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A Paradox for Agro-Environmental Land Policy

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  • Hennessy, David A.
  • Feng, Hongli

Abstract

A regulator with a fixed budget to spend on securing environmental benefits from farmed land has to choose between how many acres to enroll and the extent of benefits to require of each enrolled acre. Here we consider, given heterogeneous land, what properties of the environmental benefit-to-cost ratio imply for the choice of optimal program as the available budget varies. Conditions are found such that a program of high benefits on few acres is preferred for any budget level. It is also possible that a program delivering low benefits per acre at low cost is preferred on each land type, and yet a high benefit program is optimal policy, a variant of Simpson’s paradox.

Suggested Citation

  • Hennessy, David A. & Feng, Hongli, 2009. "A Paradox for Agro-Environmental Land Policy," Hebrew University of Jerusalem Archive 53934, Hebrew University of Jerusalem.
    • Handle: RePEc:ags:hebarc:53934
    DOI: 10.22004/ag.econ.53934
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    References listed on IDEAS

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    1. Smith, Rodney B. W. & Shogren, Jason F., 2002. "Voluntary Incentive Design for Endangered Species Protection," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 169-187, March.
    2. Feng, Hongli & Kurkalova, Lyubov A. & Kling, Catherine L. & Gassman, Philip W., 2006. "Environmental conservation in agriculture: Land retirement vs. changing practices on working land," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 600-614, September.
    3. Pavlides, Marios G. & Perlman, Michael D., 2009. "How Likely Is Simpson’s Paradox?," The American Statistician, American Statistical Association, vol. 63(3), pages 226-233.
    4. Sunder, S, 1983. "Simpson Reversal Paradox And Cost Allocation," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 21(1), pages 222-233.
    5. Adina M. Merenlender, 2006. "Habitat and Open Space at Risk of Land-Use Conversion: Targeting Strategies for Land Conservation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 28-42.
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