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Regulatory Policy Design for Agroecosystem Management on Public Rangelands

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  • Tigran Melkonyan

    () (Department of Resource Economics, University of Nevada, Reno)

  • Michael Taylor

    () (Department of Resource Economics, University of Nevada, Reno)

Abstract

This paper analyzes regulatory design for agroecosystem management on public rangelands. We present an informational and institutional environment where three of the most prominent regulatory instruments on public rangelands – input regulation, cost-sharing/taxation, and performance regulation – can be defined and compared. The paper examines how the optimal regulation is shaped by the informational and institutional constraints faced by federal land management agencies (FLMAs) such as the Bureau of Land Management and the U.S. Forest Service. These constraints include informational asymmetries between ranchers and FLMAs, limitations on FLMAs’ ability to monitor ranch-level ecological conditions, and constraints on FLMAs’ actions due to budget limitations and restrictions on the level of penalties they can assess. The theoretical model extends the previous work of Baker (1992), Prendergast (2002), and Hueth and Melkonyan (2009) by considering optimal regulation by a budget-constrained regulator in an environment of asymmetric information and moral hazard.

Suggested Citation

  • Tigran Melkonyan & Michael Taylor, 2010. "Regulatory Policy Design for Agroecosystem Management on Public Rangelands," Working Papers 10-007, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
  • Handle: RePEc:unr:wpaper:10-007
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    File URL: http://www.coba.unr.edu/econ/wp/papers/UNRECONWP10007.pdf
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    References listed on IDEAS

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    1. Brent Hueth & Tigran Melkonyan, 2009. "Standards and the regulation of environmental risk," Journal of Regulatory Economics, Springer, vol. 36(3), pages 219-246, December.
    2. Jeffrey T. LaFrance & Myles J. Watts, 1995. "Public Grazing in the West and "Rangeland Reform '94"," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 447-461.
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    5. Axel Gautier, 2004. "Regulation under Financial Constraints," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(4), pages 645-656, December.
    6. Feng, Hongli, 2007. "Green payments and dual policy goals," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 323-335, November.
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    12. Watts, Myles J & Shimshack, Jay P & LaFrance, Jeffrey T., 2006. "Grazing Fees versus Stewardship on Federal Lands," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt26b384t9, Department of Agricultural & Resource Economics, UC Berkeley.
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    Cited by:

    1. Ben White & Nick Hanley, 2016. "Should We Pay for Ecosystem Service Outputs, Inputs or Both?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 765-787, April.

    More about this item

    Keywords

    Agri-Environmental Policy; Asymmetric Information; Budget-Constrained Regulation;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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