The regulation of non-point source pollution and risk preferences: An experimental approach

Eva Camacho-Cuena and Till Requate ()
Authors registered in the RePEc Author Service: Eva Camacho Cuena ()

Ecological Economics, 2012, vol. 73, issue C, 179-187

Abstract: Many environmental problems, notably arising from agriculture, can be classified as non-point source pollution problems. In this paper we present results of an experimental study on the performance of three mechanisms designed to deal with such problems: collective fining, random fining, and a tax-subsidy scheme. We find that the fining schemes induce under-abatement, a feature being enforced with experience. We further elicit the participants' risk attitude and show that the performance of collective fining is not affected by the subjects' risk preferences. Under a system based on random fining the performance of the mechanism worsens in the presence of risk seeking subjects. However, coordination on over-abatement under the tax-subsidy can be alleviated if subjects are risk averse.

Keywords: Non-point source pollution; Environmental policy; Risk attitude; Economic experiments (search for similar items in EconPapers)
JEL-codes: C9 Q52 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:73:y:2012:i:c:p:179-187

DOI: 10.1016/j.ecolecon.2011.10.019

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