cooperation against theft a test of incentives for water management in tunisia water theft carried out by manipulating water meters constrains volumetric pricing in semi arid regions cooperative management can reduce theft and improve incentives for efficient water use by inducing peer monitoring using a theoretical model we show that theft is more likely when prices are high punishments are weak and cooperatives are large we also show how cooperative membership and punishment levels are determined endogenously by constraints on monitoring we test the model on data from tunisia for the years 2001 2003 relying on instruments that proxy for unobservable monitoring costs the results confirm that well designed incentives can reduce theft and that constraints on monitoring costs affect institutional design

the regulation of non point source pollution and risk preferences an experimental approach many environmental problems notably arising from agriculture can be classified as non point source pollution problems in this paper we present results of an experimental study on the performance of three mechanisms designed to deal with such problems collective fining random fining and a tax subsidy scheme we find that the fining schemes induce under abatement a feature being enforced with experience we further elicit the participants risk attitude and show that the performance of collective fining is not affected by the subjects risk preferences under a system based on random fining the performance of the mechanism worsens in the presence of risk seeking subjects however coordination on over abatement under the tax subsidy can be alleviated if subjects are risk averse c 2011 elsevier b v all rights reserved

policy for the adoption of new environmental monitoring technologies to manage stock externalities abstract with the development of modern information technologies relying on nanotechnologies and remote sensing a number of systems can be envisaged that allow for monitoring of the negative externalities generated by producers consumers or travelers road pricing schemes or individual emission meters for automobiles are two examples we analyze a dynamic model of stock pollution when the regulator has incomplete information on emissions generated by heterogeneous agents our contribution is to explicitly study a decentralized policy for adoption of monitoring equipment over time we determine the second best tax rates the pattern of monitoring technology adoption and identify conditions for the voluntary diffusion of monitoring technologies over time simulations show the welfare gains compared to alternative policies

budget balancing incentive mechanisms abstract a p xepapadeas j environ econom management20 113 26 1991 developed a pollution abatement incentive mechanism that both reduces the information requirements of a regulator and is budget balancing drawing only on the social gains from pollution abatement to encourage firm compliance this paper demonstrates that contrary to xepapadeas the budget balancing system of random penalties cannot be used to induce compliance with the regulator s objectives if firms are risk neutral however the mechanism can be successfully applied if firms are sufficiently risk averse e rasmusen rand j econom 18 428 435 1987

publicly vested values for fish and wildlife comment meyer s conclusion from these four observations is that natural resource asset services must loom large in individual utility functions indeed he implicitly ranks the loss of public recreational opportunity on a qualitative par with loss of home family or other important components of living quality p 228 other scholars for example dwyer and bowes 1978 have reacted differently to these same observations they conclude that weakness in the survey instruments eliciting wts responses seems likely p 1009 meyer himself touches on this area which i would characterize as that of strategic behavior he says quoting from another of his papers while it has long been recognized by theorists that the reality of an actual payment may tend to shift requests for compensation downward from initial hypothetical levels evidence from the present study raises the clear possibility that an increased reality of an actual specified injurious impact may tend to shift requests for compensation upward meyer 1978 p 20 an alternative explanation then for the four observations above is that the apparent conflict arises from strategic responses to survey questions asking about wtp and wts the strategic considerations involved may be characterized as follows

experimental evidence on dynamic pollution tax policies abstract this paper uses laboratory experiments to provide primary empirical evidence on dynamic pollution tax policies in particular we investigate a setting where a regulator with incomplete information uses a pollution tax mechanism with a simple endogenous tax rate adjustment rule to cost effectively meet a pollution standard this mechanism provides the opportunity for firms to strategically abate in order to reduce future tax rates the experiments vary important policy design features such as the type of tax ambient or emissions the initial tax rate and the tax rate adjustment speed we find that in equilibrium the pollution standard is met on average for each of these settings the observed long run tax rates vary considerably across policy designs which can be explained with a theory that allows for a mix of strategic and myopic firms along with the recognition that the incentives generated by the policy design can influence whether an agent plays myopically or strategically

