Yano, Yuki
- Department of Economics, Swedish University of Agricultural Sciences
Abstract
Risk aversion has been considered a factor in mitigating the moral hazard problem in agri-environmental policy. If farmers face multiple sources of uncertainty, however, risk aversion could contribute to the problem. Focusing on a required reduction in the use of a potentially damaging input under an agri-environmental scheme, we address the implications of risk aversion for a farmer's decision on compliance. We show that risk aversion can indeed mitigate the moral hazard problem, but, if a required change in production practices increases output risk, the impact of risk aversion is ambiguous.
Keywords
agri-environmental programmes; moral hazard; price and production uncertainty; compliance; risk-input relationships
Published in
European Review of Agricultural Economics
2011, volume: 38, number: 1, pages: 141-155
Publisher: OXFORD UNIV PRESS
SLU Authors
UKÄ Subject classification
Environmental Sciences and Nature Conservation
Economics
Publication identifier
- DOI: https://doi.org/10.1093/erae/jbq049
Permanent link to this page (URI)
https://res.slu.se/id/publ/47141