A Paradox for Agro-Environmental Land Policy

David A. Hennessy and Hongli Feng

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: A regulator with a fixed budget to spend on securing environmental benefits from farmed land has to choose between how many acres to enroll and the extent of benefits to require of each enrolled acre. Here we consider, given heterogeneous land, what properties of the environmental benefit-to-cost ratio imply for the choice of optimal program as the available budget varies. Conditions are found such that a program of high benefits on few acres is preferred for any budget level. It is also possible that a program delivering low benefits per acre at low cost is preferred on each land type, and yet a high benefit program is optimal policy, a variant of Simpson's paradox.

Keywords: benefit-to-cost ratio; environmental policy; land heterogeneity; Simpson's paradox. (search for similar items in EconPapers)
JEL-codes: D6 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-env
Date: Written

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Persistent link: http://EconPapers.repec.org/RePEc:ias:cpaper:09-wp499

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