Agricultural pollution of water, moral hazard and optimal audit policies

Aléa moral et politiques d’audit optimales dans le cadre de la pollution d’origine agricole de l’eau

Sandrine Spaeter () and Alban Verchère
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Sandrine Spaeter: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: When information on farmers' farming methods is incomplete, it is not optimal to fight water pollution due to their activities exclusively through a tax policy. Symmetrically, subsidies alone are not appropriate for some cereals which are already widely subsidized in the European Union. In this paper, we show that a contract between the farmer and the regulator with random audit, penalties or financial compensations depending on the environmental effort of the farmer, could be another alternative for Society. The relevance of such an audit policy depends on the reliability of the informations given by some indicators on the pedological, hydrological and agronomic characteristics of cultivated soils. From the practical point of view, we discuss the consistency and also the availability of such indicators in the case of the Alsatian groundwater pollution by agricultural activities. We also describe the main features of the audit system adopted in some water catchment areas in Germany (Baden-Wurttemberg).

Keywords: Agricultural pollution; Nitrates; Moral hazard; Audit; Optimal contract; Pollution agricole; Aléa moral; Contrat optimal (search for similar items in EconPapers)
Date: 2004
Note: View the original document on HAL open archive server: https://hal.science/hal-01201071v1
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Citations: View citations in EconPapers (11)

Published in Cahiers d'Economie et de Sociologie Rurales, 2004, 71, pp.5-35. ⟨10.22004/ag.econ.202650⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01201071

DOI: 10.22004/ag.econ.202650

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