Agricultural soils are a major untapped carbon sink. Carbon farming is emerging as a promising practice for tapping this potential. Smallholder farmers, who dominate agriculture across South Asia and sub-Saharan Africa, are key to scaling climate mitigation via carbon farming. It is ironic that real-world carbon programs largely fail to reach them. We study this important gap through the lens of contract design. An aggregator offers a single pooled contract to a heterogeneous population of smallholder farmers who have private adoption costs (adverse selection) and exert unobserved effort (moral hazard), with agronomic outcomes evolving over multiple seasons. We formulate this evolving contracting problem as a POMDP and use reinforcement learning to learn a dynamic profit-maximising contract. We analyse the performance of the aggregator under various conditions. We find that a profit-maximising aggregator does not merely inherit the exclusion of smallholders, it amplifies it. On large farms the aggregator realises 87.7% of achievable adoption, against only 8.2% on smallholdings. Per-hectare Measurement, Reporting and Verification (MRV) costs fall as farm size rises, and the aggregator's pooling contract compounds this gradient rather than offsetting it. A counterfactual that makes MRV costs purely area-proportional eliminates this disparity. Our results and simulation can guide contract and policy design that opens carbon income to smallholders while enabling agricultural soils to contribute to climate mitigation at scale.
To understand complex system dynamics in dairy farming, it is essential to use modeling tools that capture farm heterogeneity, social interactions, and cumulative environmental impacts. This study proposes an agent-based modeling (ABM) framework to simulate nitrogen management and the adoption of low-emission fertilizer across 295 Irish dairy farms over a 15-year period. Using empirical data, the model represents farm communication through a social network, capturing peer influence and discussion group dynamics, where adoption probabilities are driven by social contagion, farm-scale characteristics, and policy interventions such as subsidies and carbon taxes. The framework estimates sectoral greenhouse gas emissions, cumulative abatement, and private-social cost trade-offs, using Monte Carlo simulation and sensitivity analysis to quantify uncertainty. The model shows strong agreement with observed adoption trajectories (R2=0.979, RMSE = 0.0274) and is validated against empirical data using a Kolmogorov-Smirnov test (D = 0.2407, p < 0.001), indicating its ability to reproduce structural patterns in adoption behavior. Adoption dynamics are further characterized using a logistic diffusion model consistent with Rogers' innovation diffusion theory, capturing progression from early adoption to a saturation level of approximately 91%. By framing decarbonization as a socio-technical diffusion process rather than a purely economic optimization problem, this study provides an in silico policy laboratory for evaluating the robustness and diffusion speed of climate mitigation strategies prior to implementation.
Surya Jayakumar, Kieran Sullivan, John McLaughlin +2
We study the consequences of information asymmetries and misaligned incentives in settings with multiple independent agents. We model an interaction between a Sender, who holds vital private information but cannot act, and a Receiver, who must make decisions but is dependent on the Sender's information. We find that the Sender learns an optimal communication strategy that the Receiver reliably acts on. Importantly, this strategy is highly sensitive to the degree of conflict in the agents' rewards and the amount of environmental information the Receiver can already observe. We introduce a mechanism allowing the agents to form linear contracts, where a price is established for the information. We demonstrate that the Sender learns to use these payment structures to improve its rewards, though this comes at a cost of "fairness" between agents as the Sender is able to extract much of the Receiver's surplus. This raises questions about fairness, contract design, and learning in the context of multi-agent systems.
We study repeated contract design when a principal observes outcomes but not the actions that generate them. The principal may use any bounded outcome-contingent payment vector, and the agent's best response can make expected profit discontinuous in those payments. For every fixed number m≥2 of outcomes, the minimax regret over T rounds is of order Tm/(m+1), up to logarithmic factors. The upper bound allows arbitrary action spaces and agent heterogeneity, without smoothness or monotone-surplus assumptions. Its key is an effective-dimension reduction that the benchmark can be normalized even when fixed tie-breaking is not shift invariant, after which revealed preference yields a monotone response map in payment-difference coordinates. A learning policy built on a Lipschitz parametrization of this map attains the rate using only observed outcome categories. The lower-bound construction accounts for how incentive losses accumulate across outcome dimensions. It shows that each additional contractible outcome creates a precise and unavoidable increase in the worst-case cost of learning.