IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v58y2007i2p260-268.html
   My bibliography  Save this article

Equivalence of Input Quotas and Input Charges under Asymmetric Information in Agri‐environmental Schemes

Author

Listed:
  • Adam Ozanne
  • Ben White

Abstract

A model of adverse selection and moral hazard in agri‐environmental schemes is developed based on the input quota mechanism of Moxey et al. (Journal of Agricultural Economics, Vol. 50, (1999) pp. 187–202) and Ozanne et al. (European Review of Agricultural Economics, Vol. 28, (2001) pp. 329–347), rather than the input charge mechanism of White (Journal of Agricultural Economics, Vol. 53, (2002) pp. 353–360), but the variable fine of the latter rather than the fixed fine assumed by Ozanne et al. (European Journal of Agricultural Economics, Vol. 28, (2001) pp. 329–347) is used. Incentive‐compatible contracts, including the optimal probabilities of detection (and, therefore, monitoring frequencies and costs) for more and less efficient farmers, are identified. It is shown that the input charge and input quota approaches lead to identical outcomes – in terms of abatement levels, compensation payments, monitoring costs and probabilities of detection – confirming the equivalence of input quotas and input charges under asymmetric information. It is also shown that the optimal contracts are independent of the risk preferences of farmers with regard to being caught cheating.

Suggested Citation

  • Adam Ozanne & Ben White, 2007. "Equivalence of Input Quotas and Input Charges under Asymmetric Information in Agri‐environmental Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(2), pages 260-268, June.
    • Handle: RePEc:bla:jageco:v:58:y:2007:i:2:p:260-268
    DOI: 10.1111/j.1477-9552.2007.00098.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1477-9552.2007.00098.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1477-9552.2007.00098.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.
    2. Lapierre, Margaux & Le Velly, Gwenolé & Bougherara, Douadia & Préget, Raphaële & Sauquet, Alexandre, 2023. "Designing agri-environmental schemes to cope with uncertainty," Ecological Economics, Elsevier, vol. 203(C).
    3. Ozanne, Adam & White, Benedict, 2008. "Hidden action, risk aversion and variable fines in agri-environmental schemes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(2), pages 1-10.
    4. Peter Bardsley & Ingrid Burfurd, 2013. "Auctioning contracts for environmental services," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), pages 253-272, April.
    5. 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.
    6. Thiago Morello, 2023. "An Agri-environmental Scheme for Reducing Inputs Subjected to Accidental Spillage: An Application to Agricultural Burnings by Smallholders," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(2), pages 383-408, February.
    7. Uwe Latacz-Lohmann & Gunnar Breustedt, 2019. "Using choice experiments to improve the design of agri-environmental schemes," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 46(3), pages 495-528.
    8. Wieck, Christine & Annen, Dominic N., 2012. "Participation, compliance and synergies at the farm level between the single payments scheme and farm certification labels," Discussion Papers 122123, University of Bonn, Institute for Food and Resource Economics.
    9. Yuki Yano & David Blandford, 2009. "Use of Compliance Rewards in Agri‐environmental Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 530-545, September.
    10. Peter Bardsley & Ingrid Burfurd, 2008. "Contract Design for Biodiversity Procurement," Department of Economics - Working Papers Series 1031, The University of Melbourne.
    11. Rob Fraser, 2012. "Moral Hazard, Targeting and Contract Duration in Agri‐Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 56-64, February.
    12. Colman, David & Pascual, Unai & Hodge, Ian, 2010. "Evolution of Land Conservation Policy," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188082, International Consortium on Applied Bioeconomy Research (ICABR).
    13. Andrei Barbos, 2022. "Optimal contracts with random monitoring," International Journal of Game Theory, Springer;Game Theory Society, vol. 51(1), pages 119-154, March.
    14. Latacz-Lohmann, U. & Schilizzi, S. & Breustedt, G., 2012. "Auctioning outcome-based conservation contracts," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47, March.
    15. Gorddard, Russell J. & Whitten, Stuart M. & Reeson, Andrew, 2008. "When should biodiversity tenders contract on outcomes?," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 5979, Australian Agricultural and Resource Economics Society.
    16. Schilizzi, Steven & Breustedt, Gunnar & Latacz-Lohmann, Uwe, 2011. "Does tendering conservation contracts with performance payments generate additional benefits?," Working Papers 100883, University of Western Australia, School of Agricultural and Resource Economics.
    17. Latacz-Lohmann, Uwe & Schilizzi, Steven & Breustedt, Gunnar, 2011. "Auctioning Outcome-Based Conservation Contracts," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114523, German Association of Agricultural Economists (GEWISOLA).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jageco:v:58:y:2007:i:2:p:260-268. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.