Abstract

Within the European Union, it is agreed that watershed-based management of water quality problems is more efficient than centralised arrangements. In this study, a mechanism for allocating international funds to watershed authorities for nitrogen abatement in the presence of moral hazard is investigated. The results show that when there is a risk of climate change, the cost of moral hazard to the international funding agency can be high if there is a moderate likelihood of climate change and the watershed authority is guaranteed a high minimum compensation.

Keywords

nitrogen; climate change; moral hazard; Baltic Sea; policy instruments

Published in

European Review of Agricultural Economics
2014, Volume: 41, number: 2, pages: 327-351

SLU Authors

• Elofsson, Katarina

  • Department of Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

Ensure availability and sustainable management of water and sanitation for all
Take urgent action to combat climate change and its impacts


UKÄ Subject classification

Economics


Publication identifier

DOI: https://doi.org/10.1093/erae/jbt018

Permanent link to this page (URI)

https://res.slu.se/id/publ/64989