Agent based Modeling Simulation for Land Use Change

and Cost-Benefit Analysis of Land Management Policies

Armando Sánchez Vargas

, Carlos Gay Garcia

2,3

, Debora Martinez Ventura

Ana Liz Herrera Merino

and Bernardo A. Bastien Olvera

Instituto de Investigaciones Económicas, Universidad Nacional Autónoma de México, Ciudad de México, Mexico

Centro de Ciencias de la Atmósfera, Universidad Nacional Autónoma de México, Ciudad de México, Mexico

Programa de Investigación en Cambio Climático, Universidad Nacional Autónoma de México, Ciudad de México, Mexico

Facultad de Economía, Universidad Nacional Autónoma de México, Ciudad de México, Mexico

Keywords: Agent-based Modeling Simulation, Urban Growth, Social Welfare, Land Management, Cost-Benefit

Analysis.

Abstract: This study shows the Simulation of an Agent Based Model for Land Use Change (SIMBACUS) developed

on the Netlogo platform (Wilensky, 1999) for the period of 2010-2030. The model studies the interaction of

individual behavior with environmental characteristics considering socioeconomic, demographic, climate and

public policy aspects of Pachuca de Soto (Hidalgo). The simulation’s dynamism is based on population

growth and the Cobb-Douglas utility function, which determines the optimal decisions of individuals. The

results indicate that in 2030 the municipality would have 303,773 inhabitants, the urban area would grow to

21 km2 and the implementation of a land management program would have a positive impact on social welfare

and the permanence of natural resources.

1 INTRODUCTION

The use of Agent-Based Models has increased for the

simulation of complex space systems, such as urban

growth (Cantergiani, et al, 2014). These models are

based on a cellular automaton, they consider the

behavior of agents in the system to generate the

simulation and are mainly composed by the following

elements: agents, environment and the interactions

between them (Gilbert, 2008). This work’s main

objective is to analyze the impacts of the

implementation of an Ecological Land Zoning

Program (POET, for its acronym in Spanish) in a

municipality with more than 100,000 inhabitants that

shows evidence of extreme events.

The analysis is based on the Simulation of an

Agent Based Model for Land Use Change

(SIMBACUS, in Spanish), which allows to study the

interaction of individual behavior with environmental

characteristics considering socioeconomic,

demographic, climate and public policy aspects of the

municipality Pachuca de Soto (Hidalgo). The tool

also incorporates a Cost-Benefit Analysis (CBA) and

the opportunity cost of not implementing a land

management program (i.e. where is allowed to settle

and where is not). Based on this, it estimates the

population losses or gains that may be attributable to

the POET during the period 2010-2030.

The model is developed in the 5.2.0 Netlogo

programming software (Wilensky, 1999) and its

dynamism arises by population growth and a Cobb-

Douglas utility function that determines the optimal

decisions of individuals. Individual behavior is based

on economic theory, as every agent evaluates the

physical and economic characteristics of their

environment and from this they choose to settle in a

space that maximizes their utility. The simulation

period comprises 21 years, with its initial conditions

in 2010 and ending in 2030.

The following socio-demographic information is

used: population growth in the period 2010-2030

(CONAPO), crowding index (IMIP, 2009), growth

rate of economic units (INEGIa), extension of the

municipality (INEGIb) and Urban Containment

Boundaries (UCB, CONAVI). Cartographic

information in shape format (.shp) from the National

Institute of Statistics and Geography (INEGI) is

included as well.

368

Vargas, A., Garcia, C., Ventura, D., Merino, A. and Olvera, B.

Agent based Modeling Simulation for Land Use Change and Cost-Beneﬁt Analysis of Land Management Policies.

DOI: 10.5220/0006017203680375

In Proceedings of the 6th International Conference on Simulation and Modeling Methodologies, Technologies and Applications (SIMULTECH 2016), pages 368-375

ISBN: 978-989-758-199-1

The results of the simulation indicate that with an

average population growth of 0.3% each semester, the

municipality of Pachuca de Soto would have 303,773

inhabitants at the end of 2030. This simulation

considers the implementation of land management

policies, and suggests that the distribution of

population and new workplaces should be

implemented in an orderly manner, because occupied

spaces would be those that meet the physical

characteristics to be urbanized. Another important

finding emphasizes that the absence of a land

management program could result in a social

opportunity cost in terms of income, since there will

be a loss of approximately $171,490 pesos (1 Peso 

0.053  0.047€) biannually per square

kilometer, and at the end of said period the cost would

be of $13.4 million pesos. Finally, the model also

provides results of the POET’s CBA from the same

period. The results of our simulations suggest that the

Net Present Value (NPV) of the management

program would be positive ($2,284 million pesos), as

well as the Benefit-Cost ratio (1.20) and Internal Rate

of Return (15.25%). This presumes that the

implementation of such programs in circumstances of

extreme events is desirable for society since is

possible to generate positive effects on social welfare

in terms of revenue.

