The regulation of non-point source pollution and risk preferences: An experimental approach
AbstractMany environmental problems, notably arising from agriculture, can be classified as non-point source pollution problems. In this paper we present results of an experimental study on the performance of three mechanisms designed to deal with such problems: collective fining, random fining, and a tax-subsidy scheme. We find that the fining schemes induce under-abatement, a feature being enforced with experience. We further elicit the participants' risk attitude and show that the performance of collective fining is not affected by the subjects' risk preferences. Under a system based on random fining the performance of the mechanism worsens in the presence of risk seeking subjects. However, coordination on over-abatement under the tax-subsidy can be alleviated if subjects are risk averse.
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Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 73 (2012)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/ecolecon
Non-point source pollution; Environmental policy; Risk attitude; Economic experiments;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
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