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

Robert Fraser

No 100550, 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource 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 noncompliance, 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: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 18
Date: 2011
New Economics Papers: this item is included in nep-agr, nep-cta and nep-env
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://ageconsearch.umn.edu/record/100550/files/Fraser%20R.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:ags:aare11:100550

DOI: 10.22004/ag.econ.100550

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