Agent-based modeling of a rental market for agricultural land in the Argentine Pampas

Federico Bert, Guillermo P Podesta, Santiago Rovere, Michael North, Angel Menéndez, Carlos Laciana, Charles Macal, Elke Weber, Pamela Sydelko

Research output: Chapter in Book/Report/Conference proceedingConference contribution

5 Citations (Scopus)

Abstract

More than half of land in the Argentine Pampas is cropped by tenants. The importance of production on rented land motivated development of a LAnd Rental MArket (LARMA) model with endogenous formation of Land Rental Price (LRP). LARMA is a "hybrid" model that relies partly on easy-to-implement concepts from neoclassical economics, but addresses drawbacks of this approach by being integrated into an agent-based model that involves heterogeneous agents interacting in a dynamic environment. LRP formation assumes economic equilibrium: it is the price at which supply of rental land area equals land demand. LRP depends on (a) the "willing to accept" price (WTAP) of owners renting out land due to lack of capital or dissatisfaction with recent economic progress (a Minimum Progress Rate, MPR, is targeted), and (b) the "willing to pay" price (WTPP) and working capital (WC) of potential tenants. Land owners base WTAP on estimated profits they could achieve from operating their farms. Potential tenants base WTPP on their target gross margin for the upcoming cycle. Initial experiments with simplified economic contexts (input and output prices) did not show significant differences in regional land tenure from LARMA vs. use of an exogenous, fixed LRP. Nevertheless, simulated LRP trajectories reproduced observed dynamics: prices followed consistently the trajectories of conditions driving crop yields and profits. Consideration of MPR induced many land owners to rent out their farms, thus increasing the proportion of rented land. LARMA is a first attempt to translate equilibrium-based models into a model involving agent heterogeneity and social embeddedness. Many LARMA components will be used in a subsequent model with full bilateral transactions.

Original languageEnglish (US)
Title of host publicationModelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010
Pages724-731
Number of pages8
Volume1
StatePublished - 2010
Event5th Biennial Conference of the International Environmental Modelling and Software Society: Modelling for Environment's Sake, iEMSs 2010 - Ottawa, ON, Canada
Duration: Jul 5 2010Jul 8 2010

Other

Other5th Biennial Conference of the International Environmental Modelling and Software Society: Modelling for Environment's Sake, iEMSs 2010
CountryCanada
CityOttawa, ON
Period7/5/107/8/10

Fingerprint

Agent-based Modeling
Economics
Farms
Profitability
Trajectories
Crops
Profit
Market
Trajectory
Economic Equilibrium
Heterogeneous Agents
Market Model
Agent-based Model
Hybrid Model
Dynamic Environment
Gross
Margin
Transactions
Proportion
Experiments

Keywords

  • Agricultural land markets
  • Agricultural production
  • Argentina
  • Land tenure

ASJC Scopus subject areas

  • Software
  • Environmental Engineering
  • Modeling and Simulation

Cite this

Bert, F., Podesta, G. P., Rovere, S., North, M., Menéndez, A., Laciana, C., ... Sydelko, P. (2010). Agent-based modeling of a rental market for agricultural land in the Argentine Pampas. In Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010 (Vol. 1, pp. 724-731)

Agent-based modeling of a rental market for agricultural land in the Argentine Pampas. / Bert, Federico; Podesta, Guillermo P; Rovere, Santiago; North, Michael; Menéndez, Angel; Laciana, Carlos; Macal, Charles; Weber, Elke; Sydelko, Pamela.

Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010. Vol. 1 2010. p. 724-731.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Bert, F, Podesta, GP, Rovere, S, North, M, Menéndez, A, Laciana, C, Macal, C, Weber, E & Sydelko, P 2010, Agent-based modeling of a rental market for agricultural land in the Argentine Pampas. in Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010. vol. 1, pp. 724-731, 5th Biennial Conference of the International Environmental Modelling and Software Society: Modelling for Environment's Sake, iEMSs 2010, Ottawa, ON, Canada, 7/5/10.
Bert F, Podesta GP, Rovere S, North M, Menéndez A, Laciana C et al. Agent-based modeling of a rental market for agricultural land in the Argentine Pampas. In Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010. Vol. 1. 2010. p. 724-731
Bert, Federico ; Podesta, Guillermo P ; Rovere, Santiago ; North, Michael ; Menéndez, Angel ; Laciana, Carlos ; Macal, Charles ; Weber, Elke ; Sydelko, Pamela. / Agent-based modeling of a rental market for agricultural land in the Argentine Pampas. Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010. Vol. 1 2010. pp. 724-731
@inproceedings{0c5951516ad443bfa04d571da5d43917,
title = "Agent-based modeling of a rental market for agricultural land in the Argentine Pampas",
abstract = "More than half of land in the Argentine Pampas is cropped by tenants. The importance of production on rented land motivated development of a LAnd Rental MArket (LARMA) model with endogenous formation of Land Rental Price (LRP). LARMA is a {"}hybrid{"} model that relies partly on easy-to-implement concepts from neoclassical economics, but addresses drawbacks of this approach by being integrated into an agent-based model that involves heterogeneous agents interacting in a dynamic environment. LRP formation assumes economic equilibrium: it is the price at which supply of rental land area equals land demand. LRP depends on (a) the {"}willing to accept{"} price (WTAP) of owners renting out land due to lack of capital or dissatisfaction with recent economic progress (a Minimum Progress Rate, MPR, is targeted), and (b) the {"}willing to pay{"} price (WTPP) and working capital (WC) of potential tenants. Land owners base WTAP on estimated profits they could achieve from operating their farms. Potential tenants base WTPP on their target gross margin for the upcoming cycle. Initial experiments with simplified economic contexts (input and output prices) did not show significant differences in regional land tenure from LARMA vs. use of an exogenous, fixed LRP. Nevertheless, simulated LRP trajectories reproduced observed dynamics: prices followed consistently the trajectories of conditions driving crop yields and profits. Consideration of MPR induced many land owners to rent out their farms, thus increasing the proportion of rented land. LARMA is a first attempt to translate equilibrium-based models into a model involving agent heterogeneity and social embeddedness. Many LARMA components will be used in a subsequent model with full bilateral transactions.",
keywords = "Agricultural land markets, Agricultural production, Argentina, Land tenure",
author = "Federico Bert and Podesta, {Guillermo P} and Santiago Rovere and Michael North and Angel Men{\'e}ndez and Carlos Laciana and Charles Macal and Elke Weber and Pamela Sydelko",
year = "2010",
language = "English (US)",
isbn = "9788890357411",
volume = "1",
pages = "724--731",
booktitle = "Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010",

