Contract Design to Sequester Carbon in Agricultural Soils

Mireille Chiroleu-Assouline and Sébastien Roussel ()
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Sébastien Roussel: LAMETA - Université Montpellier 1

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: According to several studies, agricultural carbon sequestration could be a relatively low cost opportunity to mitigate greenhouse gas (GHG) concentration and a promising means that could be institutionalised. However the potential for additional carbon quantities in agricultural soils is critical and comes from the agricultural firms behaviour with regards to land heterogeneity. In this paper, our aim is to set incentive mechanisms to enhance carbon sequestration by agricultural firms. A policymaker has to arrange incentives as agricultural firms have private information and do not spontaneously switch to the required practices. Moreover, a novelty in our paper is to show that the potential for additional carbon sequestration is similar to an exhaustible resource. As a result, we construct an intertemporal principal-agent model with adverse selection. Our contribution is to specify contracts in order to induce truthful revelation by the firms regarding their intrinsic characteristics towards carbon sequestration, while analytically characterizing the optimal path to sequester carbon as an exhaustible resource

Keywords: Adverse selection; agriculture; carbon sequestration; incentives; land-use (search for similar items in EconPapers)
JEL-codes: D60 D62 E62 H23 Q28 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-03
New Economics Papers: this item is included in nep-cta and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://mse.univ-paris1.fr/pub/mse/CES2010/10060.pdf (application/pdf)

Related works:
Working Paper: Contract Design to Sequester Carbon in Agricultural Soils (2010)
Working Paper: Contract Design to Sequester Carbon in Agricultural Soils (2010)
Working Paper: Contract Design to Sequester Carbon in Agricultural Soils (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:10060

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