2 FORMULATION OF

SIMBACUS

The model’s implementation is developed in six-

month periods; the process displays some of the

implications of land use change and its evolution over

time, specifically in its shape, density, and gains or

losses in social welfare. The zero period or baseline

refers to information of the year 2010, which shows

the initial conditions of the municipality such as:

population, economic units with more than 30

employees, main roadways, and extension of the

urban area. In addition, CBA and opportunity cost

data is introduced.

In order to simplify the model some assumptions

are incorporated. First, it is assumed that each

individual will settle in the place that maximizes their

utility, which only depends on their distance to their

workplace and soil quality. Moreover, the real-estate

market is regulated by the supply and demand model,

which means that the Government assigns

construction permits as the need for them increases.

Regarding population and economic unit growth

rates, there’s a constant growth every 6 months and

every 3 years, respectively. The crowding index (3.3)

remains constant throughout the simulation period,

just like the population density (1,371 Hab / Km

Finally, the opportunity cost per square kilometer

increases at a constant rate of $17,000 pesos per

semester.

The simulation model consists of three main

elements that interact with each other: agents, space

and resources. The agents are homes and workplaces.

The space is restricted to cells found within the limits

of 5 of the 12 municipalities that make up the

Pachuca-Tizayuca region, which is represented with

a raster layer (.asc format) that indicates soils with

aptitude to be urbanized. In the case of the resources,

they refer to soil quality and distance from homes to

workplaces. Figure 1 describes the characteristics of

each element of the model.

The simulation takes the idea of neighborhood

and assumes that the sites are highly influenced by the

characteristics and properties of its neighbors (i.e. the

Figure 1: Elements of the simulation model.

Agent based Modeling Simulation for Land Use Change and Cost-Beneﬁt Analysis of Land Management Policies

369

agents that are close). As stated previously, each

period of the model represents 6 months, i.e. for each

tick in Netlogo, a series of biannual behaviors occurs.

First, the number of dwellers in the municipality

increases at an average constant rate and the new

individuals find empty cells according to their ability

to be urbanized. At the same time, workplaces

increase every three years according to the average

growth rate, this causes an update in the “distance”

property and people receive an information flow

about it and about soil quality. Afterwards, people

evaluate the space around them and seek to settle

where they can maximize their utility; new residents

affect soil quality and then new urbanized areas

appear. The process concludes with the update of the

number of inhabitants and the estimation of the CBA

or opportunity cost, according to the existence of a

POET.

3 AGENT’S (INDIVIDUALS)

DECISION

The decision of people to inhabit or not an empty

space (rural) is defined by a Cobb-Douglas utility

function. Each individual randomly evaluates a

number of empty cells that are suitable for

inhabitation, and then they choose the one that

maximizes their utility depending on the distance and

quality. The first represents an economic value for

agents, since it affects the transportation cost of

moving from their homes to their workplace (Batty,

2005). On the other hand, soil quality is linked to the

UCB, as well as the distance to the new workplaces

that come up during the simulation. The function that

defines the utility of each person is expressed as

follows:

U



dist,qual





dist









qual







(1)

U: Utility of the person that builds a house.

K: Arbitrary constant.

dist: It is the attribute that concerns the average

distance from homes to workplaces. This is inversely

proportional to the function, since a high average

distance adversely affects the utility of people.

qual: Attribute of soil quality.

An important aspect in the utility function is that

the user of SIMBACUS can define the parameters of

preference of the agents; they are set at the beginning

of the simulation and defined in a numerical range

from -1 to 1. The value of -1 indicates distance as a

priority for people; while 1 means that they care more

about soil quality. The balance between these

priorities is achieved when a value of 0 is set, which

means that both distance to the workplace and soil

quality are of interest to the individuals (Felsen and

Wilensky, 2007). The parameters alpha and beta were

manually tuned in function of experts opinion of

Pachuca de Soto, in terms of what could and what

could not happen.

Figure 2: Parameters of preference of the agents.

