Cathal O’Donoghue

The SMILE Model: Construction and Calibration

In the previous chapter we reviewed the use of spatial microsimulation models for policy analysis and reviewed the type of applications for which the methodology has been employed. In the absence of spatially representative micro-data in Ireland, we require a technique for generating this data and hence the microsimulation model. In this chapter we describe a number of methodologies for doing this and evaluate the performance of methods chosen for our ‘Simulation Model of the Irish Local Economy’ (SMILE). To recap, the primary focus of the SMILE framework is to assess the socio-economic impacts of policy or economic changes. The motivation for the model is to assess the impact of these changes in the context of agricultural, rural and environmental policy in addition to the more standard analysis of economic and social policy change.

A Review of Microsimulation for Policy Analysis

There are a wide range of methodological frameworks and techniques for policy evaluation and socio-economic impact assessment. A useful distinction is to divide the literature on such models by the level of resolution adopted. It is then possible to identify macro, meso and micro approaches. Macro models, dealing with whole countries or nations, are most common in economics and social policy. Meso-scale models, where countries or nations are split into regional zones, have a longer tradition in regional science, planning and geography (McCann 2001; Stimson et al. 2006). For example, many former macro-scale models such as input–output techniques are now increasingly appearing in the literature at the regional scale. Quantitative geographers have tended to build meso-scale models for smaller geographical regions, such as small-area census-based zoning systems within cities (Wilson 1974; Foot 1981; Stillwell and Clarke 2004; Fotheringham and Rogerson 2009). These types of model have a long history of applied success but the complex dynamics which underlie social and economic change, as emphasised in Chap. 2, can produce very different results within different small-area localities and even within individual households (or firms). In particular, it is useful to be able to understand, estimate or predict which localities, households or individuals (given their demographic and socio-economic characteristics) are most likely to benefit from a change in socio-economic or environmental policies. Thus, it could be argued that policy relevant modelling is a challenging research area which is well suited to a modelling framework which emphasises household or individual-level processes at the local or micro level rather than aggregated processes at the macro/meso-level.

Using the EU-SILC to model the impact of the economic crisis on inequality

In this paper we attempted to chart the impact of the early part of Ireland’s economic crisis from 2008–2009 on the distribution of income. In order to decompose the impact of changes in different income components, we utilised a microsimulation methodology and the EU-SILC User Database. This simulation based methodology involved the disaggregation of the 6 main benefit variables in the EU-SILC into 17 variables for our tax-benefit model. Validating, our results were positive, giving us confidence in our methodology. We utilised the framework to model changes in the level of income inequality from the period just before the crisis in 2004 to the depth of the worst year of the crisis in 2009. In terms of the impact of the economic crisis, we found that income inequality fell in the early part of the crisis modelled in this paper. Much of this change was due to rising inequality of market incomes, (even when discounting unemployment). This was due to the differential effect of the downturn on different sectors where some sectors such as the construction and public sectors were significantly hit, while the international traded sectors have been relatively immune from the downturn and have seen continued growth. The impact of the tax-benefit system has been to mitigate this upward pressure, with a gradual rise in the redistributive effect of the tax-benefit system driven by an increase in demand on the benefits side and increased progressivity on the tax side.Jel codesH22, H55, C15

Validation Issues and the Spatial Pattern of Household Income

Chapter 4 described a methodology for the creation of a dataset containing micro-units, their incomes and labour market characteristics within a spatial context using spatial microsimulation methods. As static spatial microsimulation is essentially a method to create spatially disaggregated microdata that previously did not exist, an important issue relates to the validation of the synthetic data generated (Voas and Williamson 2001a). Validation techniques examine model outputs in systematic ways to reveal deficiencies/errors in the model outputs. As such, model validation forms an integral part of the overall development and application of any model. Oketch and Carrick (2005) point out that it is only through validation that the credibility and reliability of a model can be assured.

