Optimal control for sustainable peatland management: subsidence, climate impacts and land use change in the Netherlands

Peatlands store large amounts of carbon, but drainage for agriculture causes the ground to sink and releases greenhouse gases. Subsidence damages buildings, roads, and ecosystems and increases the cost of keeping land dry. Managing peatlands therefore involves an intertemporal trade off: raising water tables and changing practices reduces agricultural productivity now, while delaying action raises future water management costs and climate damages as the peat stock shrinks. This thesis treats peatland management as a finite natural resource problem. It asks how peat areas should be managed over time to limit subsidence and emissions while accounting for the full social costs of climate impacts and water management. The thesis develops a forward looking economic optimization model that links hydrology, farm production, and climate damages. It begins with a simple, analytically tractable resource model that treats peat as a stock depleted by drainage. The framework is then extended to include greenhouse gas damages and their monetary valuation, making explicit the cost of emissions over time. Finally, the model allows land use to change, comparing conventional grassland with wet compatible options and full restoration, including the costs of switching. This economic model is integrated with process based subsidence and emission models to spatially apply the analysis across Dutch peat areas. The results show a consistent pattern. When climate costs are counted, water tables should generally be raised, and in many places land use should shift toward options that work with wetter soils. Intermediate choices, such as improved infiltration systems or wet compatible crops, often provide efficient long run endpoints where full restoration is not feasible. Outcomes differ across locations, so one size fits all policies are inefficient. The thesis recommends spatial targeting, supportive incentives, and adaptive pathways that help land managers move in practical steps toward wetter, lower emission systems.