Private environmental incentive contract and a weather signal - Archive ouverte HAL Access content directly
Journal Articles Environmental Economics Year : 2011

Private environmental incentive contract and a weather signal

Abstract

The authors of the paper are interested in an environmental incentive payment mode for risk-averse contracting farmers. The incitement joins the environmental output produced by the farmer to his effort through an environmental contract reported to be motivating. However, we suppose an environmental output depending on a weather signal and we consider the effect of a weather variable on the incentive contract. The first and usual incentive contract studied takes into account the average effect of a weather indicator on the farmer's environmental output. The paper studies a second incentive contract taking into account the instantaneous effect of a weather indicator on the fanner's environmental output. Then in complement of the reservation farmer's utility, authors consider a minimum incentive payment given to the farmer through a constraint of a minimum payment for every point of farmer's output. It is possible to increase this minimum payment in the second type contract (compared to the first one) without reducing the expected utility of the principal and the expected utility of the fanner, by increasing the level of the farmer's environmental action. The use of such minimum farmer's payment and the increase of this minimum payment could be very conclusive to bind a farmer by an environmental contract
Fichier principal
Vignette du fichier
Loisel_16413.pdf (379.41 Ko) Télécharger le fichier
Origin : Files produced by the author(s)
Loading...

Dates and versions

hal-01455194 , version 1 (03-02-2017)

Identifiers

Cite

Patrice Loisel, Bernard Elyakime. Private environmental incentive contract and a weather signal. Environmental Economics, 2011, vol. 2 (n° 1), pp. 62-66. ⟨hal-01455194⟩
75 View
33 Download

Share

Gmail Facebook X LinkedIn More