4 SIMULATION

The biannual evolution of the simulation implies an

update of the information on the same frequency, so

annual data is shown every 2 ticks in Netlogo. The

dynamism of SIMBACUS arises from the population

growth, which is reflected as an increased demand for

land to be inhabited, so previously empty spaces

become inhabited areas. Quality and distance

properties are updated in each period as a result of the

creation of new workplaces and the change in land

use. Moreover, considering the implementation of a

POET within the area, the model performs a CBA.

Otherwise, in case of not having a program like this,

the opportunity cost per square kilometer is

estimated.

4.1 Initial Conditions

The SIMBACUS tool allows the modification of

values by the user, according to the characteristics of

the area to be simulated. In order to do this, the first

step of the simulation is to specify the initial

conditions of the model. For this exercise, a biannual

population growth rate of 0.3% is established and

remains constant for the entire period, as well as a

growth rate of workplaces of 4% for every three years

and a crowding index of 3.3. Also, a neutral value in

the quality and/or distance priority is defined, which

states that both criteria are important for people when

deciding their location.

The opportunity cost data because of the absence

of a land management program ($17,000 pesos/km

)

is also determined. On the other hand, a CBA is

carried out when land regulations exist, for which a

Social Discount Rate of 12% is defined (SHCP,

2014). At this early stage some map layers are added

to the model, like municipal and urban polygons,

MSCCES 2016 - Special Session on Applications of Modeling and Simulation to Climatic Change and Environmental Sciences

370

urban containment boundaries, intra-urban vacant

lots, rivers, roads and other physical characteristics of

the land. In addition, workplaces are generated, the

attributes of the agents are set up, and the profit (or

opportunity cost) that the land management program

of the urban area in 2010 generates, is estimated.

4.2 Description of Execution

The simulation is developed from the execution of

four essential processes. The first and most important

has to do with population growth, since it establishes

the emergence of new individuals within the virtual

world. The population growth is accompanied by an

increasing demand for residential and commercial

land. With this, the second process starts, in which

people analyze the characteristics of the soil around

them in order to decide where to settle. New agents

randomly choose a set of possible areas for

inhabitation (cells), they evaluate the utility offered

by each cell and choose to settle in the area that

maximizes their utility.

Once the person has selected a space to establish,

the construction method is activated, which indicates

that the land has been inhabited and, as a result, is

given a new color that shows its urbanization. The

transformation of rural to urban causes an update of

the quality and distance attributes, not only in the new

inhabited area but also in the neighborhood.

Finally, the model allows the estimation of the

CBA of a land management program, as well as the

opportunity cost that would imply the absence of one.

The information about the POET’s costs and benefits

in the period 2010-2030 is introduced to the model

through a file (.csv) and a Social Discount Rate that

can be modified by the user is employed. At the end

of the simulation, the results of the program

performance indicators, the Benefit-Cost ratio and the

Net Present Value are obtained. If not, changes in the

cost of opportunity throughout the period are plotted,

and at the end of it, information is offered about the

monetary losses in terms of revenue which would

impact the inhabitants of the municipality.

5 RESULTS

The main purpose of the tool is to simulate the effect

of the implementation of land management policies

on land use change. At the same time, SIMBACUS

shows what the evolution of urban settlements would

be in the absence of such regulations. In this section,

a baseline simulation is developed, as well as two

strategic scenarios of population growth in Pachuca

de Soto. Each case incorporates a Cost-Benefit

analysis which determines whether a land

management program is feasible or not for society.

Furthermore, the model also provides results of the

social losses that would occur in the absence of land

regulation.

The simulation results are divided into two

sections. The first sets out two baseline scenarios for

the evolution of the urban area, where the only

difference between them is the existence of land

management policies. In the second section, the

scenarios that result from the modification in the

conditions of population growth at 0.43% and 0.17%

are described. In this last section it is assumed that the

municipality implemented a land management

program.

5.1 Baseline Simulation: Population

Growth with POET

Implementation

The simulation is defined by the initial conditions of

the model. This first scenario establishes restrictions

on land use change by implementing a land

management program. The base year is 2010,

Pachuca de Soto has a population of 267,862

inhabitants and 539 economic units. The average

population growth is 0.3% every 6 months and 4% for

economic units every three years. The crowding

index for the municipality is set at 3.3 throughout the

whole period and the same population density is

preserved. In addition, people’s priority for distance

and quality is determined as the same, both criteria

are important for maximizing their utility. To

estimate the CBA of the POET, a SDR of 12% is

defined (SHCP, 2014).

