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Contract Design and Targeting for the Production of Public Goods in Agriculture: The Impact of the 2003 Cap Reform

  • Bartolini, Fabio
  • Gallerani, Vittorio
  • Raggi, Meri
  • Viaggi, Davide

The objective of this paper is to compare different ways of designing agri-environmental contracts and to set targeting under adverse selection, comparing conditions before and after CAP reform 2003. The results suggest that the present contract structure may be relevantly improved through a more accurate design and a clearer target. The reform, through the decoupling mechanism, will contribute to reduce the opportunity cost of the adoption of agri-environmental measures. This may increase the optimal amount of public goods produced by agriculture and will encourage participation by farmers. However, in order to properly exploit the new conditions brought by the 2003 reform, it is necessary to review the way agri-environmental payments are assigned and their structure, in terms of targeting, contract differentiation and payment allocation.

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File URL: http://purl.umn.edu/24559
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Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24559.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24559
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  1. repec:ltr:wpaper:1997.08 is not listed on IDEAS
  2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
  3. Uwe Latacz-Lohmann & Carel P. C. M. Hamsvoort, 1998. "Auctions as a Means of Creating a Market for Public Goods from Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 334-345.
  4. Claassen, Roger & Breneman, Vincent E. & Bucholtz, Shawn & Cattaneo, Andrea & Johansson, Robert C. & Morehart, Mitchell J., 2004. "Environmental Compliance In U.S. Agricultural Policy: Past Performance And Future Potential," Agricultural Economics Reports 34033, United States Department of Agriculture, Economic Research Service.
  5. C. Choe & I. Fraser, 1998. "A Note on Imperfect Monitoring of Agri-Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 250-258.
  6. Chongwoo Choe & Iain Fraser, 1999. "Compliance Monitoring and Agri-Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 468-487.
  7. Ing-Marie Gren, 2004. "Uniform or discriminating payments for environmental production on arable land under asymmetric information," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 61-76, March.
  8. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
  9. Andrew Moxey & Ben White & Adam Ozanne, 1999. "Efficient Contract Design for Agri-Environment Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 187-202.
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