Abstract

Farming activity is modeled under an intervention policy regime, combining the environmental requirements of the Council Nitrates Directive (91/676/EEC) and the compensatory provisions of the second pillar of Common Agricultural Policy. It is considered that farmers in their decision whether to comply or not with the provisions of regulation adopt either an optimizing behavioral rule if characterized by full rationality or follow evolutionary rules modeled by imitation dynamics if bounded rationality occurs. The impact of these different behavioral rules on the selection of monitoring effort and thus on the compliance incentives of a population of farmers is examined. Analysis indicated that if monitoring e¤ort is chosen arbitrarily or optimally based on the accustomed full rationality assumption then the population adopts a monomorphic behavior in the long-run, involving either full or noncompliance with the Directive's provisions. A polymorphic behavior involving partial compliance of the population also arises if the dynamic model of optimal monitoring is constrained by replicator dynamics which represent the imitation rules. It is evident, thus, that the number and the type of the equilibrium steady-states is affected by the assumption regarding the behavioral rule adopted by regulated agents. Finally, analysis was repeated under the presence of investment in monitoring capital providing identical population dynamics

Published in

Conference

15th Annual Conference of European Association of Environmental Resource Economists (EAERE)

SLU Authors

• Passa, Constadina

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Environmental Sciences related to Agriculture and Land-use
Economics and Business
Social Sciences


Permanent link to this page (URI)

https://res.slu.se/id/publ/24669