Agri-environmental policy and moral hazard under multiple sources of uncertainty

Sammanfattning

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.

Nyckelord

agri-environmental programmes; moral hazard; price and production uncertainty; compliance; risk-input relationships

Publicerad i

European Review of Agricultural Economics
2011, volym: 38, nummer: 1, sidor: 141-155
Utgivare: OXFORD UNIV PRESS

SLU författare

• Yano, Yuki

  • Institutionen för ekonomi, Sveriges lantbruksuniversitet
    

UKÄ forskningsämne

Miljö- och naturvårdsvetenskap
Nationalekonomi

Publikationens identifierare

• DOI: https://doi.org/10.1093/erae/jbq049

Permanent länk till denna sida (URI)

https://res.slu.se/id/publ/47141