The optimal pollution permit trading system is examined when the regulator, faced with incomplete information on firms’' abatement costs and delivery coefficients, seeks to minimize expected total abatement costs to meet an ex ante pollution target. Intuitively, we find that the optimal trading...

Due to payoff uncertainties combined with risk aversion and/or real options, farmers may demand a premium in order to adopt conservation tillage practices, over and above the compensation for the expected profit losses (if any). We propose a method of directly estimating the financial incentives...

To value water quality improvements in the Chesapeake Bay or elsewhere, it is necessary to choose an appropriate model of consumer behavior. A number of different travel cost based recreation demand models have beenemployed to value changes in water quality or beach access. Among the possible...

Due to payoff uncertainties combined with risk aversion and/or real options, farmers may demand a premium in order to adopt conservation tillage practices, over and above the compensation for the expected profit losses (if any). We propose a method of directly estimating the financial incentives...

In this paper, we study the social efficiency of private carbon markets that include trading in agricultural soil carbon sequestration when there are significant co-benefits (positive environmental externalities) associated with the practices that sequester carbon. Likewise, we investigate the...

Researchers have recognized the central role that the choice of functional form has on estimated of consumer surplus. The purpose of this paper is to quantify the magnitude of errors which might arise from the use of incorrect functional forms. It describes a simulation experiment where...

Agricultural Policy and Conservation Programs in the United States: New Futures, New Benefits

We propose a new explanation for the WTP/WTA disparity in experiments and surveys. Uncertainty, irreversibility and limited learning opportunities can generate commitment costs, driving a wedge between WTP and WTA. We present experimental evidence that supports our hypothesis.