Iowa State Univ., Center for Agricultural and Rural Development / by Bruce A. Babcock and Zabid Iqbal
[Executive Summary] Economics models used by California, the Environmental Protection Agency,and the EU Commission all predict significant emissions from conversion of land from forest and pasture to cropland in response to increased biofuel production. The models attribute all supply response not captured by increased crop yields to land use conversion on the extensive margin.
The dramatic increase in agricultural commodity prices since the mid-2000s seems ideally suited to test the reliability of these models by comparing actual land use changes that have occurred since the price increase to model predictions. Country-level data from FAOSTAT were used to measure land use changes. To smooth annual variations, changes in land use were measured as the change in average use across 2004 to 2006 compared to average use across 2010 to 2012. Separate measurements were made of changes in land use at the extensive margin, which involves bringing new land into agriculture, and changes in land use at the intensive margin, which includes increased double cropping, a reduction in unharvested land, a reduction in fallow land, and a reduction in temporary or mowed pasture. Changes in yield per harvested hectare were not considered in this study. Significant findings include:
•Given the lack of a definitive counterfactual, it is not possible to judge the consistency of model predictions of land use to what actually happened in each country.Some indirect findings are that model predictions of land use change in Brazil are too high relative to other South American countries; and model predictions of increasing extensive land use that are larger than what actually occurred are consistent with actual land use changes only if cropland was kept from going out of production rather than being converted from forest or pasture.
The contribution of this study is to confirm that the primary land use change response of the world’s farmers from 2004 to 2012 has been to use available land resources more efficiently rather than to expand the amount of land brought into production.This finding is not necessarily new and it is consistent with the literature that shows the value of waiting before investing in land conversion projects;however,this finding has not been recognized by regulators who calculate indirect land use.Our conclusion that intensification of agricultural production has dominated supply response in most of the world does not rely on higher yields in terms of production per hectare harvested. Any increase in yields in response to higher prices.