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Spatial Dimensions of US Crop Selection: Recent Responses to Markets and Policy

Author

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  • Motamed, Mesbah J.
  • McPhail, Lihong Lu

Abstract

We explicitly measure corn acreage response to the biofuels boom from 2006 to 2010. Specifically, we use newly available micro-scale planting data over time to test whether corn cultivation intensifies in proportion to the proximity of ethanol processors. We control for the endogeneity of plant location to corn acreage by using transportation network data for instruments. Our results show that reducing the distance between a farm and an ethanol plant by one percent increases acreage in corn by 0.64% and reveal a price elasticity of supply of 0.47%. To our knowledge, this is the first study that measures changes in location and intensity of corn planting in response to incentives posed by the recent biofuels boom. The results can serve as a springboard for researchers and policy-makers concerned with crop diversity, environmental sustainability, and greenhouse gas emissions.

Suggested Citation

  • Motamed, Mesbah J. & McPhail, Lihong Lu, 2011. "Spatial Dimensions of US Crop Selection: Recent Responses to Markets and Policy," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103270, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea11:103270
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    File URL: http://purl.umn.edu/103270
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    Cited by:

    1. Gaurav Arora & Peter T. Wolter & Hongli Feng & David A. Hennessy, 2016. "Role of Ethanol Plants in Dakotas Land Use Change: Incorporating Flexible Trends in the Difference-in-Difference Framework with Remotely-Sensed Data," Center for Agricultural and Rural Development (CARD) Publications 16-wp564, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Arora, Gaurav & Wolter, Peter T. & Feng, Hongli & Hennessy, David A., 2015. "Role of Ethanol Plants in Dakotas’ Land Use Change: Analysis Using Remotely Sensed Data," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205877, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

    More about this item

    Keywords

    corn acreage; ethanol; panel data analysis; instrumental variables; Agricultural and Food Policy; Crop Production/Industries; Land Economics/Use; Q1; Q28; C33;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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