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Contracting for Non-Point-Source Pollution Abatement

Author

Listed:
  • Olof Bystrom

  • DANIEL W. BROMLEY

Abstract

This study presents an incentive scheme to control agricultural nonpoint-source pollution. The analysis is based on a principal-agent framework with two parties: farmers and a regulating authority. Our incentive scheme proposes collective penalties as a way to control pollution. Unlike previous analyses of incentive schemes to control agricultural pollution, we suggest nonindividual contracts between farmers and a regulating authority, where farmers can trade pollution abatement efforts. Findings show that the information requirement of a regulatory agency can be substantially reduced if contracts can be made nonindividual.
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Suggested Citation

  • Olof Bystrom & DANIEL W. BROMLEY, 1996. "Contracting for Non-Point-Source Pollution Abatement," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 392, Wisconsin-Madison Agricultural and Applied Economics Department.
    • Handle: RePEc:wop:wisaes:392
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    File URL: http://www.aae.wisc.edu/www/pub/sps/stpap392.pdf
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    Cited by:

    1. Dan Protopopescu, 2009. "Dynamic Stackelberg Game with Risk-Averse Players: Optimal Risk-Sharing under Asymmetric Information," UFAE and IAE Working Papers 797.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. DeVuyst, Eric A. & Ipe, Viju C., 1999. "A Group Incentive Contract To Promote Adoption Of Best Management Practices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-16, December.
    3. Peter Goldsmith & Rishi Basak, 2001. "Incentive Contracts and Environmental Performance Indicators," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(4), pages 259-279, December.
    4. Shao, Shuai & Yang, Zhenbing & Xu, Le & Yang, Lili, 2024. "Environmental protection experience of secretaries and effectiveness of environmental governance: Evidence from COD discharge in China," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 237-253.
    5. 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.
    6. Bromley, Daniel W., 1996. "The Environmental Implications Of Agriculture," Staff Papers 12591, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    7. Ricardo Smith Ramírez, 2007. "Testing for information asymmetries in voluntary conservation contracts," Working Papers DTE 402, CIDE, División de Economía.
    8. Taylor, Michael A. & Randall, Alan & Sohngen, Brent, 2001. "Point-Nonpoint Source Pollution Trading Using Collective Performance Incentives," 2001 Annual meeting, August 5-8, Chicago, IL 20776, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Harvey, Sallyann, 2005. "Using contracts to mitigate salinity: an analysis of voluntary cost-sharing agreements," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137926, Australian Agricultural and Resource Economics Society.
    10. Hansen, Lars Garn & Romstad, Eirik, 2007. "Non-point source regulation -- A self-reporting mechanism," Ecological Economics, Elsevier, vol. 62(3-4), pages 529-537, May.
    11. Harvey, Sallyann, 2004. "Dryland salinity, coordinating action and economic policy: a role for contracts?," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58703, Australian Agricultural and Resource Economics Society.
    12. repec:isu:genstf:1999010108000013154 is not listed on IDEAS
    13. Cyril Bourgeois & Pierre-Alain Jayet, 2010. "Revisited water-oriented relationships between a set of farmers and an aquifer: accounting for lag effect," Working Papers 2010/06, INRA, Economie Publique.

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