}

TY - GEN

T1 - Agent-based modeling of a rental market for agricultural land in the Argentine Pampas

AU - Bert, Federico

AU - Podesta, Guillermo P

AU - Rovere, Santiago

AU - North, Michael

AU - Menéndez, Angel

AU - Laciana, Carlos

AU - Macal, Charles

AU - Weber, Elke

AU - Sydelko, Pamela

PY - 2010

Y1 - 2010

N2 - More than half of land in the Argentine Pampas is cropped by tenants. The importance of production on rented land motivated development of a LAnd Rental MArket (LARMA) model with endogenous formation of Land Rental Price (LRP). LARMA is a "hybrid" model that relies partly on easy-to-implement concepts from neoclassical economics, but addresses drawbacks of this approach by being integrated into an agent-based model that involves heterogeneous agents interacting in a dynamic environment. LRP formation assumes economic equilibrium: it is the price at which supply of rental land area equals land demand. LRP depends on (a) the "willing to accept" price (WTAP) of owners renting out land due to lack of capital or dissatisfaction with recent economic progress (a Minimum Progress Rate, MPR, is targeted), and (b) the "willing to pay" price (WTPP) and working capital (WC) of potential tenants. Land owners base WTAP on estimated profits they could achieve from operating their farms. Potential tenants base WTPP on their target gross margin for the upcoming cycle. Initial experiments with simplified economic contexts (input and output prices) did not show significant differences in regional land tenure from LARMA vs. use of an exogenous, fixed LRP. Nevertheless, simulated LRP trajectories reproduced observed dynamics: prices followed consistently the trajectories of conditions driving crop yields and profits. Consideration of MPR induced many land owners to rent out their farms, thus increasing the proportion of rented land. LARMA is a first attempt to translate equilibrium-based models into a model involving agent heterogeneity and social embeddedness. Many LARMA components will be used in a subsequent model with full bilateral transactions.

AB - More than half of land in the Argentine Pampas is cropped by tenants. The importance of production on rented land motivated development of a LAnd Rental MArket (LARMA) model with endogenous formation of Land Rental Price (LRP). LARMA is a "hybrid" model that relies partly on easy-to-implement concepts from neoclassical economics, but addresses drawbacks of this approach by being integrated into an agent-based model that involves heterogeneous agents interacting in a dynamic environment. LRP formation assumes economic equilibrium: it is the price at which supply of rental land area equals land demand. LRP depends on (a) the "willing to accept" price (WTAP) of owners renting out land due to lack of capital or dissatisfaction with recent economic progress (a Minimum Progress Rate, MPR, is targeted), and (b) the "willing to pay" price (WTPP) and working capital (WC) of potential tenants. Land owners base WTAP on estimated profits they could achieve from operating their farms. Potential tenants base WTPP on their target gross margin for the upcoming cycle. Initial experiments with simplified economic contexts (input and output prices) did not show significant differences in regional land tenure from LARMA vs. use of an exogenous, fixed LRP. Nevertheless, simulated LRP trajectories reproduced observed dynamics: prices followed consistently the trajectories of conditions driving crop yields and profits. Consideration of MPR induced many land owners to rent out their farms, thus increasing the proportion of rented land. LARMA is a first attempt to translate equilibrium-based models into a model involving agent heterogeneity and social embeddedness. Many LARMA components will be used in a subsequent model with full bilateral transactions.

KW - Agricultural land markets

KW - Agricultural production

KW - Argentina

KW - Land tenure

UR - http://www.scopus.com/inward/record.url?scp=84858653406&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84858653406&partnerID=8YFLogxK

M3 - Conference contribution

AN - SCOPUS:84858653406

SN - 9788890357411

VL - 1

SP - 724

EP - 731

BT - Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010

ER -