Land market mechanisms for preservation of space for coastal ecosystems

Abstract

This paper presents an agent-based model of a land market, which is used to explore the effects of land taxes on the land use in a coastal zone. The model simulates the emergence of land prices and urban land patterns from bottom-up via interactions of individual agents in a land market. A series of model experiments helps visualize and explore how economic incentives in a land market may influence the spatial distribution of land prices and urban developments, either leaving space for coastal ecosystems or not. We demonstrate that economic incentives do affect urban form and pattern, land prices and welfare measures. However, they may not always be sufficient to reduce the pressure on coastal ecosystems. Our results show that preservation of ecosystems may involve difficult trade-offs between economic and ecological priorities, as well as between healthy ecosystems and social equity. We also show how conventional economic modelling based on a representative agent, which is usually employed by policy makers, overestimates both environmental benefits and economic costs associated with the tax meant to preserve coastal ecosystems.