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Chapters 2 and 3 have focused largely on drivers of global change which are exogenous to the economic framework developed in this book, including population, income and total factor productivity. In this chapter we focus exclusively on the endogenous responses to the scarcity which emerges when demand growth outpaces productivity growth. These include three margins of economic response: the demand margin, or consumers’ response to higher prices, the extensive margin of supply, which captures the potential responsiveness of total cropland area to higher returns in agriculture, and the intensive margin of supply, which captures producers’ scope for substituting nonland inputs for land in response to increased scarcity. Each of these margins is explored in detail, and this is followed by a series of simulations with the SIMPLE model showing how they interact with one another in order to determine total cropland conversion. This analysis demonstrates that purely biophysical analyses of global change significantly overstate the amount of cropland conversion required in the face of growing demand.
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Uris Lantz C. Baldos
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