Agri-environmental Policies and Public Goods: An Assessment of Coalition Incentives and Minimum Participation Rules
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An increasing number of papers analyse the inclusion of collective/spatial conditionality constraints in agricultural policies dealing with natural resource management. In this article we theoretically assess the conditions in which employing collective conditionality constraints linked to incentives better reach the social preferences on PG provision by agriculture. We deal with this issue by using a coalition formation model to endogenize the size of the group of farmers cooperating, and investigate how it is affected by different policy schemes. We analyse and compare the following policy schemes: (1) a homogenous payment that target the whole population of farmers, (2) a coalition bonus, that incentivizes only the contributions by the coalition members, and (3) a coalition bonus associated to a MPR on the size of the coalition. The results show that formulating payments that discriminate between co-operators and free-riders, and associating to such a payment a MPR, is relatively more effective than the traditional homogenous payments. However this is true only under some (local) conditions that we theoretically derived.
KeywordsAgglomeration bonus Coalition formation Public good Biodiversity conservation Agri-environmental policy
The authors thank the two anonymous reviewers for their comments, which significantly helped to improve the manuscript. Any remaining errors are our own responsibility. The article is based on the PhD thesis of Matteo Zavalloni.
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