Cathal O’Donoghue FARM-LEVEL MICROSIMULATION MODELLING Farm-Level Microsimulation Modelling ’ Cathal O Donoghue Farm-Level Microsimulation Modelling Cathal O’Donoghue RuralEconomy andDevelopment Programme Athenry, Galway Ireland ISBN978-3-319-63978-9 ISBN978-3-319-63979-6 (eBook) DOI10.1007/978-3-319-63979-6 LibraryofCongressControlNumber:2017948310 ©TheEditor(s)(ifapplicable)andTheAuthor(s)2017 Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whether thewholeorpartofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseof illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmissionorinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilar ordissimilarmethodologynowknownorhereafterdeveloped. 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Printedonacid-freepaper ThisPalgraveMacmillanimprintispublishedbySpringerNature TheregisteredcompanyisSpringerInternationalPublishingAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Dedicated to the staff of Teagasc and to Farmers of the National Farm Survey Preface This work represents an overview of the model development in relation tofarm-levelmicro-simulationmodellingthatIundertookovera10-year period in Teagasc, the Irish Agriculture and Food Development Authority, an important research and extension institution in Ireland. The book builds upon my career expertise in the development of sim- ulation models to understand distributional consequences of policy, market and societal changes. fl As a sector, very strongly in uenced by public policy and with very fi signi cant distributional implications of policy, market and societal changes, agriculture has substantial scope and potential for model development. I was glad to have worked with colleagues in Teagasc who were very experienced in other forms of modelling. ’ I am very proud to have worked for Teagasc. Teagasc s staff members are hugely dedicated to their client base of farmers, food businesses and rural dwellers. Most ofthe models developed in thisbookdraw upon the Teagasc National Farm Survey. I would like to express my appreciation fortheworkofthemembersofthesurveyteam,whohavegenerated one ofthehighestquality micro datasetsIhave everworkedwithandforthe vii viii Preface fi farmers who have volunteered their time and their con dential farm management data for over 40 years. Most of all, this book builds upon work with my Ph.D. students and collaborators of my Policy Lab. As in all large-scale modelling efforts, the work is a team effort. It has been a pleasure working with the many Ph. D. students and post-docs over the years. Within my lab, everyone fi bene ts from the infrastructure that has been built and everyone con- tributes.Thus,manyhave contributed tothedevelopmentofthemodels in this book. I would like to express my appreciation in particular to Ursula Colohan who was my PA, Programme Administrator for the decade, John Lennon, who undertook a lot of the data preparation and Mary Ryan who co-authored 3 of the chapters and whose forensic eye helped with the editing. In each chapter, I acknowledge collaborating partners and co-authors. In all models, I have made the major or a major contribution to their development. Most of the analyses in this book extend work done in collaborationwiththePh.D.students.InthecasesofChaps.5,9and10, fi fl the rst collaborator is the lead author on the chapter, re ecting their contribution to these chapters. In the remaining chapters, I am the lead author. However, all are collaborative efforts in one form or other. I am grateful for their efforts. Chapter 2 represents an update of work previ- ously published in O’Donoghue (2016).1 ’ Athenry, Ireland Cathal O Donoghue Note 1. O’Donoghue, C., Farm Level Microsimulation Models in Shrestha, S., Barnes, A., & Ahmadi, B. V. (Eds.). (2016). Farm-level Modelling: Techniques, Applications and Policy. CABI. Contents 1 Introduction 1 1.1 Introduction 1 1.2 Farm-Level Microsimulation 4 1.3 Book Structure 11 References 17 2 Farm-Level Microsimulation Modelling: An Updated Survey 21 2.1 Introduction 21 2.2 Applications of Farm-Level Microsimulation Modelling 24 2.3 Conclusions 34 References 35 3 Static Farm Microsimulation Model: Price Impact 49 3.1 Introduction 49 3.2 Theoretical Framework 52 3.3 Methodology 58 3.4 Data 60 ix x Contents 3.5 Results 67 3.6 Conclusions 83 References 85 — 4 Hypothetical Microsimulation Modeling Farm Taxation 87 4.1 Introduction 87 4.2 Policy Framework 89 4.3 Methodology 95 4.4 Data 98 4.5 Results 101 4.6 Conclusions 112 Appendix Policy Parameters 113 References 115 5 Farm Subsidy Microsimulation Modelling 119 5.1 Introduction 119 5.2 Policy Context 121 5.3 Theoretical Framework 125 5.4 Methodology and Data 129 5.5 Results 134 5.6 Conclusions 142 References 144 6 Spatial Microsimulation of Farm Income 147 6.1 Introduction 147 6.2 Methodology 149 6.3 Data 157 6.4 Results 162 References 172 Contents xi 7 Farm-Level Income Generation Microsimulation Model 177 7.1 Introduction 177 7.2 Theoretical Framework 179 7.3 Methodology 183 7.4 Data 189 7.5 Results 192 7.6 Conclusions 210 References 211 8 Behavioural Microsimulation Modelling: Agri-Environmental Schemes 215 8.1 Introduction 215 8.2 Theoretical Framework 220 8.3 Methodology 223 8.4 Data 226 8.5 Results 229 8.6 Conclusions 236 References 237 9 Inter-temporal Microsimulation Model: Forestry Planting Decisions 241 9.1 Introduction 241 9.2 Theoretical Framework 246 9.3 Methodology 249 9.4 Data 261 9.5 Results 262 9.6 Conclusions 275 References 277 10 Spatial Microsimulation Model for Environmental Policy 283 10.1 Introduction 283 10.2 Theoretical Framework 288 10.3 Methodology 295