Figure 3 shows the map with SIMBACUS’s initial

conditions. Specifically, urban estates of the

municipality of Pachuca are shown in gray and

neighboring municipalities in brown. Soil suitable to

be urbanized is shown in orange, while white

characterizes spaces that aren’t fit for habitation.

Other important aspects also considered are roads and

rivers, represented by black and blue lines

respectively. Finally, economic units (red dots) are

located within the urban area of Pachuca, as well as

areas categorized as vacant lots (pink areas).

The results of this simulation indicate that with a

baseline population growth of 0.3% average per

semester, the municipality would have 303,773

inhabitants by the end of the period (2030). This

means that there would be 92,052 homes with a

crowding index of approximately 3.3. The assumed

demographic dynamism would cause previously

Agent based Modeling Simulation for Land Use Change and Cost-Beneﬁt Analysis of Land Management Policies

371

Figure 3: SIMBACUS’ initial conditions.

empty spaces to be inhabited now by people and

companies. In the first instance, agents would occupy

areas within the urban range currently categorized as

vacant lots. Afterwards, they would settle in spaces

around the urban area, extending it to 21 km

in 2030.

The results of the CBA show that the NPV of the

program would be of 2,284.478 million pesos and

would have a benefit-cost ratio of 1.20, so is possible

to say that land management policies would generate

social benefits over a period of 21 years (see table 1).

Table 1: Results of Simulation I.

Parameter Value

Total Population 303,773

Total Homes 92,052

New Economic Units 168

Urban Area Growth 21 km

Net Present Value

(NPV)

2,248.478 million pesos

Benefit – Cost ratio 1.20

Figure 4: Results of Simulation I. Yellow circles are new

economic units, dark-gray areas are new urbanized areas.

For all other colors, please refer to Figure 3.

Figure 4 shows that the distribution of the

population and new workplaces would be

implemented in an orderly manner, since occupied

spaces are those that meet the physical

characteristics to be urbanized. This suggests that

the population could be living in less risky areas

without causing damage to the ecosystems that still

persist in the region.

5.2 Baseline Simulation: Population

Growth without the

Implementation of a POET

The following simulation considers the same initial

conditions as the previous one, but with no land

regulation. This implies an opportunity cost, which is

represented through the household’s income losses,

as well as the deterioration of some natural areas. By

keeping the same rates of population and economic

unit growth, you can see that change occurs mainly in

the distribution of population, as agents decide to

settle in areas that don’t meet the physical

characteristics to be urbanized (see Fig. 5).

The lack of a land management program could

also have negative effects on household income,

especially for those living in areas of extreme events.

The results show that this would be a social

opportunity cost, since per square kilometer there

would be an average loss of $171,490 pesos

biannually, and of $13.4 million pesos at the end of

the period (see Table 2).

Table 2: Results of Simulation II.

Parameter Value

Total Population 303,773

Total Homes 92,052

New Economic Units 168

Urban Area Growth 21 km

Opportunity Cost (Monetary Income) 13.4 million pesos

MSCCES 2016 - Special Session on Applications of Modeling and Simulation to Climatic Change and Environmental Sciences

372

Figure 5 shows that much of the urban growth

occurs in the north of the municipality, which means

that people would occupy areas where woodland

vegetation predominates. This situation could lead to

the loss of natural resources that are essential for the

maintenance of ecological balance. Also, it is possible

to see that new homes would be located in areas of

high and medium risk.

Figure 5: Results of Simulation II. Yellow circles are new

economic units, dark-gray areas are new urbanized areas.

For all other colors, please refer to Figure 3.

5.3 Strategic Scenarios: Population

The capital of the state of Hidalgo is located in the

municipality of Pachuca de Soto. Therefore, an

accelerated population growth can lead to a large

expansion of the urban area and the absorption of

peripheral locations (IMIP, 2009). For this exercise,

the 2010 population (267,862 inhabitants) is taken as

a baseline. Modifications are made based on standard

deviation values (±) of the average growth rate that

are proposed by CONAPO. The model shows

biannual information, so the increases and decreases

in population growth have the same temporality. In

addition, in all the scenarios the implementation of a

land management policy is considered.

