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

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

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

5 Scopus citations

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
Subtitle of host publicationProceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010
Pages724-731
Number of pages8
StatePublished - Dec 1 2010
Externally publishedYes
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

Publication series

NameModelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010
Volume1

Conference

Conference5th 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

All Science Journal Classification (ASJC) codes

  • Software
  • Environmental Engineering
  • Modeling and Simulation

Keywords

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

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  • Cite this

    Bert, F., Podestá, G., 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 (pp. 724-731). (Modelling for Environment's Sake: Proceedings of the 5th Biennial Conference of the International Environmental Modelling and Software Society, iEMSs 2010; Vol. 1).