A Group Incentive Contract to Promote Adoption of Best Management Practices
The control of agricultural nonpoint source pollution is emerging as a priority of state and national pollution control programs. Best management practices (BMPs) are often proposed as a method of control. Many BMPs are perceived by farmers as having economic disadvantages when compared to conventio...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Western Agricultural Economics Association
1999-12-01
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| Series: | Journal of Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://ageconsearch.umn.edu/record/30803 |
| _version_ | 1819229861060804608 |
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| author | Eric A. DeVuyst Viju C. Ipe |
| author_facet | Eric A. DeVuyst Viju C. Ipe |
| author_sort | Eric A. DeVuyst |
| collection | DOAJ |
| description | The control of agricultural nonpoint source pollution is emerging as a priority of state and national pollution control programs. Best management practices (BMPs) are often proposed as a method of control. Many BMPs are perceived by farmers as having economic disadvantages when compared to conventional management systems. In the absence of tougher environmental restrictions on farmer behavior and complete observability of individual farmer actions, it may be necessary to provide economic incentives to encourage farmer adoption of BMPs within environmentally sensitive watersheds. This study investigates the use of a group incentive contract to encourage adoption of BMPs. The idea behind the group incentive contract is to compensate farmers for actual damages due to adoption of BMPs while avoiding moral hazard problems and exploiting the correlated risks that farmers in a watershed face. Simulation results indicate that the majority of the nitrate pollution generated by central Illinois corn growers could eliminated at little or no cost. |
| first_indexed | 2024-12-23T11:19:54Z |
| format | Article |
| id | doaj.art-d8c15ee1080745dc81808007f70bb709 |
| institution | Directory Open Access Journal |
| issn | 1068-5502 2327-8285 |
| language | English |
| last_indexed | 2024-12-23T11:19:54Z |
| publishDate | 1999-12-01 |
| publisher | Western Agricultural Economics Association |
| record_format | Article |
| series | Journal of Agricultural and Resource Economics |
| spelling | doaj.art-d8c15ee1080745dc81808007f70bb7092022-12-21T17:49:06ZengWestern Agricultural Economics AssociationJournal of Agricultural and Resource Economics1068-55022327-82851999-12-0124236738210.22004/ag.econ.3080330803A Group Incentive Contract to Promote Adoption of Best Management PracticesEric A. DeVuystViju C. IpeThe control of agricultural nonpoint source pollution is emerging as a priority of state and national pollution control programs. Best management practices (BMPs) are often proposed as a method of control. Many BMPs are perceived by farmers as having economic disadvantages when compared to conventional management systems. In the absence of tougher environmental restrictions on farmer behavior and complete observability of individual farmer actions, it may be necessary to provide economic incentives to encourage farmer adoption of BMPs within environmentally sensitive watersheds. This study investigates the use of a group incentive contract to encourage adoption of BMPs. The idea behind the group incentive contract is to compensate farmers for actual damages due to adoption of BMPs while avoiding moral hazard problems and exploiting the correlated risks that farmers in a watershed face. Simulation results indicate that the majority of the nitrate pollution generated by central Illinois corn growers could eliminated at little or no cost.https://ageconsearch.umn.edu/record/30803best management practicesincentive contractnonpoint source pollution |
| spellingShingle | Eric A. DeVuyst Viju C. Ipe A Group Incentive Contract to Promote Adoption of Best Management Practices Journal of Agricultural and Resource Economics best management practices incentive contract nonpoint source pollution |
| title | A Group Incentive Contract to Promote Adoption of Best Management Practices |
| title_full | A Group Incentive Contract to Promote Adoption of Best Management Practices |
| title_fullStr | A Group Incentive Contract to Promote Adoption of Best Management Practices |
| title_full_unstemmed | A Group Incentive Contract to Promote Adoption of Best Management Practices |
| title_short | A Group Incentive Contract to Promote Adoption of Best Management Practices |
| title_sort | group incentive contract to promote adoption of best management practices |
| topic | best management practices incentive contract nonpoint source pollution |
| url | https://ageconsearch.umn.edu/record/30803 |
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