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Agri-environmental schemes: Adverse selection, information structure and delegation

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  • Canton, Joan
  • De Cara, Stéphane
  • Jayet, Pierre-Alain

Abstract

This work analyzes alternative designs of agri-environmental schemes and how different incentive mechanisms impact on their overall efficiency. It focuses on spatial targeting and delegation in an asymmetric information context. First, the optimal contract under adverse selection is modeled. This model underlines the trade-off between information rents and allocative efficiency. The impact of spatial targeting is then addressed. Disaggregated information structures increase the optimal efforts asked of the farmers. It may also involve higher information rents and may reduce the net contributions of some farmers. Finally, the consequences of delegating authority within the principal-agent relationship are investigated. The results illustrate that spatial targeting and delegation, when combined, have asymmetric impacts on farmers' payoffs.

Suggested Citation

  • Canton, Joan & De Cara, Stéphane & Jayet, Pierre-Alain, 2009. "Agri-environmental schemes: Adverse selection, information structure and delegation," Ecological Economics, Elsevier, vol. 68(7), pages 2114-2121, May.
  • Handle: RePEc:eee:ecolec:v:68:y:2009:i:7:p:2114-2121
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    Cited by:

    1. Helin, Janne, 2009. "Does geography matter in nutrient abatement? Bioeconomic model of heteregoneus farm nutrient loads," 2009 Conference, August 16-22, 2009, Beijing, China 51693, International Association of Agricultural Economists.
    2. Thomas Coisnon & Walid Oueslati & Julien Salanié, 2013. "Spatial targeting of agri-environmental policy and urban development," Working Papers halshs-00795815, HAL.
    3. 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.
    4. Michael A. Arnold & Joshua M. Duke & Kent D. Messer, 2013. "Adverse Selection in Reverse Auctions for Ecosystem Services," Land Economics, University of Wisconsin Press, vol. 89(3), pages 387-412.
    5. Mireille Chiroleu-Assouline & Sebastien Roussel, 2014. "Payments for Carbon Sequestration in Agricultural Soils: Incentives for the Future and Rewards for the Past," CEEES Paper Series CE3S-01/14, European University at St. Petersburg, Department of Economics.
    6. repec:kap:enreec:v:68:y:2017:i:4:d:10.1007_s10640-016-0055-x is not listed on IDEAS
    7. 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).
    8. Russell, Noel P. & Sauer, Johannes, 2012. "Efficient Procurement of Ecosystem Services – Adverse versus Beneficial Selection," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134988, Agricultural Economics Society.
    9. Paul J. Burke, 2016. "Undermined by Adverse Selection: Australia's Direct Action Abatement Subsidies," Economic Papers, The Economic Society of Australia, vol. 35(3), pages 216-229, September.
    10. Russell, Noel P. & Sauer, Johannes, 2012. "Beneficial selection and the efficient procurement of ecosystem services," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124894, Agricultural and Applied Economics Association.
    11. Uthes, Sandra & Sattler, Claudia & Zander, Peter & Piorr, Annette & Matzdorf, Bettina & Damgaard, Martin & Sahrbacher, Amanda & Schuler, Johannes & Kjeldsen, Chris & Heinrich, Uwe & Fischer, Holger, 2010. "Modeling a farm population to estimate on-farm compliance costs and environmental effects of a grassland extensification scheme at the regional scale," Agricultural Systems, Elsevier, vol. 103(5), pages 282-293, June.
    12. Kuhfuss, Laure & Jacquet, Florence & Preget, Raphaële & Thoyer, Sophie, 2012. "Le dispositif des MAEt pour l’enjeu eau : une fausse bonne idée ?," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 93(04), pages 395-422, December.
    13. Thomas Coisnon & Walid Oueslati & Julien Salanié, 2012. "Agri-environmental policy and urban sprawl patterns: A general equilibrium analysis," Working Papers halshs-00753221, HAL.

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