An Incentive Compatible Self-Compliant Pollution Policy and Asymmetric Information on Both Risk Attitudes and Technology
This paper develops an incentive compatible policy to control agricultural pollution, where the government knows the ranges of technology types and risk attitudes but not their distributions across farmers. The policy creates incentives for farmers to participate in the program, but includes constraints to ensure both self-selection of the appropriate policy, and self-compliance with the policy selected. Unknown risk attitudes are accommodated through stochastic efficiency rules. The model is applied empirically to estimate policies to limit nitrate contamination from New York agriculture. The estimated cost of such a program is not large compared to past commodity policies. Payments could be reduced if soils information is used to assign policies. Self-compliance is possible and does not impose a large cost on the government. If the policy were designed under risk neutrality, payments would be substantially below the incentive needed for participation by a risk averse farmer.
|Date of creation:||Oct 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Warren Hall, Ithaca NY 14853|
Web page: http://aem.cornell.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pannell, David J. & Malcolm, Bill & Kingwell, Ross S., 2000.
"Are we risking too much? Perspectives on risk in farm modelling,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 23(1), June.
- Pannell, David J. & Malcolm, Bill & Kingwell, Ross S., 2000. "Are we risking too much? Perspectives on risk in farm modelling," Agricultural Economics, Blackwell, vol. 23(1), pages 69-78, June.
- 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.
- JunJie Wu & Bruce A. Babcock, 1996. "Contract Design for the Purchase of Environmental Goods from Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 935-945.
- Boisvert, Richard N. & Peterson, Jeffrey M., 2001. "Control Of Nonpoint Source Pollution Through Voluntary Incentive-Based Policies: An Application To Nitrate Contamination In New York," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 30(2), October.
- Peterson, Jeffrey M. & Boisvert, Richard N., 2001. "Designing Nonpoint Source Pollution Policies With Limited Information About Both Risk Attitudes And Production Technology," 2001 Annual meeting, August 5-8, Chicago, IL 20720, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Wu, JunJie & Babcock, Bruce A., 1995.
"Optimal Design of a Voluntary Green Payment Program Under Asymmetric Information,"
Staff General Research Papers
843, Iowa State University, Department of Economics.
- Wu, JunJie & Babcock, Bruce A., 1995. "Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(02), December.
- JunJie Wu & Bruce A. Babcock, 1995. "Optimal Design of a Voluntary Green Payment Program Under Asymmetric Information," Center for Agricultural and Rural Development (CARD) Publications 95-wp131, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Baumol,William J. & Oates,Wallace E., 1988.
"The Theory of Environmental Policy,"
Cambridge University Press, number 9780521311120, 1.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, July.
- Murat Isik, 2002. "Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 557-571.
When requesting a correction, please mention this item's handle: RePEc:ags:cudawp:127318. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.