Developing a microsimulation model for farm forestry planting decisions

Abstract

There is increasing pressure in Europe to convert land from agriculture to forestry which would enable the sequestration of additional carbon, thereby mitigating agricultural greenhouse gas production. However, there is little or no information available on the drivers of the land use change decision from agriculture to forestry at individual farm level, which is complicated by the inter-temporal nature of the decision. This paper describes a static microsimulation approach which provides a better understanding of the life-cycle relativity of forestry and agricultural incomes, using Ireland as a case-study. The microsimulation methodology allows for the generation of actual and counterfactual forest and agricultural income streams and for other attributes of utility such as long-term wealth and leisure, for the first time. These attributes are then modelled using purpose built forest models and farm microdata from a 30 year longitudinal dataset. The results show the importance of financial drivers but additionally show that wealth and leisure are also important factors in this inter-temporal land use change decision. By facilitating the examination of the distribution of farms across the farming population, the use of a static microsimulation approach allows us to make a considerable contribution to the literature in relation to the underlying drivers of farm afforestation behaviour. In the broader context of Climate Smart Agriculture and the Grand Challenges facing the intensification of agricultural production, these findings have implications for policies that seek to optimize natural resource use.