Philippe Bontems

AgriBMPWater: systems approach to environmentally acceptable farming

To help local regulators mitigate non-point source agricultural pollution and implement environment-friendly agricultural practices, a comparison between different existing or simulated best management practices (BMPs) has been carried out within a pluridisciplinary project called AgriBMPWater (FP5 founded). The project has been imagined and built in a pluridisciplinary approach and framework. The approach developed corresponds to a cost/effectiveness assessment of several BMPs in several European watersheds, also including the study of their acceptability by farmers. Thanks to the integrated assessment of existing and potential BMPs, a selection grid contributes to provide assistance to regulators on how to conduct environmental, economic and sociological analyses for helping decision makers. Water quality problems encountered and dealt with in this project include nitrate, phosphorus, sediment, pesticide loads and acid water concerns. Thus, the developed framework allows for a large range of hydrological and economic models, depending on the environmental problem detected in each watershed.

Regulating Nitrogen Pollution with Risk Averse Farmers under Hidden Information and Moral Hazard

We consider a model of pollution regulation for a risk averse farmer involving hidden information, moral hazard, and risk-sharing. The representative farmer faces a production risk originating from nitrogen leaching, and privately observes the soil capacity in retaining nitrogen only after the regulation contract is signed. The latter specifies a transfer and a nitrogen quota, whose decomposition by the farmer among different production stages is unknown to the regulator. We first characterize the optimal solution to the regulators problem. The sequential decision model is estimated on French crop production data, and the results are used to calibrate and simulate the optimal contract.

Creating countervailing incentives through the choice of instruments

Abstract We analyze the relative efficiency of output and input incentive schemes in an agency model under adverse selection. Depending on the marginal rate of substitution between effort and productivity, two cases of note may appear. In the first one, both incentive schemes imply the same ranking of agents regarding the productivity parameter. In that case, one instrument always dominates the other one, whatever the agent’s type. In the second case, the two schemes produce reverse rankings and the principal is always better off using a type-dependent mixed strategy over the two incentive schemes. If there is no restriction on mixed strategies, the principal is able to implement the first best. If the principal must use pure strategies, she is still better off by offering contracts with type-dependent monitoring instrument: allowing the agent to choose the instrument enhances the principal welfare.

Honesty in Environmental Compliance Games

This note investigates the consequences of honesty in a compliance game involving polluting firms and an environmental agency. Two enforcement schemes with or without self-reporting of behavior are considered. First, we show that non intervention may become optimal when the proportion of honest polluters is large enough but still inferior to one. Secondly, the increase in the number of honest polluters has striking ambiguous effects on pollution and social welfare. Indeed, we give examples in which an increase in the proportion of honest polluters leads to an increase in the number of non compliant polluters or a decrease in social welfare.

Interactions between agricultural economics and environmental and resource economics in European research: Insights from the theory of non-renewable resources

Agricultural Economics and Environmental and Resource Economics are two fields which cross-fertilized each other. These interactions are expected to grow in the near future, as the sustainability of agriculture is challenged by the depletion of natural resources. In this article, we focus on three topics in natural resource economics: the resource curse, the sustainable development, and the green paradox. Insights from these topics are then used to discuss the future challenges to be addressed in agricultural economics. The literature on the resource curse examines the links between resource rent and economic development, and emphasizes that resource richness may jeopardize economic growth. The recent boom in agricultural commodity prices may lock developing countries in a poverty trap if the rent from agricultural products exports is not properly reinvested. The economics literature on sustainable development emphasizes that defining sustainability is a difficult task, and that there is not a unanimous sustainability criterion to be applied to agriculture. Here again, the question of capital depreciation and investment for future generations is central and calls for the valuation of the capital assets agriculture relies on. The literature on the green paradox questions the effectiveness of well-intended environmental policies and their possible counter-productive effects. Improperly defined policies, such as biofuel subsidies and mandate, or land use constraints aiming at preserving biodiversity, may result in more rapid resource degradation. (This abstract was borrowed from another version of this item.)

Régulation par la production ou par l'intrant en présence d'incertitude

This paper deals with the relative efficiency of output versus input incentives schemes in a static principal-agent model with both moral hazard and adverse selection. We define conditions that allow us to extend the result obtained by Maskin and Riley [1985] on the superiority of output contingent contract to the stochastic production setting.