Wine, climate, and institutions : exploring the role of endogenous institutional change on climate resilience with agent-based modelling

Abstract: The literature highlights how climate change might challenge the definitions of wine geographical indications (GIs) in Europe. The central issue addressed in this thesis is whether European GI viticultural systems could tackle climate change via initiating adaptive institutional change processes to relax the constraints imposed by GI production standards. To do so, drawing from institutional economics theory and literature on cooperatives and collective brand, we developed a novel agent-based model (ABM) representing an abstract GI wine production system in the European Union (EU). Using illustrative data, our model allows testing different impact scenarios driven by climate change, spatial heterogeneity, and alternative institutional settings (i.e., voting mechanism). We used the model to explore individual and collective components of climate resilience and the relationship between economic agents and their environment. We compared the average output of 100 simulations for each of the 12 different climate-landscape-institution scenarios. The inclusion of endogenous institutional change led to considerable variations in all target variables, including the emergence of complex/chaotic behaviours. It enabled the system to reduce farm exits, increase profitability and collective brand value. We showed how landscape heterogeneity has a twofold role in the climate resilience of the system. It increases individual adaptability but obstructs collective adaptive capacity through institutional change. The two different voting mechanisms considered (i.e., relative and absolute majority) did not produce any discernible result. The study highlights the importance of policies oriented to strengthening investments in intangibles and facilitating GI rule amendments, especially in sectors where cooperatives predominate due to poor intangible investments capability and other issues connected to member heterogeneity.