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Green Payments And Dual Policy Goals

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  • Feng, Hongli

Abstract

This paper analyzes the efficient design of green payments. Green payments can generate environmental benefits and support farmers' income. We extend a standard adverse selection model by incorporating dual policy goals into the design of green payments: conservation and income support. We also introduce heterogeneity into conservation efficiency type. The results of our dual-goal model and the standard adverse selection model are significantly different. The differences arise from two aspects. First, since farmers may receive green payments for conservation, or income support, or both, the incentive structure in the standard adverse selection model can be significantly altered. Second, information rent is no longer just a cost to induce truthful revelation, it also acts as income support if it goes to farmers whose income support is valued by policymakers. These two differences have important implications for the design of green payments.

Suggested Citation

  • Feng, Hongli, 2002. "Green Payments And Dual Policy Goals," 2002 Annual meeting, July 28-31, Long Beach, CA 19697, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea02:19697
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    Cited by:

    1. Emmanuelle Quillérou & Rob Fraser, 2010. "Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Stewardship Scheme Design Reduce Adverse Selection?," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 369-380.
    2. Lewis, David J. & Plantinga, Andrew J. & Nelson, Erik & Polasky, Stephen, 2011. "The efficiency of voluntary incentive policies for preventing biodiversity loss," Resource and Energy Economics, Elsevier, vol. 33(1), pages 192-211, January.
    3. Timo Sipiläinen & Anni Huhtala, 2013. "Opportunity costs of providing crop diversity in organic and conventional farming: would targeted environmental policies make economic sense?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 40(3), pages 441-462, July.
    4. Quillerou, Emmanuelle & Fraser, Rob W. & Fraser, Iain, 2010. "Adverse Selection in the Environmental Stewardship Scheme: Evidence in the Higher Level Stewardship Scheme?," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91676, Agricultural Economics Society.
    5. Quillerou, Emmanuelle & Fraser, Rob W., 2009. "Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Entry Scheme Design Reduce Adverse Selection?," 83rd Annual Conference, March 30 - April 1, 2009, Dublin, Ireland 51068, Agricultural Economics Society.
    6. Sipilainen, Timo & Huhtala, Anni, 2012. "Opportunity Costs of Providing Crop Diversity in Organic and Conventional Farming," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126652, International Association of Agricultural Economists.
    7. Gregory M. Parkhurst & Jason F. Shogren & Thomas Crocker, 2016. "Tradable Set-Aside Requirements (TSARs): Conserving Spatially Dependent Environmental Amenities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 719-744, April.
    8. Richard D. Horan & Roger Claassen, 2007. "Targeting Green Payments under a Budget Constraint," Land Economics, University of Wisconsin Press, vol. 83(3), pages 319-330.
    9. Bontems, Philippe, 2008. "On the optimal design of income support and agri-environmental regulation," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6246, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Tigran Melkonyan & Michael H. Taylor, 2013. "Regulatory Policy Design for Agroecosystem Management on Public Rangelands," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 606-627.
    11. Charles Palmer & Markus Ohndorf & Ian A. MacKenzie, 2009. "Life’s a breach! Ensuring ‘permanence’ in forest carbon sinks under incomplete contract enforcement," CER-ETH Economics working paper series 09/113, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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    Keywords

    Environmental Economics and Policy;

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