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Hidden action, risk aversion and variable fines in agri-environmental schemes

Adam Ozanne and Ben White ()

Australian Journal of Agricultural and Resource Economics, 2008, vol. 52, issue 2

Abstract: This note analyses the design of agri-environmental schemes for risk-averse producers whose input usage is only observable by costly monitoring. The scheme penalises producers in proportion to input use in excess of a quota. A striking result is that if the scheme is designed in such a way that producers always comply with the quota, risk aversion is not relevant in determining the level of input use.

Keywords: agri-environmental policy; monitoring; risk aversion; Environmental Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2008
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