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Agri-environmental schemes: Adverse selection, information structure and delegation

Author

Listed:
  • Joan Canton

    (Economics Department - University of Ottawa [Ottawa])

  • Stephane de Cara

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Pierre-Alain Jayet

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

Abstract

This work analyzes alternative designs of agri-environmental schemes and how different incentive mechanisms impact on their overall efficiency. It focuses on spatial targeting and delegation in an asymmetric information context. First, the optimal contract under adverse selection is modeled. This model underlines the trade-off between information rents and allocative efficiency. The impact of spatial targeting is then addressed. Disaggregated information structures increase the optimal efforts asked of the farmers. It may also involve higher information rents and may reduce the net contributions of some farmers. Finally, the consequences of delegating authority within the principal–agent relationship are investigated. The results illustrate that spatial targeting and delegation, when combined, have asymmetric impacts on farmers' payoffs.

Suggested Citation

  • Joan Canton & Stephane de Cara & Pierre-Alain Jayet, 2009. "Agri-environmental schemes: Adverse selection, information structure and delegation," Post-Print hal-01172912, HAL.
    • Handle: RePEc:hal:journl:hal-01172912
    DOI: 10.1016/j.ecolecon.2009.02.007
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    Cited by:

    1. Michael A. Arnold & Joshua M. Duke & Kent D. Messer, 2013. "Adverse Selection in Reverse Auctions for Ecosystem Services," Land Economics, University of Wisconsin Press, vol. 89(3), pages 387-412.
    2. Ober, Carina & Canessa, Carolin & Frick, Fabian & Sauer, Johannes, 2025. "The role of behavioural factors in accepting agri-environmental contracts – Evidence from a Q-method and thematic analysis in Germany," Ecological Economics, Elsevier, vol. 231(C).
    3. Paul J. Burke, 2016. "Undermined by Adverse Selection: Australia's Direct Action Abatement Subsidies," Economic Papers, The Economic Society of Australia, vol. 35(3), pages 216-229, September.
    4. Russell, Noel P. & Sauer, Johannes, "undated". "Beneficial selection and the efficient procurement of ecosystem services," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124894, Agricultural and Applied Economics Association.
    5. Kuhfuss, Laure & Jacquet, Florence, 2012. "Le dispositif des MAEt pour l’enjeu eau : une fausse bonne idée ?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 93(4).
    6. Thomas Coisnon & Walid Oueslati & Julien Salanié, 2013. "Spatial targeting of agri-environmental policy and urban development," Post-Print halshs-00949730, HAL.
    7. Mireille Chiroleu-Assouline & Sebastien Roussel, 2014. "Payments for Carbon Sequestration in Agricultural Soils: Incentives for the Future and Rewards for the Past," CEEES Paper Series CE3S-01/14, European University at St. Petersburg, Department of Economics.
    8. Bertoni, D. & Curzi, D. & Iacus, S. & Olper, A., 2018. "Estimating the Causal Effect of Green Payments in Agriculture: The Coarsened Exact Matching," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277381, International Association of Agricultural Economists.
    9. Li, Tongzhe & Fooks, Jacob & Messer, Kent D., "undated". "Residents’ Preferences in Adopting Water Runoff Management Practices: Examining the Effect of Behavioral Nudges in a Field Experiment," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259127, Agricultural and Applied Economics Association.
    10. Thomas Coisnon & Walid Oueslati & Julien Salanié, 2012. "Agri-environmental policy and urban sprawl patterns: A general equilibrium analysis," Working Papers halshs-00753221, HAL.
    11. Stephane de Cara & Bruno Vermont, 2014. "Atténuation de l’effet de serre d’origine agricole : efficacité en coûts et instruments de régulation," Post-Print hal-01173041, HAL.
    12. Valentin Bellassen & Igor Shishlov, 2017. "Pricing Monitoring Uncertainty in Climate Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(4), pages 949-974, December.
    13. Uthes, Sandra & Sattler, Claudia & Zander, Peter & Piorr, Annette & Matzdorf, Bettina & Damgaard, Martin & Sahrbacher, Amanda & Schuler, Johannes & Kjeldsen, Chris & Heinrich, Uwe & Fischer, Holger, 2010. "Modeling a farm population to estimate on-farm compliance costs and environmental effects of a grassland extensification scheme at the regional scale," Agricultural Systems, Elsevier, vol. 103(5), pages 282-293, June.
    14. Saint-Cyr, Legrand D.F. & Védrine, Lionel & Legras, Sophie & Le Gallo, Julie & Bellassen, Valentin, 2023. "Drivers of PES effectiveness: Some evidence from a quantitative meta-analysis," Ecological Economics, Elsevier, vol. 210(C).
    15. Sauer, Johannes & Walsh, John, 2011. "ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108963, Agricultural Economics Society.
    16. Vergamini, Daniele & Viaggi, Davide & Raggi, Meri, "undated". "Agri-environmental measures and farmers’ rent: evaluating the potential contribution of auctions to increase the efficiency of Agri-environmental schemes in Emilia-Romagna (Italy)," 2016 Fifth AIEAA Congress, June 16-17, 2016, Bologna, Italy 242443, Italian Association of Agricultural and Applied Economics (AIEAA).
    17. Matteo Olivieri & Maria Andreoli & Daniele Vergamini & Fabio Bartolini, 2021. "Innovative Contract Solutions for the Provision of Agri-Environmental Climatic Public Goods: A Literature Review," Sustainability, MDPI, vol. 13(12), pages 1-22, June.
    18. Janusch, Nicholas R. & Messer, Kent D. & Ferraro, Paul J. & Allen, William, "undated". "Farmer participation in nutrient management practices in Delaware: A field experiment," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258456, Agricultural and Applied Economics Association.
    19. Helin, Janne, 2009. "Does geography matter in nutrient abatement? Bioeconomic model of heteregoneus farm nutrient loads," 2009 Conference, August 16-22, 2009, Beijing, China 51693, International Association of Agricultural Economists.
    20. Bertoni, Danilo & Curzi, Daniele & Aletti, Giacomo & Olper, Alessandro, 2020. "Estimating the effects of agri-environmental measures using difference-in-difference coarsened exact matching," Food Policy, Elsevier, vol. 90(C).
    21. Mireille Chiroleu-Assouline & Sébastien Roussel, 2010. "Contract Design to Sequester Carbon in Agricultural Soils," Documents de travail du Centre d'Economie de la Sorbonne 10060, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    22. Wunder, Sven & Fraccaroli, Cecilia & Varela, Elsa & Bruzzese, Stefano & Termansen, Mette, 2025. "Examining innovative designs of agri-environmental schemes in Europe: A case comparison of impact pathways," Ecosystem Services, Elsevier, vol. 73(C).
    23. Russell, Noel P. & Sauer, Johannes, 2012. "Efficient Procurement of Ecosystem Services – Adverse versus Beneficial Selection," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134988, Agricultural Economics Society.
    24. Xiaohui Ding & Chen Zhou & Volker Mauerhofer & Weizhou Zhong & Guoping Li, 2019. "From Environmental Soundness to Sustainable Development: Improving Applicability of Payment for Ecosystem Services Scheme for Diverting Regional Sustainability Transition in Developing Countries," Sustainability, MDPI, vol. 11(2), pages 1-22, January.

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