Land Reallocation and Climate Damages to Agriculture: Evidence from Brazil

How climate change affects agricultural output depends on how it shifts potential yields across crops and locations, and on how readily farmers move land among crops and into other uses. We estimate this response with a random-coefficients logit on Brazilian Agricultural Census data, in which plots value crops at world prices times their own FAO-GAEZ potential yields. Own-price crop area elasticities average about 1, and total cropland responds with an elasticity of 0.5 as land moves between crops and pasture. Under a high-emissions scenario (SSP3-7.0) for 2041--2060, climate change reshapes where crops are grown: crop area falls in today's breadbaskets but rises in two-fifths of regions, and this reallocation amplifies the output effects of yield changes. Nationally, farm income falls by 2.3% of crop revenue, yet regions holding three-quarters of Brazil's farmland lose twice that amount, and reallocation offsets a fifth of the damages.