A Synthesis on Agent-Based Impact Assessment Models from the Perspective of the EU Rural Development Policy Measures

The second pillar of the European Union’s (EU) Common Agricultural Policy (CAP) aims at supporting rural areas by meeting the economic, environmental and social challenges. To deal with these challenges, countries are faced with the question of selecting the best tools among a large set of policy instruments. The problem of choosing the best policy instruments is aggravated by the very heterogeneous character of the societal demands that differ among member countries with very different economic and institutional structures. This study aims to introduce the agent-based modelling platforms that have been widely used in the impact analysis of recent rural development policies in the EU in a comparative manner. It also aims to explain how the above-mentioned sources of heterogeneity are handled in these models. To achieve the stated objectives, the study first examines the historical development of rural development policies within the EU. Subsequently, it proceeds to analyse several agent-based platforms that have been employed for the purpose of assessing the impact of agricultural policies with respect to certain features such as integration of land market, modelling unit, decision rule, rules of exit, labour market and price formation. To conclude, it is observed that as the rural development policies are formulated on farm-basis and as farms have a heterogeneous structure within themselves, in addition, the expansion of databases and the development of empirical analysis tools and technologies have led to a shift in empirical analyses towards agent-based models. However, these modelling platforms still embody various problems, especially in terms of database adjustments and parameterization and calibration of the model.