Price Insurance, Moral Hazard and Agri-environmental Policy

Robert Fraser

No 124305, 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia from Australian Agricultural and Resource Economics Society

Abstract: Motivated by recent EC proposals to “strengthen risk management tools” in the CAP in relation to farmers’ increased exposure to market price risk, this paper draws attention to a potential negative consequence of such a change in the CAP – an associated increase in cheating behaviour by farmers in the context of environmental stewardship. A theoretical framework for this policy problem is developed and used not just to illustrate the problem, but also to propose a solution – specifically to combine the introduction of CAP-supported policy changes which reduce farmers’ exposure to market-based risk with changes in environmental stewardship policies which increase the riskiness of cheating and thereby discourage such behaviour.

Keywords: Demand and Price Analysis; Environmental Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 21
Date: 2012
New Economics Papers: this item is included in nep-env, nep-ias and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare12:124305

DOI: 10.22004/ag.econ.124305

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