The conservation of bioresources and the sustainability of agricultural practices are promoted through dedicated policy action in several countries. The European Union promoted a strong policy in this direction through agri-environmental schemes (AES) attached to rural development policy (reg. 2078/92, 1257/99, 1698/2005) .In studying such policy, a key issue is the interpretation of farmers’ behavior in reacting to policy incentives. Relatively few study try to put such behavior in a dynamic perspective and to take into consideration price expectations and transaction costs in simulating policy behavior. The objective of this paper is to evaluate alternative policy design options for agri-environmental schemes, taking into account such factors of decision making. The methodology relies on a simulation model of agri-environmental practices adoption based on a real option approach, including transaction costs and simulating different price expectations by farmers. Transaction costs included are both ex-ante and ex-post. Policy alternatives are represented by a different level of payment and a different dynamic of such payments over time. The model is applied to a case study in the Province of Ferrara (Italy). The conservation practices modeled may involve landscape measures as plantation of tree rows, hedgerows or creation of small lakes. Results show that transaction costs and expectations play an important role in the adoption of agri-environmental practices, as well as expectations, particularly in the present scenarios of change. The option to wait for adoption is a relevant alternative from the point of view of farmers, while, on the other hand, hold up phenomena may allow relevant savings in payments. Altogether the present policy time framework (7 years) appears insufficient for an accurate incentive design, particularly for actions with a relevant investment component and for decisions requiring to take into account long term income opportunities
Bartolini F., Raggi M., Viaggi D. (2007). Incentives, expectations and timing in conservation policy design: a case study in Emilia Romagna (Italy). s.l : s.n.
Incentives, expectations and timing in conservation policy design: a case study in Emilia Romagna (Italy)
BARTOLINI, FABIO;RAGGI, MERI;VIAGGI, DAVIDE
2007
Abstract
The conservation of bioresources and the sustainability of agricultural practices are promoted through dedicated policy action in several countries. The European Union promoted a strong policy in this direction through agri-environmental schemes (AES) attached to rural development policy (reg. 2078/92, 1257/99, 1698/2005) .In studying such policy, a key issue is the interpretation of farmers’ behavior in reacting to policy incentives. Relatively few study try to put such behavior in a dynamic perspective and to take into consideration price expectations and transaction costs in simulating policy behavior. The objective of this paper is to evaluate alternative policy design options for agri-environmental schemes, taking into account such factors of decision making. The methodology relies on a simulation model of agri-environmental practices adoption based on a real option approach, including transaction costs and simulating different price expectations by farmers. Transaction costs included are both ex-ante and ex-post. Policy alternatives are represented by a different level of payment and a different dynamic of such payments over time. The model is applied to a case study in the Province of Ferrara (Italy). The conservation practices modeled may involve landscape measures as plantation of tree rows, hedgerows or creation of small lakes. Results show that transaction costs and expectations play an important role in the adoption of agri-environmental practices, as well as expectations, particularly in the present scenarios of change. The option to wait for adoption is a relevant alternative from the point of view of farmers, while, on the other hand, hold up phenomena may allow relevant savings in payments. Altogether the present policy time framework (7 years) appears insufficient for an accurate incentive design, particularly for actions with a relevant investment component and for decisions requiring to take into account long term income opportunitiesI documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
