The role of uncertainty and expectations in modeling (range)land use strategies: An application of dynamic optimization modeling with recursion
AbstractThis paper presents a bio-economic optimization modeling approach for the simulation of land use decision making by farmers faced with climatic uncertainties. The approach is applied to the study of land use strategies on commercial ranches in Namibia. First, we compare two models differing in their structure: the first one is an inter-temporal optimization model (forward-looking with perfect foresight) while the second is recursive and it explicitly incorporates uncertainty in the decision making process. Second, we point out the structural advantage of the recursive optimization model in its ability to simulate how decision makers' perceptions on the occurrence of stochastic events alter land use strategies and their economic and ecological outcomes. Both models make use of a State-and-Transition conceptual framework to depict the bio-economic feedback. We found that the incorporation of rainfall uncertainty in decision making is crucial when modeling land use strategies in highly variable ecological-economic systems such as ranches in arid rain-fed areas. Where knowledge of rainfall distribution is inaccurate (due to lack of experience or climate change) both, farmers and rangelands, would be better off by precautiously expecting low rainfalls. Finally, our results show that minimizing herd size adjustment costs would support the establishment of sustainable land use strategies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 69 (2010)
Issue (Month): 12 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolecon
Bio-economic model Rangelands Stochastic modeling Recursive modeling State-and-Transition Rainfall expectations;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stefan Baumgärtner & Martin F. Quaas, 2007.
"Ecological-economic viability as a criterion of strong sustainability under uncertainty,"
Working Paper Series in Economics
67, University of Lüneburg, Institute of Economics.
- BaumgÃ¤rtner, Stefan & Quaas, Martin F., 2009. "Ecological-economic viability as a criterion of strong sustainability under uncertainty," Ecological Economics, Elsevier, Elsevier, vol. 68(7), pages 2008-2020, May.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometrica, Econometric Society,
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Heidelbach, Olaf, 2007. "Efficiency of selected risk management instruments: An empirical analysis of risk reduction in Kazakhstani crop production," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 40, number 92323.
- Babiker, Mustafa & Gurgel, Angelo & Paltsev, Sergey & Reilly, John, 2009. "Forward-looking versus recursive-dynamic modeling in climate policy analysis: A comparison," Economic Modelling, Elsevier, vol. 26(6), pages 1341-1354, November.
- Marc Nerlove, 1981.
"Expectations, Plans and Realizations: In Theory and Practice,"
Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science
511, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Nerlove, Marc, 1983. "Expectations, Plans, and Realizations in Theory and Practice," Econometrica, Econometric Society, Econometric Society, vol. 51(5), pages 1251-79, September.
- Janssen, Sander & van Ittersum, Martin K., 2007. "Assessing farm innovations and responses to policies: A review of bio-economic farm models," Agricultural Systems, Elsevier, Elsevier, vol. 94(3), pages 622-636, June.
- Batabyal, Amitrajeet A., 1999. "Aspects of the optimal management of cyclical ecological-economic systems," Ecological Economics, Elsevier, Elsevier, vol. 30(2), pages 285-292, August.
- Perrings, Charles & Walker, Brian, 2004. "Conservation in the optimal use of rangelands," Ecological Economics, Elsevier, Elsevier, vol. 49(2), pages 119-128, June.
- Higgins, Steven I. & Kantelhardt, Jochen & Scheiter, Simon & Boerner, Jan, 2007. "Sustainable management of extensively managed savanna rangelands," Ecological Economics, Elsevier, Elsevier, vol. 62(1), pages 102-114, April.
- Charles Perrings & David Stern, 2000. "Modelling Loss of Resilience in Agroecosystems: Rangelands in Botswana," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 16(2), pages 185-210, June.
- Janssen, Marco A. & Anderies, John M. & Walker, Brian H., 2004. "Robust strategies for managing rangelands with multiple stable attractors," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 140-162, January.
- Michael T. Wallace & Joan E. Moss, 2002. "Farmer Decision-Making with Conflicting Goals: A Recursive Strategic Programming Analysis," Journal of Agricultural Economics, Wiley Blackwell, Wiley Blackwell, vol. 53(1), pages 82-100.
- Finnoff, David & Shogren, Jason F. & Leung, Brian & Lodge, David, 2005. "The importance of bioeconomic feedback in invasive species management," Ecological Economics, Elsevier, Elsevier, vol. 52(3), pages 367-381, February.
- Briner, Simon & Finger, Robert, 2012. "Bio-economic modelling of decisions under yield and price risk for suckler cow farms," 123rd Seminar, February 23-24, 2012, Dublin, Ireland, European Association of Agricultural Economists 122547, European Association of Agricultural Economists.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.