Contracting Nitrogen Abatement in the Baltic Proper Watershed Under the Risk of Climate Change
Within the EU, it is agreed that watershed-based management of water quality problems is likely to be more economically efficient compared to existing institutional arrangements. Watershed authorities, assigned under the European Water Framework Directive, do however lack financial resources for policy implementation. EU funding for agri-environmental measures is mainly channeled through CAP via national governments to the farmers. In this paper, a mechanism for allocating international funds to watershed authorities is investigated assuming that there is a risk of moral hazard on behalf of the regional authority. The assumed purpose of the funding is to reduce nitrogen loads to the Baltic Proper, and the implications of uncertainty about the risk of climate change are investigated. Results shows that the risk premium associated with the presence of moral hazard can be high if there is a high likelihood of climate change and marginal damage is increasing rapidly in loads.
|Date of creation:||2011|
|Contact details of provider:|| Web page: http://www.eaae.org|
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.:
- Stina Hökby & Tore Söderqvist, 2003. "Elasticities of Demand and Willingness to Pay for Environmental Services in Sweden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(3), pages 361-383, November.
- Atanu Saha & C. Richard Shumway & Hovav Talpaz, 1994. "Joint Estimation of Risk Preference Structure and Technology Using Expo-Power Utility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 173-184.
- Elke U. Weber & Christopher Hsee, 1998. "Cross-Cultural Differences in Risk Perception, but Cross-Cultural Similarities in Attitudes Towards Perceived Risk," Management Science, INFORMS, vol. 44(9), pages 1205-1217, September.
- Carlsson, Fredrik & Daruvala, Dinky & Johansson-Stenman, Olof, 2001.
"Are People Inequality Averse Or Just Risk Averse?,"
Working Papers in Economics
43, University of Gothenburg, Department of Economics.
- Fredrik Carlsson & Dinky Daruvala & Olof Johansson-Stenman, 2005. "Are People Inequality-Averse, or Just Risk-Averse?," Economica, London School of Economics and Political Science, vol. 72(3), pages 375-396, 08.
- Wu, JunJie & Babcock, Bruce A., 1995.
"Optimal Design of a Voluntary Green Payment Program Under Asymmetric Information,"
Staff General Research Papers Archive
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.
- Jeffrey M. Peterson & Richard N. Boisvert, 2004. "Incentive-Compatible Pollution Control Policies under Asymmetric Information on Both Risk Preferences and Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 291-306.
- Adam Ozanne & Ben White, 2008.
"Hidden action, risk aversion and variable fines in agri-environmental schemes ,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 52(2), pages 203-212, 06.
- Ozanne, Adam & White, Benedict, 2008. "Hidden action, risk aversion and variable fines in agri-environmental schemes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(2), June.
- Gren, Ing-Marie & Jonzon, Ylva & Lindqvist, Martin, 2008. "Costs of nutrient reductions to the Baltic Sea," Department of Economics publications 3212, Swedish University of Agricultural Sciences, Department of Economics.
- Baerenklau, Kenneth A., 2002. "Green Payment Programs For Nonpoint Source Pollution Control: How Important Is Targeting For Cost-Effectiveness?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(02), December.
- 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.
- 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. "Control of Nonpoint Source Pollution Through Voluntary Incentive-Based Policies: An Application to Nitrate Contamination in New York," Agricultural and Resource Economics Review, Cambridge University Press, vol. 30(02), pages 127-138, October.
- Quiggin, John & Chambers, Robert G., 1998. "A state-contingent production approach to principal-agent problems with an application to point-source pollution control," Journal of Public Economics, Elsevier, vol. 70(3), pages 441-472, December.
When requesting a correction, please mention this item's handle: RePEc:ags:eaae11:114344. 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 references are entirely missing, you can add them using this form.