Exploring agent-level calculations of risk and returns in relation to observed land-use changes in the US Great Plains, 1870–1940

Abstract

Land-use change in the US Great Plains since agricultural settlement in the second half of the nineteenth century has been well documented. While aggregate historical trends are easily tracked, the decision making of individual farmers is difficult to reconstruct. We use an agent-based model to tell the history of the settlement of the west by simulating farm-level agricultural decision making based on historical data about prices, yields, farming costs, and environmental conditions. The empirical setting for the model is the period between 1875 and 1940 in two townships in Kansas, one in the shortgrass region and the other in the mixed grass region. Annual historical data on yields and prices determine profitability of various land uses and thereby inform decision making, in conjunction with the farmer’s previous experience and randomly assigned levels of risk aversion. Results illustrating the level of agreement between model output and a unique and detailed set of household-level records of historical land use and farm size suggest that economic behavior and natural endowments account for land change processes to some degree, but are incomplete. Discrepancies are examined to identify missing processes through model experiments, in which we adjust input and output prices, crop yields, agent memory, and risk aversion. These analyses demonstrate that how agent-based modeling can be a useful laboratory for thinking about social and economic behavior in the past.