voluntary threat approaches to reduce ambient water pollution this article considers the regulation of nonpoint source water pollution through the use of a voluntary threat approach which allows a polluter group to meet a standard voluntarily but imposes an ambient tax upon noncompliance in particular we develop an endogenous voluntary threat approach that can be parameterized to induce compliance as a unique subgame perfect nash equilibrium and eliminate zero abatement equilibria experimental evidence on the proposed approach as well as the exogenous approach of segerson and wu 2006 suggests that the severity of the threatened tax and the opportunity for communication are critical in determining policy outcomes

performance of the ambient tax does the nature of the damage matter the ambient tax is often considered as an efficient instrument to achieve a first best outcome of ambient pollution when the regulator cannot observe individual emissions or when monitoring costs are prohibitive while this view is supported to a large extent by experimental findings there remains several hurdles that hinder the implementation of the ambient tax in the field one of these hurdles is the nature of the damage experimental findings suggest that the efficiency of the ambient tax is higher under external damage i e if ambient pollution affects non polluters spraggon in j public econ 84 427 456 2002 than under internal damage i e if ambient pollution affects polluters themselves cochard et al in environ resour econ 30 393 422 2005 but this result rests on very different experimental settings therefore we designed a new experiment that allows to compare external and internal damage within a common setting our main finding is that the ambient tax is equally efficient under internal and external damage

efficiency of nonpoint source pollution instruments an experimental study in nonpoint source pollution problems the regulator does not observe each polluter s individual emission which prevents him from using the conventional policy instruments therefore new instruments have been designed to regulate this type of pollution in an experiment we compare the efficiency of some of these instruments an input based tax an ambient tax subsidy an ambient tax and a group fine we assume that polluters themselves are affected by environmental damages a control session without any regulation is also carried out in order to study the status quo situation our experimental data show that the input tax and the ambient tax are very efficient and reliable and the group fine is fairly efficient and reliable these instruments improve social welfare with respect to the status quo on the contrary the ambient tax subsidy decreases social welfare with respect to the status quo and its effect is very unreliable

a dynamic conjectural variations model in the private provision of public goods a differential game approach abstract the purpose of this paper is to provide a reasonable microfoundation to justify the concept of a conjectural variations equilibrium which is often used in the literature on private provision of public goods with the help of the differential game by interpreting the steady state conjectures in a dynamic contribution game as the conjectural variations in the corresponding static game we derive explicit forms of nash or non zero conjectural variations depending on the choice of the strategy spaces furthermore we find that there may be uncountable many conjectural variations and the possibility of matching behavior i e positive conjectural variations when non linear markov perfect strategies are used and when the domain of a state variable is appropriately restricted

a damage based tax mechanism for regulation of non point emissions in a recent paper segerson 1988 proposed a novel incentive mechanism for stochastic non point emissions based on ambient pollution concentrations in nature for specification of the mechanism when the damage function is nonlinear the regulator must know polluters cost and emission functions the mechanism also gives incentives to form coalitions among polluters which if they are formed render the mechanism inefficient in this paper we propose a revised mechanism which eliminates the need for knowledge of polluters cost and emission functions and reduces the probability of coalition forming a standards and pricing version of the revised mechanism with both properties mentioned is also developed

the regulation of non point source pollution under imperfect and asymmetric information abstract this paper develops a bayesian framework for discussing the role of information in the design of non point source pollution control mechanisms an ambient concentration tax is examined allowing for spatial transport among multiple zones imposition of the tax requires costly measurement of concentrations in selected zones and the selection of zones for measurement must be undertaken without perfect information regarding several parameters of the problem potentially crucial information issues discussed include a the impact of asymmetric priors regarding fate and transport b the cost of measuring ambient concentration and c the optimal acquisition of information regarding fate and transport

nonpoint source pollution taxes and excessive tax burden if a regulator is unable to measure firms individual emissions an ambient tax can be used to achieve the socially desired level of pollution with this tax each firm pays a unit tax on aggregate emissions in order for the tax to be effective firms must recognize that their decisions affect aggregate emissions when firms behave strategically with respect to the tax setting regulator under plausible circumstances their tax burden is lower under an ambient tax relative to the tax which charges firms on the basis of individual emissions firms may prefer the case where the regulator is unable to observe individual firm emissions even if this asymmetric information causes the regulator to tax each firm on the basis of aggregate emissions

