Abstract
To reduce the non-point source pollution generated by agricultural activities that leads to undesirable effects on downstream water resources, policymakers have instituted programs to incentivize farmers’ mitigation adoption behavior. These programs, however, have proven to be costly and generate low participation rates. We investigate the interaction of two externalities in farmers’ best management practices (BMP) adoption decisions under performance-based payment programs: knowledge spillovers and positive environmental outcomes. Our results illustrate that targeted programs can improve the cost-effectiveness of policies by focusing on those communities where the programs have more impact through the spillover mechanism. The results are driven by interactions between the distribution of farmers’ willingness to adopt and the positive externalities generated by neighbors’ decisions
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Liu, H., Ruebeck, C.S. (2021). Externalities, Spillover Effects, and Implications for Payment-for-Performance Programs. In: Ahrweiler, P., Neumann, M. (eds) Advances in Social Simulation. ESSA 2019. Springer Proceedings in Complexity. Springer, Cham. https://doi.org/10.1007/978-3-030-61503-1_32
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DOI: https://doi.org/10.1007/978-3-030-61503-1_32
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