Land Market Interactions between Heterogeneous Agents in a Heterogeneous Landscape -- Tracing the Macro-Scale Effects of Individual Trade-Offs between Environmental Amenities and Disamenities


Filatova, Tatiana; van der Veen, Anne; Parker, Dawn

Journal or Book Title: Canadian Journal of Agricultural Economics

Volume/Issue: 54/4

Page Number(s): 431-457

Year Published: 2009


Heterogeneity in both the spatial environment and economic agents is a crucial driver of land market dynamics. We present an agent-based land market model where land from agriculture use is transferred into urban. The model combines the microeconomic demand, supply, and bidding foundations of spatial economics models with the spatial heterogeneity of spatial econometric models in a single methodological platform. Heterogeneous agents exchange heterogeneous spatial goods via simulated bilateral market interactions. We model a coastal city where both coastal amenities and flooding or erosion disamenities drive land market outcomes, facilitating separate analysis of the effects of each driver on land rents and land development patterns. We also analyze the implications of homogeneous versus heterogeneous but unbiased flood risk perceptions. Since buyers with low risk perceptions drive market outcomes, spatial development under heterogeneous risk perceptions differs qualitatively, with more expansion into risky areas. Our results highlight the shortcomings of policy models based on representative agent assumptions and the importance of including agent-level data in empirical modeling.

DOI: 10.1111/j.1744-7976.2009.01164.x

Type of Publication: Journal Article

Publisher: Wiley