Incentive Contracts for Natura 2000 Implementation: A Mixed Model of Adverse Selection and Moral Hazard
The implementation of nature conservation policy in the EU is often based on contracts between public authorities and landowners. We model these contracts in the presence of adverse selection and moral hazard when the outcome is uncertain. The results show that agents, who have high probability to reach a higher level of conservation, should be offered a contract where transfers depend on the final outcome with a bonus for a high state. When conservation measures are correlated with forest management, we show that the contractual measures involve distorded tranfers. Finally, we analyze the payment mechanisms used in France and Denmark and show that these mechanisms result in overcompensation and underperformance since they do not take the problem of moral hazard and natural variability into account.
|Date of creation:||Oct 2006|
|Contact details of provider:|| Postal: 14 rue Girardet, 54042 Nancy cedex|
Phone: 33 (0)3 83 39 68 66
Fax: 33 (0)3 83 37 06 45
Web page: http://www.nancy.inra.fr/lef
More information through EDIRC
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.:
- 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.
- Huennemeyer, Anne-Juliane & Rollins, Kimberly S., 2001. "Private Resource Management And Public Trust: Optimal Resource Conservation Contracts Under Asymmetric Information," Working Papers 34141, University of Guelph, Department of Food, Agricultural and Resource Economics.
- Boyer, M. & Laffont, J.J., 1995.
"Environmental Risks and Bank Liability,"
Cahiers de recherche
9501, Universite de Montreal, Departement de sciences economiques.
- Marcel Boyer & Jean-Jacques Laffont, 1994. "Environmental Risks and Bank Liability," CIRANO Working Papers 94s-22, CIRANO.
- Boyer, Marcel & Laffont, Jean-Jacques, 1994. "Environmental Risks and Bank Liability," IDEI Working Papers 45, Institut d'Économie Industrielle (IDEI), Toulouse.
- Boyer, M. & Laffont, J.J., 1995. "Environmental Risks and Bank Liability," Cahiers de recherche 9501, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Russell, Noel P, 1993. "Efficiency of Rural Conservation and Supply Control Policies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 20(3), pages 315-26.
- Laffont, Jean-Jacques, 1995. "Regulation, moral hazard and insurance of environmental risks," Journal of Public Economics, Elsevier, vol. 58(3), pages 319-336, November.
- Moyle, Brendan, 1998. "Species conservation and the principal-agent problem," Ecological Economics, Elsevier, vol. 26(3), pages 313-320, September.
- Guesnerie, Roger & Picard, Pierre & Rey, Patrick, 1989.
"Adverse selection and moral hazard with risk neutral agents,"
European Economic Review,
Elsevier, vol. 33(4), pages 807-823, April.
- Guesnerie Roger & Picard Pierre & Rey P, 1986. "Adverse selection and moral hazard with risk-neutral agent," CEPREMAP Working Papers (Couverture Orange) 8624, CEPREMAP.
- Theilen, Bernd, 2003. "Simultaneous moral hazard and adverse selection with risk averse agents," Economics Letters, Elsevier, vol. 79(2), pages 283-289, May.
- 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.
- Slangen, Louis H G, 1997. "How to Organise Nature Production by Farmers," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(3-4), pages 508-29.
- Philippe Bontems & Alban Thomas, 2006. "Regulating Nitrogen Pollution with Risk Averse Farmers under Hidden Information and Moral Hazard," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 57-72.
- Kline, Jeffrey D. & Alig, Ralph J. & Johnson, Rebecca L., 2000. "Forest owner incentives to protect riparian habitat," Ecological Economics, Elsevier, vol. 33(1), pages 29-43, April.
When requesting a correction, please mention this item's handle: RePEc:lef:wpaper:2006-06. 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: (Sylvain CAURLa)
If references are entirely missing, you can add them using this form.