A combined agent-based and biophysical modelling approach to address GHG mitigation policy issues

Project Contact

• Robin Matthews, Macaulay Institute
• Innocent Bakam, Macaulay Institute

Project Summary

Agent-based modelling (ABM) is an approach that has been receiving attention as a way of linking the biophysical and socio-economic components of a system to study such social dilemmas. Advantages of the approach include its ability to accommodate multiple scales of decision-making, to incorporate individual variation in decision-making at the micro-level, and to study the emergence of collective responses to environmental management policies. The People and Landscapes Model (PALM) is a combined agent-based/biophysical model operating at the level of a catchment, and consists of a number of household agents located on a landscape made up of heterogeneous land units, each of which contains routines to calculate its water balance and carbon and nitrogen dynamics. Decisions made by the household agents result in actions which may influence the fluxes of water, carbon and nitrogen within the landscape.

Preliminary results from the model show that GHG emissions can be reduced by economic instruments such as (a) imposition of a GHG tax, (b) providing incentives for low emitting land uses, and (c) a combination of the two. A GHG tax has the disadvantage of extracting money from the economy of the region so that average returns decline over time even though agents select low emitting land uses. An incentive scheme to reward agents selecting land uses that emit less GHGs is beneficial to the economy of the region with overall annual returns increasing over time, although this does require the influx of money from some external source. A combination of taxation and incentive, with revenue generated from taxing agents selecting land uses with GHG emissions above a threshold and distributing this to agents with land uses emitting below the threshold, would appear to be a ‘cost-neutral’ solution to reducing overall GHG emissions.

We are currently working on evaluating some of the challenges facing the implementation of such schemes, including the setting of appropriate thresholds of GHG emissions, and measuring and monitoring of individual and aggregate behaviour of land managers. The transaction costs of these, particularly of the latter, along with technical issues, are factors that have so far prevented the operationalisation of such schemes.

Publications

1. Matthews, R.B. & Bakam, I., 2007. A combined agent-based and biophysical modelling approach to address GHG mitigation policy issues. In: D. Kulasiri & L. Oxley (Editors), Proceedings of MODSIM 2007 International Congress on Modelling and Simulation, Dec 10-13, 2007. Modelling and Simulation Society of Australia and New Zealand, Christchurch, New Zealand.