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On the optimal design of income support and agri-environmental regulation

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  • Bontems, Philippe

Abstract

In this paper, we develop a model of regulation for a set of heterogenous farmers whose production yields to environmental externalities. The goal of the regulator is first to offer some income support depending on collective preferences towards income redistribution and second to internalize externalities. The optimal policy is constrained by the information available. We first consider the second best where the regulator is able to observe all individuals decisions in terms of inputs and individual profit, but not the individual farming labor supply. We characterized the generalized transfer in function of the desire to redistribute and the underlying characteristics of the production process. In a second step, we assume that the regulator has only information on aggregate consumption of inputs and hence can only tax/subsidy linearly inputs and output. However, because the accounting profit remains observable, a non linear transfer of profit is still part of the optimal policy. In the last part of the paper, we endogenize the market price of land and examine how the optimal policy should be modified.

Suggested Citation

  • Bontems, Philippe, 2008. "On the optimal design of income support and agri-environmental regulation," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6246, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6246
    DOI: 10.22004/ag.econ.6246
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    References listed on IDEAS

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    3. Philippe Bontems & Gilles Rotillon & Nadine Turpin, 2008. "Acceptable reforms of agri-environmental policies," Revue d'économie politique, Dalloz, vol. 118(6), pages 847-883.
    4. Philippe Bontems & Gilles Rotillon & Nadine Turpin, 2005. "Self-Selecting Agri-environmental Policieswith an Application to the Don Watershed," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(3), pages 275-301, July.
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    9. Philippe Bontems & Gilles Rotillon & Nadine Turpin, 2005. "Self-selecting agri-environmental policies with an application to the Don watershed [[Acceptabilité de politiques agri-environnementales discriminantes : le cas du bassin versant du Don]]," Post-Print hal-02678669, HAL.
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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy;

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