Spatial Targeting of Agri-Environmental Policy Using Bilevel Evolutionary Optimization

26 Pages Posted: 19 Sep 2014

See all articles by Gerald Whittaker

Gerald Whittaker

Government of the United States of America - Agricultural Research Service (ARS)

Rolf Färe

Oregon State University - Department of Economics

Shawna Grosskopf

Oregon State University

Bradley Barnhart

U.S. Department of Agriculture (USDA)

Moriah Bostian

Lewis & Clark College - Department of Economics

George Mueller-Warrant

Government of the United States of America - Agricultural Research Service (ARS)

Steven Griffith

Government of the United States of America - Agricultural Research Service (ARS)

Date Written: September 16, 2014

Abstract

Environmental policy related to agriculture is generally administered by a government agency charged with achieving legislative objectives. The enabling legislation of an agency typically establishes a set of tools that the agency uses to influence the behavior on non-governmental agricultural producers who are pursuing their own objectives. This circumstance is recognizable as a bilevel optimization, or Stackelberg game. In the instance of agri-environmental policy, there is a single leader, the agency, and agricultural producers who are followers. The agency moves first, establishing a policy with the goal of optimizing its own objectives, and the producers respond by complying with the policy in a way that maximizes their individual profits. Almost all analysis and simulation of agri-environmental policy to date employ a single level of optimization. Comparison of scenarios where several agency policies are stipulated and the producers optimize with those constraints is a common approach. Many studies use a sequential optimization, where an agency optimizes, and then the producers optimize. We observe that in practice the agency and the producers are all solving their optimization problems at the same time, a crucial feature that is not represented by scenarios or sequential optimization. Our hypothesis is that bilevel optimization provides a better representation agri-environmental policy implementation, and will provide a better method of calculating optimal trade-offs among multiple objectives. We describe a hybrid genetic algorithm for solution of multiple objective bilevel optimization problems, and show how to incorporate data envelopment analysis (DEA) to simulate producer behavior, and include the Soil and Water Assessment Tool (SWAT) to provide the information about environmental effects required by the agency to specify their objectives. We applied the resulting integrated modeling system to the analysis of an incentive policy in the Calapooia watershed in Oregon, USA, using synthetic economic data generated from the Census of Agriculture. Through bilevel optimization, we were able to spatially target agri-environmental policy to find multiple objective Pareto frontiers that dominate those available from other methods.

Keywords: Bilevel optimization, DEA, SWAT, multi-objective, evolutionary algorithms

JEL Classification: C61, Q28

Suggested Citation

Whittaker, Gerald and Färe, Rolf and Grosskopf, Shawna and Barnhart, Bradley and Bostian, Moriah and Mueller-Warrant, George and Griffith, Steven, Spatial Targeting of Agri-Environmental Policy Using Bilevel Evolutionary Optimization (September 16, 2014). Available at SSRN: https://ssrn.com/abstract=2497134 or http://dx.doi.org/10.2139/ssrn.2497134

Gerald Whittaker (Contact Author)

Government of the United States of America - Agricultural Research Service (ARS) ( email )

Corvallis, OR 97330
United States

Rolf Färe

Oregon State University - Department of Economics ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)
541-737-5917 (Fax)

Shawna Grosskopf

Oregon State University ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)

Bradley Barnhart

U.S. Department of Agriculture (USDA) ( email )

1301 New York Ave. NW
Washington, DC 20250
United States

Moriah Bostian

Lewis & Clark College - Department of Economics ( email )

Portland, OR 97204
United States

George Mueller-Warrant

Government of the United States of America - Agricultural Research Service (ARS) ( email )

Jamie L. Whitten Building
1400 Independence Ave., S.W.
Washington, DC 20250
United States

Steven Griffith

Government of the United States of America - Agricultural Research Service (ARS) ( email )

Jamie L. Whitten Building
1400 Independence Ave., S.W.
Washington, DC 20250
United States

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