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

SDG6 Clean water and sanitation
SDG13 Climate action


UKÄ Subject classification

Economics


Publication Identifiers

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

Permanent link to this page (URI)

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