Agri-environmental schemes: Adverse selection, information structure and delegation

Joan Canton, Stéphane De Cara and Pierre-Alain Jayet
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Joan Canton: Economics Department - University of Ottawa [Ottawa]

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Abstract: This work analyzes alternative designs of agri-environmental schemes and how different incentive mechanisms impact on their overall efficiency. It focuses on spatial targeting and delegation in an asymmetric information context. First, the optimal contract under adverse selection is modeled. This model underlines the trade-off between information rents and allocative efficiency. The impact of spatial targeting is then addressed. Disaggregated information structures increase the optimal efforts asked of the farmers. It may also involve higher information rents and may reduce the net contributions of some farmers. Finally, the consequences of delegating authority within the principal–agent relationship are investigated. The results illustrate that spatial targeting and delegation, when combined, have asymmetric impacts on farmers' payoffs.

Keywords: CONTRAT; SELECTION ADVERSE; STRUCTURE D'INFORMATION; AGRI-ENVIRONMENTAL POLICY; CONTRACT; ADVERSE SELECTION; INFORMATION STRUCTURE; DELEGATION; ASYMMETRIC INFORMATION; PAYMENTS; COSTS; INCENTIVES; DESIGN; POLICY; DECENTRALIZATION; POLLUTION; SERVICES (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (22)

Published in Ecological Economics, 2009, 68 (7), pp.2114-2121. ⟨10.1016/j.ecolecon.2009.02.007⟩

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Journal Article: Agri-environmental schemes: Adverse selection, information structure and delegation (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01172912

DOI: 10.1016/j.ecolecon.2009.02.007

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