Prevention and Compensation of Muddy Flows: Some Economic Insights

Sandrine Spaeter, Francois Cochard and Anne Rozan

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: Recent surveys report the increasing number of muddy flows in many areas, and point out the fact that agricultural practices (among others) influence significantly the risk and severity of muddy flows. In this paper, we investigate the economic incentives that can be given to the farmer to adopt different practices. We propose an original economic instrument that entails an `ambient tax', voluntary revelations and a compensation fund. Because of the authorities' difficulties to be informed of each farmer's individual efforts, the tax cannot depend on the individual but on the collective level of efforts. However, each agent may lower his tax payment by revealing his individual efforts to the regulator so that high efforts may be rewarded compared to low ones. The tax revenue is used to supply a fund that is dedicated to the compensation of victims if a muddy flow occurs. hence it is possible to simultaneously increase the incentives for farmers to adopt more environmentally friendly practices and to improve the compensation of victims without mitigating their incentives to protect themselves against the risk of muddy flow.

Keywords: muddy flow; natural disasters; economic incentives; ambient tax; insurance; compensation fund. (search for similar items in EconPapers)
JEL-codes: G22 H21 H23 H3 Q2 Q54 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://beta.u-strasbg.fr/WP/2006/2006-29.pdf (application/pdf)

Related works:
Working Paper: Prevention and Compensation of Muddy Flows: Some Economic Insights (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2006-29

Access Statistics for this paper

More papers in Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg Contact information at EDIRC.
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).