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Evaluating the potential contribution of contract auctions to Agri-Environmental Policy efficiency: A simulation model for Emilia-Romagna (Italy)

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  • Viaggi, Davide
  • Raggi, Meri
  • Gallerani, Vittorio

Abstract

Auctions are a potentially suitable policy tool for increasing the efficiency of Agri- Environmental Schemes (AES) through an improved allocation of contracts. In theory, through the auction mechanism, farmers have incentives to reveal their compliance costs, helping to reduce information rents and increase policy cost-effectiveness. The aim of this paper is to simulate the potential contribution of auction mechanisms to the efficiency of AES in Emilia-Romagna (Italy). The results show advantages for auctions compared with traditional flat rate payments based on average compliance costs. However, their performance is worse than flat payments based on marginal compliance costs.

Suggested Citation

  • Viaggi, Davide & Raggi, Meri & Gallerani, Vittorio, 2010. "Evaluating the potential contribution of contract auctions to Agri-Environmental Policy efficiency: A simulation model for Emilia-Romagna (Italy)," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 11(2), June.
  • Handle: RePEc:ags:aergaa:118671
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    References listed on IDEAS

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    1. Uwe Latacz-Lohmann & Carel P. C. M. Hamsvoort, 1998. "Auctions as a Means of Creating a Market for Public Goods from Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 334-345.
    2. Thilo W. Glebe, 2008. "Scoring two-dimensional bids: how cost-effective are agri-environmental auctions?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(2), pages 143-165, June.
    3. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    4. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    5. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
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    Cited by:

    1. Vergamini, Daniele & Viaggi, Davide & Raggi, Meri, 2016. "Agri-environmental measures and farmers’ rent: evaluating the potential contribution of auctions to increase the efficiency of Agri-environmental schemes in Emilia-Romagna (Italy)," 2016 Fifth AIEAA Congress, June 16-17, 2016, Bologna, Italy 242443, Italian Association of Agricultural and Applied Economics (AIEAA).
    2. Vergamini, Daniele & White, Benedict & Viaggi, Davide, 2015. "Agri-Environmental Policies design in Europe, USA and Australia: is an auction more cost-effective than a self-selecting contract schedule?," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207357, Italian Association of Agricultural and Applied Economics (AIEAA).
    3. Vergamini, Daniele & Raggi, Meri & Viaggi, Davide, 2013. "Evaluating the potential contribution of spatially differentiated payments to the efficiency of Agri-Environmental Measures: A resource allocation model for Emilia Romagna (Italy)," 2013 Second Congress, June 6-7, 2013, Parma, Italy 150235, Italian Association of Agricultural and Applied Economics (AIEAA).

    More about this item

    Keywords

    Auction; Contract; Agri-Environmental Policy; Information asymmetry; Agricultural and Food Policy; Environmental Economics and Policy; Q15; Q18;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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