Moral Hazard, Targeting and Contract Duration in Agri-Environmental Policy

Robert Weston Fraser

No 108795, 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK from Agricultural Economics Society

Abstract: This paper extends the multi-period agri-environmental contract model of Fraser (2004) so that it contains a more realistic specification of the inter-temporal penalties for non-compliance, and therefore of the inter-temporal moral hazard problem in agri-environmental policy design. On this basis it is shown that a farmer will have an unambiguous preference for cheating early over cheating late in the contract period based on differences in the expected cost of compliance. It is then shown how the principal can make use of this unambiguous preference to target monitoring resources intertemporally, and in so doing, to encourage full contract duration compliance.

Keywords: Moral Hazard; Contract Duration; Agri-Environmental Policy; Targeting; Agribusiness; Environmental Economics and Policy; Q15; Q18; Q58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cta and nep-env
Date: 2011-04
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Related works:
Journal Article: Moral Hazard, Targeting and Contract Duration in Agri‐Environmental Policy (2012)
Working Paper: Moral Hazard, Targeting and Contract Duration in Agri-Environmental Policy (2011)
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Persistent link: http://EconPapers.repec.org/RePEc:ags:aesc11:108795

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