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Use of Compliance Rewards in Agri-environmental Schemes

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  • Yuki Yano
  • David Blandford

Abstract

Ensuring that farmers comply with the terms of agri-environmental schemes is an important issue. This paper explores the use of a 'compliance-reward' approach under heterogeneous net compliance costs with respect to cost-share working lands programmes such as the Environmental Quality Incentives Program (EQIP) in the United States. Specifically, we examine the use of a reward under asymmetric information and output price uncertainty. We examine two possible sources of financing under the assumption of budget neutrality: (i) funds obtained by reducing monitoring effort; and (ii) money saved by reducing the number of farmers enrolled. We discuss the advantages and disadvantages of each source of funding and analyse these numerically for both risk-neutral and risk-averse farmers. We also examine the trade-off between increased expenditure on monitoring effort and compliance rewards when additional budgetary resources are available. We show that under certain conditions a compliance reward can increase compliance rates. For risk-averse farmers, however, conditions that ensure a positive outcome become more restrictive. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The Agricultural Economics Society.

Suggested Citation

  • Yuki Yano & David Blandford, 2009. "Use of Compliance Rewards in Agri-environmental Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 530-545.
  • Handle: RePEc:bla:jageco:v:60:y:2009:i:3:p:530-545
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    Cited by:

    1. Sauer, Johannes & Walsh, John, 2011. "ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108963, Agricultural Economics Society.
    2. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Behavioural Change through Agri-Environmental Policies ? – A Distance Function based Matching Approach," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134783, Agricultural Economics Society.
    3. Sauer, Johannes & Walsh, John & Zilberman, David, 2013. "Agri-Environmental Policy Effects at Producer Level - Identification and Measurement," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156099, German Association of Agricultural Economists (GEWISOLA).
    4. repec:kap:enreec:v:69:y:2018:i:1:d:10.1007_s10640-016-0072-9 is not listed on IDEAS
    5. Cho, Wonjoo & Blandford, David, 2015. "Bilateral information asymmetry and irreversible practice adoption through agri-environmental policy: an application to peat land retirement in Norway," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204212, Agricultural Economics Society.
    6. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Producer Behaviour and Agri-Environmental Policies: A Directional Distance based Matching Approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124877, Agricultural and Applied Economics Association.
    7. repec:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x16500338 is not listed on IDEAS

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