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Acceptable Reforms of Agri-Environmental Policies

  • Bontems, Philippe
  • Rotillon, Gilles
  • Turpin, Nadine

We consider a model of regulation for nonpoint source water pollution through non linear taxation/subsidization of agricultural production. Farmers are heterogenous along two dimensions, their ability to transform inputs into final production and the available area they possess. Asymmetric information and participation of farmers to the regulation scheme put constraints on the optimal policy that we characterize. We show that a positive relationship between size of land and ability may exacerbate adverse selection effects. We then introduce acceptability constraints and show that the intervention under acceptability amounts to reallocate production towards inefficient farmers who benefit from the reform at the expense of efficient producers. Last, we calibrate the model using datas on a french watershed (Don watershed). Simulations indicate that satisfying a high degree of acceptability does not entail high welfare losses compared to low degree of acceptability.

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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19150.

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Date of creation: 2005
Date of revision:
Handle: RePEc:ags:aaea05:19150
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  1. James Shortle & David Abler & Richard Horan, 1998. "Research Issues in Nonpoint Pollution Control," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 571-585, April.
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  3. Gabrielle DEMANGE & Pierre-Yves GEOFFARD, 2006. "Reforming incentive schemes under political constraints: the physician agency," Annales d'Economie et de Statistique, ENSAE, issue 83-84, pages 221-250.
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  9. Jullien, Bruno, 1997. "Participation Constraints in Adverse Selection Models," IDEI Working Papers 67, Institut d'Économie Industrielle (IDEI), Toulouse.
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  11. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
  12. Wu, JunJie & Babcock, Bruce A., 1996. "Contract Design for the Purchase of Environmental Goods from Agriculture," Staff General Research Papers 1050, Iowa State University, Department of Economics.
  13. Alfons Weersink & John R. Livernois & Jason F. Shogren & James S. Shortle, 1998. "Economic Instruments and Environmental Policy in Agriculture," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 309-327, September.
  14. Fleming, R. A. & Adams, R. M., 1997. "The Importance of Site-Specific Information in the Design of Policies to Control Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 347-358, July.
  15. Shortle, James S & Horan, Richard D, 2001. " The Economics of Nonprofit Pollution Control," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 255-89, July.
  16. Richard Horan & James Shortle & David Abler, 2002. "Ambient Taxes Under m-Dimensional Choice Sets, Heterogeneous Expectations, and Risk-Aversion," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(2), pages 189-202, February.
  17. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
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