The Location Economics of Biomass Production for Electricity Generation

The opening decade of the twenty-first century has been marked by substantial increases in the cost of fossil-fuel based energy. This increase in energy costs has been driven by a variety of factors including the diminishing availability of these resources, political uncertainty in some of the major fossil-fuel producing regions of the world and a rapidly increasing demand from growing economies such as China and India (Clancy et al. 2008). Ireland, given its limited availability of domestic fossil-fuel, is particularly vulnerable to the uncertainty regarding future energy supply and prices. Furthermore, concerns over man-made greenhouse gas (GHG) emissions and their potential impact on global climate change have fostered a desire in many countries for substitution of fossil-fuels which produce high levels of GHG emissions with renewable energy sources. For example, the European Union (EU) has proposed that 20 % of EU energy consumption should be from renewable energies by 2020 (Directive 2009/28/EC). As a result, Irish energy policy is set firmly in the global and EU context which has put energy security and climate change among the most urgent international challenges (Department of Communications and Marine and Natural Resources 2007). This combination of economic, regulatory and environmental pressures heightens Ireland’s need to identify viable alternative renewable energy sources.

Spatial Access to Health Services

Recent years have seen a renewed interest in a more integrated planning approach for service provision. Previously, government investment to improve access to public services has been prioritised either on the basis of the spatial distribution of services or on the availability of transport services. However, ease of access to a variety of services, such as retail, health and recreational services is increasingly recognised as an integral part of daily life and that by increasing individual level access to services other issues such as social exclusion, physical isolation and deprivation can be ameliorated. Thus, a more systematic approach to measuring accessibility would allow scarce public funding to be targeted more effectively at tackling those problems. As a result, the debate on accessibility now centres on a range of issues including:

Modelling Greenhouse Gas Emissions from Agriculture

Agriculture in a developed country such as Ireland uses intensive tillage systems, high energy and large fertilizer applications, resulting in fossil-fuel based emissions, reductions in soil carbon, and emissions of nitrous oxides. In addition, animal herds emit high methane levels. Accompanying this is the fact that environmental policy within agriculture and its effects on the revenue and output of Irish farmers is an important issue in Ireland due to the relative strength of the agriculture sector. As discussed in Chap. 2, even though Ireland’s sustained strong economic performance since the mid-1990s benefited other sectors more than agriculture, the agri-food sector as a whole still accounted for an estimated 8.6 % of GDP in 2005. Primary agriculture remains more important to the Irish economy than is the case in most other EU member states. Irish agriculture accounted for 2.7 % of GDP at market prices in 2005 in Ireland, compared to an EU average of 1.6 %.

Creating a Spatial Microsimulation Model of the Irish Local Economy

The Simulated Model of the Irish Local Economy (SMILE) is a spatial microsimulation model designed to analyse the relationships between regions and to project the spatial implications of public policy and economic development on welfare in rural areas. The development of this model was motivated by the lack of spatially referenced socio-economic and demographic microdata to facilitate analyses of welfare in Ireland. This chapter provides an overview of procedures carried out in both the creation and application of SMILE. In doing so, a new data synthesis procedure to improve computational efficiency is presented, which we call quota sampling. Synthesis results are validated according to internal totals, with a calibration procedure implemented to align welfare distributions to known external totals. This model is then applied to analyse the spatial incidence of disposable income and welfare redistribution in Ireland. It is found that Irish tax-benefit policy is effective in redistributing income from the greater Dublin area and south of Ireland to the rest of the country.

Forestry in Ireland: an examination of individuals' preferences and attitudes towards the non-market benefits of forests.

In addition to their importance for timber production, Irelands forests represent a multi-faceted resource that enhances the environment, promotes biodiversity, sequesters atmospheric carbon and facilitates recreational activity. Within this context, the overall aim of this paper is to examine some of the non-market – or rather non-timber production related – benefits of forests. Forestry investment has been identified as a means of promoting economic development in rural areas. The survey results presented here suggest that there are likely to be substantial public good benefits to the promotion of the forestry sector. More specifically, given the frequency of visits nationally, forest parks are shown to be a recreational resource which is highly valued by the general public. Results suggest, however, that individuals are not a homogeneous group with regard to their use of forest parks as there are significant differences between likely users and non-users. In terms of visual amenity, the general public...

Modelling the Spatial Pattern of Rural Tourism and Recreation

One of the key strengths of SMILE is its facility to combine spatial data from many diverse sources in order to examine economic, social and environmental issues of importance to the rural economy in Ireland. Indeed, spatial context lies at the heart of many aspects of the rural economy and SMILE, as a modelling and data infrastructure, can be usefully applied in conjunction with techniques such as geographic information systems (GIS) analysis and microeconometrics to examine such issues. One such area of interest is rural tourism. Rural tourism is now an important contributor to rural development in Ireland given the long term decline of agriculture, particularly in its potential for stimulating employment and providing a viable option for off-farm diversification.