Conservation contract adoption under fixed and variable costs

Geraldine Ducos and Pierre Dupraz
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Geraldine Ducos: Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique

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Abstract: Farmers' conservation contract adoption is usually explained through the technology lens, i.e. with operational costs depending on the subscribed area and environmental efforts. In their 2003 article, Dupraz et al. analysed this issue by introducing utility farmers directly derive from contract environmental outcomes. They specified farmers' willingness to accept, which is the minimum compensation payment the farmer accepts to enrol and produce environmental services on a given area. Here, we deepen this analysis at two levels. First, at the theoretical one, by introducing fixed compliance costs in the willingness to accept approach. Secondly, we empirically show that among fixed compliance costs, fixed transaction costs are a significant contracting barrier. It explains why smallest farms have a reduced probability to contract.

Keywords: AGRO-ENVIRONMENTAL CONTRACT; WILLINGNESS TO ACCEPT; FIXED COMPLIANCE COST (search for similar items in EconPapers)
Date: 2007-12-13
Note: View the original document on HAL open archive server: https://hal.science/hal-01931625v1
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Published in 1. Journées INRA-SFER de recherches en Sciences Sociales, Société Française d'Economie Rurale (SFER). FRA., Dec 2007, Paris, France. 22 p

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