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Conservation contract adoption under fixed and variable costs

Author

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  • Geraldine Ducos

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

  • Pierre Dupraz

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

Abstract

Farmers' conservation contract adoption is usually explained through the technology lens, i.e. with operational costs depending on the subscribed area and environmental efforts. In their 2003 article, Dupraz et al. analysed this issue by introducing utility farmers directly derive from contract environmental outcomes. They specified farmers' willingness to accept, which is the minimum compensation payment the farmer accepts to enrol and produce environmental services on a given area. Here, we deepen this analysis at two levels. First, at the theoretical one, by introducing fixed compliance costs in the willingness to accept approach. Secondly, we empirically show that among fixed compliance costs, fixed transaction costs are a significant contracting barrier. It explains why smallest farms have a reduced probability to contract.

Suggested Citation

  • Geraldine Ducos & Pierre Dupraz, 2007. "Conservation contract adoption under fixed and variable costs," Post-Print hal-01931625, HAL.
    • Handle: RePEc:hal:journl:hal-01931625
    Note: View the original document on HAL open archive server: https://hal.science/hal-01931625v1
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    References listed on IDEAS

    as
    1. Geraldine Ducos & Pierre Dupraz, 2007. "The asset specificity issue in the private provision of environmental services: Evidence from agro-environmental contracts," Post-Print hal-01931632, HAL.
    2. Masten, Scott E & Meehan, James W, Jr & Snyder, Edward A, 1991. "The Costs of Organization," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(1), pages 1-25, Spring.
    3. Eric Brousseau & M’hand Fares, 2000. "Incomplete contracts and governance structures: are incomplete contract theory and new institutional economics substitutes or complements?," Chapters, in: Claude Ménard (ed.), Institutions, Contracts and Organizations, chapter 26, Edward Elgar Publishing.
    4. Knowler, Duncan & Bradshaw, Ben, 2007. "Farmers' adoption of conservation agriculture: A review and synthesis of recent research," Food Policy, Elsevier, vol. 32(1), pages 25-48, February.
    5. P. Dupraz & D. Vermersch & B. De Frahan & L. Delvaux, 2003. "The Environmental Supply of Farm Households: A Flexible Willingness to Accept Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(2), pages 171-189, June.
    6. Sako, Mari & Helper, Susan, 1998. "Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 387-417, March.
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