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Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information

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Author Info
Wu, Junjie
Babcock, Bruce A.

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Abstract

Green payment programs, where the government pays farmers directly for environmental benefits, are an alternative to the current method of achieving environmental benefits which restricts farming practices in exchange for deficiency payments. This article presents a voluntary green payment program using the principles of mechanism design under asymmetric information. Information asymmetry arises because the government knows only the distribution of farmers’' production situations, rather than farm-specific information. The program is demonstrated with irrigated corn production in the Oklahoma high plains. A green payment program can reduce budget costs and pollution, while increasing the net social value of corn production.

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Publisher Info
Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 20 (1995)
Issue (Month): 02 (December)
Pages:
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Handle: RePEc:ags:jlaare:30774

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Keywords: Environmental Economics and Policy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Chang-Fu Wanglian & Arne Hallam, 1986. "Study of Productivity Changes on Individual Crops, A," Center for Agricultural and Rural Development (CARD) Publications 86-wp7, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  2. Lewis, Tracy R. & Feenstra, Robert & Ware, Roger, 1989. "Eliminating price supports : A political economy perspective," Journal of Public Economics, Elsevier, vol. 40(2), pages 159-185, November. [Downloadable!] (restricted)
    Other versions:
  3. Weymark, John A, 1987. "Comparative Static Properties of Optimal Nonlinear Income Taxes," Econometrica, Econometric Society, vol. 55(5), pages 1165-85, September. [Downloadable!] (restricted)
  4. Klaus Frohberg, 1988. "Impact of Technical Progress in Milk Production, The," Center for Agricultural and Rural Development (CARD) Publications 88-wp27, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lichtenberg, Erik, 2004. "Some Hard Truths About Agriculture and the Environment," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(1), April. [Downloadable!]
  2. Na Li Dawson & Kathleen Segerson, 2003. "Voluntary Agreements with Industries: Participation Incentives with Industry-wide Targets," Working papers 2004-06, University of Connecticut, Department of Economics. [Downloadable!]
    Other versions:
  3. Huennemeyer, Anne-J. & Rollins, Kimberly S., 2001. "Private Resource Management And Public Trust: Optimal Resource Conservation Contracts Under Asymmetric Information," Working Papers 34141, University of Guelph, Department of Food, Agricultural and Resource Economics. [Downloadable!]
  4. Feng, Hongli, 2002. "Green Payments And Dual Policy Goals," 2002 Annual meeting, July 28-31, Long Beach, CA 19697, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  5. Boisvert, Richard N. & Peterson, Jeffrey M., 2001. "Control Of Nonpoint Source Pollution Through Voluntary Incentive-Based Policies: An Application To Nitrate Contamination In New York," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 30(2), October. [Downloadable!]
  6. Siikamäki, Juha & Layton, David, 2005. "Incentive Payment Programs for Environmental Protection: A Framework for Eliciting and Estimating Landowners' Willingness to Participate," Discussion Papers dp-05-57, Resources For the Future. [Downloadable!]
  7. Blandford, David & Boisvert, Richard N., 2002. "Multifunctional Agriculture and Domestic/International Policy Choice," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 3(1). [Downloadable!]
  8. Peterson, Jeffrey M. & Boisvert, Richard N., 2001. "Designing Nonpoint Source Pollution Policies With Limited Information About Both Risk Attitudes And Production Technology," 2001 Annual meeting, August 5-8, Chicago, IL 20720, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Tun Lin & Timo Goeschl, 2004. "Biodiversity Conservation on Private Lands: Information Problems and Regulatory Choices," Working Papers 2004.55, Fondazione Eni Enrico Mattei. [Downloadable!]
  10. Hongli Feng, 2007. "Green Payments and Dual Policy Goals," Center for Agricultural and Rural Development (CARD) Publications 02-wp304, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  11. Goodhue, Rachael E. & Gruere, Guillaume & Klonsky, Karen, 2001. "Designing Green Programs To Protect Environmental Amenities: A Mechanism Design Approach," 2001 Annual meeting, August 5-8, Chicago, IL 20702, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  12. Lankoski, J. & Lichtenberg, E. & Ollikainen, M., 2008. "Agri-environmental program compliance under heterogeneous conditions," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44381, European Association of Agricultural Economists. [Downloadable!]
  13. Blandford, David & Boisvert, Richard N., 2002. "Non-Trade Concerns And Domestic/International Policy Choice," Working Papers 14615, International Agricultural Trade Research Consortium. [Downloadable!]
  14. Bontems, Philippe, 2008. "On the optimal design of income support and agri-environmental regulation," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6246, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  15. Böhringer, Christoph & Frondel, Manuel, 2002. "Assessing Voluntary Commitments: Monitoring is Not Enough!," ZEW Discussion Papers 02-62, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  16. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June. [Downloadable!] (restricted)
  17. Kathleen Segerson & JunJie Wu, 2003. "Nonpoint Pollution Control: Inducing First-best Outcomes through the Use of Threats," Working papers 2003-03, University of Connecticut, Department of Economics, revised Aug 2004. [Downloadable!]
    Other versions:
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