environmental policy under imperfect information incentives and moral hazard abstract when net emissions of individual polluters cannot be efficiently monitored then emissions charges controls on emissions levels or subsidies for emissions reduction are not effective as environmental policy instruments this paper proposes instruments that can be applied in such limited information situations these instruments take the form of contracts between a pollution control agency and individual polluters the contracts include a combination of fines and subsidies that induces dischargers to follow optimal environmental policies in the absence of individual monitoring

group decision making theory and behavior under performance based water quality payments abstract two theoretical models explaining group allocation decisions under watershed level performance based payments are explored i reward and penalize individual contributors and ii reduce the problem with cost sharing and cooperative abatement under model i an optimal amount of pollution from individual contributors can be achieved with proper payment incentive and group allocation formula model ii represents a cost effective solution to pollution reduction where the group optimizes its return from group payments but does not necessarily achieve an optimal level of pollution field experiment observations support farmer behavior closer to model ii

ambient based pollution mechanisms a comparison of homogeneous and heterogeneous groups of emitters abstract over the last two decades ambient based tax mechanisms have been offered as a potential solution to the problem of nonpoint source water pollution previous theoretical analyses suggest that the performance of ambient based tax mechanisms does not depend on firm characteristics such as size whilst policy discussions advocate that such mechanisms are best suited for regulating relatively homogeneous firms using controlled laboratory experiments we provide empirical evidence that the distribution of firm sizes does have a significant impact on observed group decision making and further that heterogeneity has the potential to generate both some relatively desirable outcomes as well as some outcomes that are not attractive these results suggest that richer theoretical models that capture important strategic interactions and social preferences are needed to better describe laboratory behavior and by extension behavior in potential policy settings

regulation of non point emissions a variance based mechanism non point emission problems such as pesticide nitrate and phosphorus pollution of lakes and ground water are often characterised by a small number of polluters convex damage functions and stochastic emissions some regulatory mechanisms proposed in the literature for stochastic non point emissions implement the optimal abatement vector in dominant strategies ensuring that non nash conjectures cannot be rationalized however specification of these mechanisms requires firm level information and differentiated rates when the damage function is convex other mechanisms eliminate the need for firm level information and rate differentiation but only implement optimum in nash strategies where non nash conjectures that cause equilibrium to stray from optimum can be rationalized in this paper we propose a mechanism which eliminates the need for firm level information and rate differentiation while retaining implementation in dominant strategies

ambient taxes when polluters have multiple choices economic research on environmental policy design has largely been concerned with the merits of emissions based economic incentives e g emissions charges emissions reduction subsidies transferable discharge permits ambient based tax subsidy schemes have drawn considerable interest in nonpoint pollution literature as alternatives to emissions based instruments expanding especially on segerson s seminal article this article examines the optimal design and budget balancing properties of ambient tax subsidy schemes under more realistic assumptions about the dimensions of firms choice sets than prior research

team approaches in reducing nonpoint source pollution abstract it is technically difficult and costly to monitor nonpoint source pollution consequently most economic instruments directed towards reducing this type of pollution have focused on circumventing the monitoring problem by focusing on readily observable factors such instruments include taxes or tradable permits on inputs or other incentives to induce changes in farming practices one difficulty with such approaches is that the incentives may not be consistent with the primary objectives of the policies to reduce nutrient runoffs this paper seeks to identify under what conditions it would be beneficial to apply more direct incentives for reduced nutrient runoffs monitoring and enforcement are core issues in this connection it is still difficult to monitor individual farm field runoffs hence the incentive problems associated with multiple agents emitting to the same recipient need to be resolved

non point source regulation a self reporting mechanism abstract information feasible regulatory mechanisms that do not require the regulator to acquire firm level information have been proposed long ago for stochastic non point emission problems these mechanisms do not take polluter cooperation and firm entry exit incentives simultaneously into account nor are these issues addressed in an informationally efficient way in this paper we propose an informationally feasible self reporting mechanism that is robust to cooperation among polluters while giving participating firms correct abatement incentives as well as giving entry exit incentives that are correct to a first order approximation