Linking Land use, Biophysical, and Economic
Models for Policy Analysis
Catherine L. Kling
Iowa State University
October 13, 2015
Prepared for “Coupling Economic Models with Agronomic,
Hydrologic, and Bioenergy Models for sustainable Food,
Energy, and Water Systems” NSF funded workshop
Charge to Session Participants:
1) briefly summarize an integrated modeling effort
you’ve worked on that has integrated across one or
more dimensions of crops, land use, and/or water
quality models and
2) identify the shortcomings and challenges that you
ran into along the way
All Models are Wrong: Some are
Useful*
• What makes a model useful?
• If it helps answer a question of interest
• Conference goal: how to make models more useful?
*Box, G. E. P. (1979), "Robustness in the strategy of scientific model building", in Launer, R. L.; Wilkinson, G.
N., Robustness in Statistics, Academic Press, pp. 201–236
Goal FEW System: to make people as
well off as possible
• Benefit-Cost Analysis
– Value of improvements in ecosystem services
– Vs. costs (usually market)
• Policy Design: design and evaluate policies to
bring these costs and benefits into decisions
8
1. Policy Design
Evaluate policy scenarios
– Posit changes in prices or policies (taxes, cap and
trade, etc.)
– Model to predict changes in land use (shift crop
choices, implement conservation practices, retire
land from production, plant biofuel crops)
– Model to evaluate environmental effects of a
changed land use configuration (C sequestration,
water quality, climlate impact, erosion etc.)
1. Policy Design Example
“Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior,”
Canadian Journal of Agricultural Economics 54(2006): 247-267 (with Lyubov Kurkalova and Jinhua Zhao).
What does it take for farmers to adopt conservation tillage
practices?

Profit loss from switching

Reluctance (or premium) due to uncertainty
risk aversion, value of information
Estimate

The subsidy needed for adoption at each parcel

Generated supply curve of conservation tillage

Linked to biophysical model (EPIC) produce supply of soil
erosion reduction
How many conservation services
can Iowa provide?
Baseline
Soil loss due to
erosion,
tons/ac/year
0.78 - 3.5
3.5 - 6.4
6.4 - 9.85
9.85 - 15.56
15.56 - 25.48
How many conservation services
can Iowa provide?
Green Payments
$3.25/acre
Soil loss due to
erosion,
tons/ac/year
0.78 - 3.5
3.5 - 6.4
6.4 - 9.85
9.85 - 15.56
15.56 - 25.48
How many conservation services
can Iowa provide?
Green Payments
$10.40/acre
Soil loss due to
erosion,
tons/ac/year
0.78 - 3.5
3.5 - 6.4
6.4 - 9.85
9.85 - 15.56
15.56 - 25.48
1. Policy Design Challenge: scale
Goldilocks models: relevant to human scales
• Not too small: C sequestration, field averages fine,
more detail not useful
• Not too big: Climate change, world wide average
changes will not support understanding of
adaptation issues
• Just right: field, farm, watershed, landscape scales
• But, just right is question specific
Policy Design Challenge: Connection to
human system, land use options
• Economists want to perform scenarios, what if
questions
• Cost effectiveness nitrate reductions from
adoption of cover crops vs. wetlands vs.
bioreactors vs. tile drain management…
• Model each of these “levers” at similar
accuracy/detail ideally same model)
Policy Design Challenge: climate
and weather
• Characterize uncertainties:
– Weather – climate
– Model parameters
– Ability to formally do Monte Carlo analysis great!
• But don’t get obsessive: qualitative is better than
nothing
Policy Design Challenge: Temporal
and Dynamics of Systems
• Soil C storage is intertemporal process
• Some economic decisions have important
dynamic/intertemporal components
• Biggest challenge when both physical and
human system have dynamic components
2. Benefit-Cost Analysis
1. Humans make land use decisions to produce food
and energy
2. Decisions impact natural system locally, regionally,
and globally (nutrients, pesticides, GHGs, SO2, etc)
3. Create Market Products (food) and Nonmarket
Products (ecosystem services)
4. Valuing ecosystem services: how much are people
willing to trade off food/fuel for ecosystem services?
Would you be
willing to pay
$25/year in
property taxes to
support a project
to improve the
conditions of
Storm Lake to
those described
below?
Challenge: linking through multiple
biophysical processes
• Storm Lake: Model how changes in Lake alter
various ecosystem service
• An additional layer: how does a change land
use in the watershed affect Storm Lake then
how does that alter services?
• How much is it worth to have a farmer in a
specific location install a wetland?
Valuing ecosystem service: Iowa
Nutrient Reduction Strategy
• Scenario: cover crops, nutrient changes and
wetlands on most of Iowa's 22 million acres
• How do these change multitude of
environmental endpoints and where? water
quality, habitat, pollinators, flood risk
reduction
• How do these translate into ecosystem service
changes?
Making Linked Models more Useful
1. Ideally model is developed with question in mind
2. All expertise is at table on front end
3. Realistically, will often not happen….