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The collective provision of environmental goods: a discussion of contractual issues

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  • Jeremy Franks

Abstract

Although many species have a larger range than the average sized farm, most agri-environment schemes (AES) involve contracts with individual land managers. However, in the Netherlands 'collective contracts' allow neighbouring land managers to co-ordinate environmental management at the landscape rather than the farm-scale. Findings from a study of Dutch Environmental Co-operatives (ECs) are used to discuss how collective contracts for environmental goods affect the following contractual issues associated with AES: transaction costs, asymmetry of information, the 'hold-up', 'end-of-contract' and 'assurance' problems and incomplete contracts. As a prerequisite for effective collective contracts requires land managers holding communal aims and interests, the techniques used by ECs to form like-minded groups are also reviewed. Government support for collective contracts can be justified because they: (1) reduce transaction costs; (2) improve ecological effectiveness; and (3) increase the policy options available. Government support for ECs can be justified (1) as compensation to members for the additional costs they incur co-ordinating group actions; (2) to assist collectives buy-in expert advice; and (3) because they increase participation rates by (a) helping counter the 'hold-up', 'assurance' and 'incomplete contract' problems, and (b) by framing decisions in ways that shift attitudes, values and aspirations among members.

Suggested Citation

  • Jeremy Franks, 2011. "The collective provision of environmental goods: a discussion of contractual issues," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 54(5), pages 637-660.
  • Handle: RePEc:taf:jenpmg:v:54:y:2011:i:5:p:637-660 DOI: 10.1080/09640568.2010.526380
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    References listed on IDEAS

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    1. Frances Ruane & Xiaoheng Zhang, 2007. "Location Choices of the Pharmaceutical Industry in Europe after 1992," The Institute for International Integration Studies Discussion Paper Series iiisdp220, IIIS.
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    Cited by:

    1. Nick Hanley & Simanti Banerjee & Gareth D. Lennox & Paul R. Armsworth, 2012. "How should we incentivize private landowners to ‘produce’ more biodiversity?," Oxford Review of Economic Policy, Oxford University Press, vol. 28(1), pages 93-113, Spring.
    2. Laure Kuhfuss & Raphaële Préget & Sophie Thoyer & Nick Hanley, 2015. "Nudging farmers to sign agri-environmental contracts: the effects of a collective bonus," Discussion Papers in Environment and Development Economics 2015-06, University of St. Andrews, School of Geography and Sustainable Development.
    3. Villanueva, Anastasio J. & Rodriguez-Entrena, Macario & Arriaza, Manuel & Gomez-Limon, Jose A., 2015. "Matching supply-side and demand-side analyses for the assessment of agri-environmental schemes: The case of irrigated olive groves of southern Spain," 2015 Conference, August 9-14, 2015, Milan, Italy 211919, International Association of Agricultural Economists.
    4. Villanueva, Anastasio J. & Rodríguez-Entrena, Macario & Gómez-Limón, José A. & Arriaza Balmón, Manuel, 2014. "Agri-environmental schemes in olive growing: farmers’ preferences towards collective participation and ecological focus areas," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182918, European Association of Agricultural Economists.

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