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Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes

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Abstract

This paper examines the issue of incentive compatibility within environmental stewardship schemes, where incentive payments to farmers to provide environmental goods and services are based on foregone agricultural income. The particular focus of the paper is land heterogeneity, either of agricultural or environmental value, leading to divergence between the actual and socially optimal level of provision of environmental goods and services. Given land heterogeneity, such goods and services are likely to be systematically over‐ or under‐provided in response to a flat rate payment for income foregone.

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  • Rob Fraser, 2009. "Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 190-201, February.
    • Handle: RePEc:bla:jageco:v:60:y:2009:i:1:p:190-201
    DOI: 10.1111/j.1477-9552.2008.00183.x
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    3. David R. Harvey, 2003. "Agri‐environmental Relationships and Multi‐functionality: Further Considerations," The World Economy, Wiley Blackwell, vol. 26(5), pages 705-725, May.
    4. Campbell, Danny, 2007. "Combining mixed logit models and random effects models to identify the determinants of willingness to pay for rural landscape improvements," 81st Annual Conference, April 2-4, 2007, Reading University, UK 7975, Agricultural Economics Society.
    5. Danny Campbell, 2007. "Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random‐Effects Models," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 467-483, September.
    6. D. Roberts & J. Froud & R. W. Fraser, 1996. "Participation In Set Aside: What Determines The Opting In Price?," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 89-98, January.
    7. Nick Hanley & Sergio Colombo & Pamela Mason & Helen Johns, 2007. "The Reform of Support Mechanisms for Upland Farming: Paying for Public Goods in the Severely Disadvantaged Areas of England," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 433-453, September.
    8. Rob Fraser, 2002. "Moral Hazard and Risk Management in Agri‐environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 475-487, November.
    9. JunJie Wu & Bruce A. Babcock, 1996. "Contract Design for the Purchase of Environmental Goods from Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 935-945.
    10. Knowler, Duncan & Bradshaw, Ben, 2007. "Farmers' adoption of conservation agriculture: A review and synthesis of recent research," Food Policy, Elsevier, vol. 32(1), pages 25-48, February.
    11. R. Fraser, 1993. "Set‐Aside Premiums And The May 1992 Cap Reforms," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(3), pages 410-417, September.
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    13. Rob Fraser & Hild Rygnestad, 1999. "An Assessment of the Impact of Implementing the European Commission's Agenda 2000 Cereal Proposals for Specialist Wheatgrowers in Denmark," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 328-335, May.
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