A Note on Imperfect Monitoring of Agri‐Environmental Policy

Chongwoo Choe and Iain Fraser

Journal of Agricultural Economics, 1998, vol. 49, issue 2, 250-258

Abstract: In this note the impact of imperfect compliance monitoring on the implementation of agri‐environmental policy is analysed. A principal‐agent model is used to demonstrate how imperfections in the monitoring process lead to higher levels of incentive payments to ensure compliance. This means that less accurate compliance monitoring results in higher social costs from policy implementation. Technical enhancements in the accuracy of compliance monitoring will therefore lead to a reduction in social costs. This is an important result with significant implications for the design and implementation of agri‐environmental policy.

Date: 1998
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https://doi.org/10.1111/j.1477-9552.1998.tb01267.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:49:y:1998:i:2:p:250-258

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