5.3.1 Population Growth 1 (Pgr = 0.43%)

The first scenario assumes a dynamic growth as a

result of investments and projects that are planned for

the area, such as the Bicentennial Refinery, the

PLATAH and the Hidalgo projects. From this it is

assumed that there will be a strong impact on

population growth (IMIP, 2009) and the biannual

average rate of growth is proposed to increase by

0.43%. The existence of an Ecological Land Zoning

Program (POET), an initial population of 267,862

inhabitants and 539 economic units are set as the

initial conditions for the simulation. Their respective

growth rates are 0.43% per semester and 4% every

three years. The crowding index is set at 3.3 and the

quality/distance priority is considered the same. The

CBA of the program is estimated with a Social

Discount Rate of 12%.

SIMBACUS results suggest that an increase in

population growth would imply that the population of

the municipality will be of 320,757 inhabitants in 20

years. This means that there would be 52,895 more

people than in the baseline scenario, as a result of

investment circumstances and the important

migratory flow towards the metropolitan area of

Pachuca (IMIP, 2009). On housing issues, it is

estimated that with a 3.3 crowding index, 97,199

households would be needed, which would cause the

urban area to reach 29 km

(see Table 3).

Table 3: Results of Simulation III.

Parameter Value

Total Population 320,757

Total Homes 97,199

New Economic Units 168

Urban Area Growth 29 km

Net Present Value

(NPV)

2,284.47 million pesos

Benefit – Cost ratio 1.20

The dynamic increase of population would

generate a more rapid expansion of the urban area,

which would develop in an orderly manner; this is

because people would be located in areas with the

physical conditions for a better urban development

according to the POET (see Figure 6). Furthermore,

through the CBA it can be concluded that these

programs would generate a social benefit, which

means that public resources would be properly

invested. Under this scenario, population growth

would also produce a fusion between the existing

urban sprawls of Pachuca and Mineral de la Reforma.

Figure 6: Results of Simulation III.

5.3.2 Population Growth 2 (PGR = 0.17%)

The following scenario is performed with the goal of

having a setting with a lower biannual population

Agent based Modeling Simulation for Land Use Change and Cost-Beneﬁt Analysis of Land Management Policies

373

growth rate. It is assumed that population control

policies are implemented while the initial conditions

are similar to the previous case. However, the

population growth rate is set at 0.17%.

The results indicate that a reduction of population

growth could lower the need for spaces to be

urbanized, since the increase in this type of land

would be only of 13 km

. Under this scenario, at the

end of 2030 the total population of the municipality

would be of 287,669 people and 87,172 homes would

be required (see Table 4).

Table 4: Results of Simulation III.

Parameter Value

Total Population 287,669

Total Homes 87,172

New Economic Units 168

Urban Area Growth 13 km2

Net Present Value

(NPV)

2,284.47 million pesos

Benefit – Cost ratio 1.20

Figure 7 shows that the population occupies

mostly vacant lots within the existing urban area.

There is an expansion of the urban area in the contour

of the current polygon; which is much lower than in

previous cases. It is important to note that people

settle in areas where there is a roadway, which could

suggest that transportation networks are an important

factor for urbanization.

Figure 7: Results of Simulation III.

6 CONCLUSIONS

The study of the effectiveness of land management

programs and the analysis of their profitability

contributes to decision making in public policy. The

main objective of this paper is to analyze the

implementation of an Ecological Land Zoning

Program (POET) in a municipality with more than

100,000 inhabitants that presents evidence of extreme

events. To do this, an Agent Based Modeling

Simulation for Land Use Change (SIMBACUS) is

developed, which allows studying the interaction

between individual behavior and environmental

characteristics. The model runs on the Netlogo 5.2.0

platform (Wilensky, 1999) for the period of 2010-

2030 and aims to be a useful tool for urban

development issues, especially in highly populated

municipalities that have evidence of extreme events.

One of its main features is that not only does it show

the evolution of human settlements, but also offers the

results of the Cost-Benefit Analysis of implementing

a land management program.

SIMBACUS provides spatial and social elements

that allow the configuration of a simulation of urban

growth. At the same time, it takes into account the

individual behavior of agents based on economic

theory, from the maximization of their utility. One of

the main findings of this study is that the

implementation of land management policies could

cause urban area growth to occur in a more orderly

way. In addition, CBA suggests that such actions

could generate a social benefit in terms of household

income, as well as the preservation of natural

resources. From the Cobb-Douglas function it was

possible to see that soil quality and distance to the

workplace are factors that could affect mobility and

land distribution of people within urban areas.

Nevertheless, future work includes the consideration

of other georreferenced factors in order to obtain

more reliable results.

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