Investigating Impacts of Alternative Crop Market Scenarios on Land Use Change with an Agent-Based Model

Abstract

We developed an agent-based model (ABM) to simulate farmers’ decisions on crop type and fertilizer application in response to commodity and biofuel crop prices. Farm profit maximization constrained by farmers’ profit expectations for land committed to biofuel crop production was used as the decision rule. Empirical parameters characterizing farmers’ profit expectations were derived from an agricultural landowners and operators survey and integrated in the ABM. The integration of crop production cost models and the survey information in the ABM is critical to producing simulations that can provide realistic insights into agricultural land use planning and policy making. Model simulations were run with historical market prices and alternative market scenarios for corn price, soybean to corn price ratio, switchgrass price, and switchgrass to corn stover ratio. The results of the comparison between simulated cropland percentage and crop rotations with satellite-based land cover data suggest that farmers may be underestimating the effects that continuous corn production has on yields. The simulation results for alternative market scenarios based on a survey of agricultural land owners and operators in the Clear Creek Watershed in eastern Iowa show that farmers see cellulosic biofuel feedstock production in the form of perennial grasses or corn stover as a more risky enterprise than their current crop production systems, likely because of market and production risks and lock in effects. As a result farmers do not follow a simple farm-profit maximization rule