Agri-Environmental Policy and Moral Hazard under Output Price and Production Uncertainty

Yuki Yano and David Blandford

No 44323, 2008 International Congress, August 26-29, 2008, Ghent, Belgium from European Association of Agricultural Economists

Abstract: Several theoretical and empirical models have been developed to examine how risk aversion affects compliance with agri-environmental schemes under asymmetric information and uncertainty. However, none has examined the case where the level of compliance is a continuous variable and producers face simultaneous monitoring, output price and production uncertainty. Treating conservation effort as a continuous variable, we show that risk aversion can mitigate the moral hazard problem in most cases. However, if conservation effort has a risk-increasing impact on production the effect of risk aversion on compliance is ambiguous.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 11
Date: 2008
New Economics Papers: this item is included in nep-cta, nep-env and nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae08:44323

DOI: 10.22004/ag.econ.44323

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