Agri-environmental Regulation on the Back of a Data Envelopment Analysis

Ben White, Jananee Raguragavan and Robert G Chambers ()

No 7963, 81st Annual Conference, April 2-4, 2007, Reading University from Agricultural Economics Society

Abstract: A land retirement policy whereby land is taken out of agriculture and converted to natural vegetation or forestry has the potential to reduce environmental damage related to dryland salinity in Western Australia. This paper uses some recent results in the theory of directional distance functions (Chambers and Fare, 2004) to analyse alternative policy designs for a land retirement scheme. The results indicate that a fixed price scheme is inefficient compared with a first-best solution, but performs adequately. A scheme requiring a fixed proportion of area retired by all producers is inefficient. A separating solution, based on mechanism design, gives a small but siginificant increase in welfare compared to a fixed price scheme.

Keywords: Agri-environmental policy; distance functions; efficiency; mechanism design; Environmental Economics and Policy; Q12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-env and nep-reg
Date: 2007

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