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Implementing the water framework directive: contract design and the cost of measures to reduce nitrogen pollution from agriculture.
Environ Manage. 2007 Oct; 40(4):567-77.EM

Abstract

The performance of different policy design strategies is a key issue in evaluating programmes for water quality improvement under the Water Framework Directive (60/2000). This issue is emphasised by information asymmetries between regulator and agents. Using an economic model under asymmetric information, the aim of this paper is to compare the cost-effectiveness of selected methods of designing payments to farmers in order to reduce nitrogen pollution in agriculture. A principal-agent model is used, based on profit functions generated through farm-level linear programming. This allows a comparison of flat rate payments and a menu of contracts developed through mechanism design. The model is tested in an area of Emilia Romagna (Italy) in two policy contexts: Agenda 2000 and the 2003 Common Agricultural Policy (CAP) reform. The results show that different policy design options lead to differences in policy costs as great as 200-400%, with clear advantages for the menu of contracts. However, different policy scenarios may strongly affect such differences. Hence, the paper calls for greater attention to the interplay between CAP scenarios and water quality measures.

Authors+Show Affiliations

Dipartimento di Economia e Ingegneria Agrarie, University of Bologna, Viale Fanin, 50, 40127, Bologna, Italy.No affiliation info availableNo affiliation info availableNo affiliation info available

Pub Type(s)

Journal Article
Research Support, Non-U.S. Gov't

Language

eng

PubMed ID

17879126

Citation

Bartolini, Fabio, et al. "Implementing the Water Framework Directive: Contract Design and the Cost of Measures to Reduce Nitrogen Pollution From Agriculture." Environmental Management, vol. 40, no. 4, 2007, pp. 567-77.
Bartolini F, Gallerani V, Raggi M, et al. Implementing the water framework directive: contract design and the cost of measures to reduce nitrogen pollution from agriculture. Environ Manage. 2007;40(4):567-77.
Bartolini, F., Gallerani, V., Raggi, M., & Viaggi, D. (2007). Implementing the water framework directive: contract design and the cost of measures to reduce nitrogen pollution from agriculture. Environmental Management, 40(4), 567-77.
Bartolini F, et al. Implementing the Water Framework Directive: Contract Design and the Cost of Measures to Reduce Nitrogen Pollution From Agriculture. Environ Manage. 2007;40(4):567-77. PubMed PMID: 17879126.
* Article titles in AMA citation format should be in sentence-case
TY - JOUR T1 - Implementing the water framework directive: contract design and the cost of measures to reduce nitrogen pollution from agriculture. AU - Bartolini,Fabio, AU - Gallerani,Vittorio, AU - Raggi,Meri, AU - Viaggi,Davide, Y1 - 2007/08/10/ PY - 2005/05/06/received PY - 2006/09/21/accepted PY - 2007/9/20/pubmed PY - 2008/1/25/medline PY - 2007/9/20/entrez SP - 567 EP - 77 JF - Environmental management JO - Environ Manage VL - 40 IS - 4 N2 - The performance of different policy design strategies is a key issue in evaluating programmes for water quality improvement under the Water Framework Directive (60/2000). This issue is emphasised by information asymmetries between regulator and agents. Using an economic model under asymmetric information, the aim of this paper is to compare the cost-effectiveness of selected methods of designing payments to farmers in order to reduce nitrogen pollution in agriculture. A principal-agent model is used, based on profit functions generated through farm-level linear programming. This allows a comparison of flat rate payments and a menu of contracts developed through mechanism design. The model is tested in an area of Emilia Romagna (Italy) in two policy contexts: Agenda 2000 and the 2003 Common Agricultural Policy (CAP) reform. The results show that different policy design options lead to differences in policy costs as great as 200-400%, with clear advantages for the menu of contracts. However, different policy scenarios may strongly affect such differences. Hence, the paper calls for greater attention to the interplay between CAP scenarios and water quality measures. SN - 0364-152X UR - https://www.unboundmedicine.com/medline/citation/17879126/Implementing_the_water_framework_directive:_contract_design_and_the_cost_of_measures_to_reduce_nitrogen_pollution_from_agriculture_ L2 - http://dx.doi.org/10.1007/s00267-005-0136-z DB - PRIME DP - Unbound Medicine ER -