Green Payments and Dual Policy Goals
AbstractWe use a mechanism design framework to analyze the optimal design of green payment policies with the dual goals of conservation and income support for small farms. Each farm is characterized by two dimensions of attributes: farms size and conservation efficiency. The policymaker may not be able to use the attributes as an explicit criterion for payments. We characterize optimal policy when conservation efficiency is unobservable to policy-makers, and when farm size is also unobservable. An income support goal is shown to reduce the conservation distortion caused by asymmetric information. The cost of optimal green payment mechanisms is shown to depend crucially on whether large or small farms have greater conservation efficiency.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 2108.
Date of creation: 01 Nov 2007
Date of revision:
Publication status: Published in Journal of Environmental Economics and Management, November 2007, vol. 54 no. 3, pp. 323-335
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- 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.
- NEP-AGR-2002-10-27 (Agricultural Economics)
- NEP-ALL-2002-08-16 (All new papers)
- NEP-ENE-2002-08-16 (Energy Economics)
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