Adverse Selection in the Environmental Stewardship Scheme: Evidence in the Higher Level Stewardship Scheme?

The Environmental Stewardship Scheme provides payments to farmers for the provision of environmental services based on foregone agricultural income. This creates a potential incentive compatibility problem which, combined with an information asymmetry on farm land heterogeneity, could lead to adverse selection of farmers into the Scheme and therefore reduced cost-effectiveness of the Scheme. This reduced cost-effectiveness would be represented by a systematic overpayment of farmers for the land enrolled into the Scheme, compared to the opportunity cost of production. This paper examines the potential adverse selection problem affecting the higher tier of the Environmental Stewardship, the Higher Level Stewardship, using a principal agent framework combined with farm-level data on participation in the HLS. Empirically, it is found that, at the farm level, HLS participation is negatively related to cereal yields, suggesting the existence of adverse selection in the HLS and farmer overcompensation from entering the scheme.Adverse selection, agri-environment, Environmental Stewardship, principal-agent, contract, Environmental Economics and Policy, D78, D82, H44, Q18, Q58,

Seasonal variability, land values and willingness-to-pay for a forward wheat contract with protein premiums and discounts

This article investigates the impact of a protein premiums and discounts system on the income stream from growing wheat. Based on a biological relationship between protein and yield in uncertain seasonal conditions, it shows that such a system reduces the expected level and variability of wheat income. It is subsequently argued, using a numerical analysis, that protein payments affect both the attraction to wheat growers of forward contracts and the value of land used for wheat. The nature of both of these impacts is related to the level of seasonal variability affecting the land. Consequently, wheat growers in the more unreliable regions of the wheatbelt may have been particularly disadvantaged by the system.Land Economics/Use,

Moral Hazard, Targeting and Contract Duration in Agri-Environmental Policy

This paper extends the multi-period agri-environmental contract model of Fraser (2004) so that it contains a more realistic specification of the inter-temporal penalties for noncompliance, and therefore of the inter-temporal moral hazard problem in agri-environmental policy design. On this basis it is shown that a farmer will have an unambiguous preference for cheating early over cheating late in the contract period based on differences in the expected cost of compliance. It is then shown how the principal can make use of this unambiguous preference to target monitoring resources intertemporally, and in so doing, to encourage full contract duration compliance.Environmental Economics and Policy,

Seasonal variability and a farmer's supply response to protein premiums and discounts

This article extends the analysis of the impact of a system of protein premiums and discounts to that on a farmer’s planned production. Despite an unambiguously negative impact on expected profits of equally likely premiums and discounts, supply response to the introduction of such a system is shown to depend on the level of seasonal variability faced by the farmer. In particular, farmers in regions which are more seasonally unreliable are likely to feature a negative supply response, whereas those in regions which are more seasonally reliable are likely to feature a positive supply response. Consequently, it is suggested that, overall, protein payments for wheat may have encouraged a shift of wheat‐growing activity away from more seasonally unreliable areas.Farm Management,

An analysis of the Western Australian gold royalty

This article analyzes the modified form of ad valorem royalty recently announced by the WA government in relation to gold production, which features a threshold price below which there is no tax liability and compares this royalty with a profit-based royalty. The level at which the threshold price is set plays an important role in determining the performance of the royalty in relation to its impact on production and the expected level and variability of tax revenue. It is argued that the higher this price is set, the stronger the grounds for preferring a profit-based royalty, eve taking into account the reliability of each form for generating tax revenue.Resource /Energy Economics and Policy,

Moral Hazard, Targeting and Contract Duration in Agri-Environmental Policy

This paper extends the multi-period agri-environmental contract model of Fraser (2004) so that it contains a more realistic specification of the inter-temporal penalties for non-compliance, and therefore of the inter-temporal moral hazard problem in agri-environmental policy design. On this basis it is shown that a farmer will have an unambiguous preference for cheating early over cheating late in the contract period based on differences in the expected cost of compliance. It is then shown how the principal can make use of this unambiguous preference to target monitoring resources intertemporally, and in so doing, to encourage full contract duration compliance.Moral Hazard, Contract Duration, Agri-Environmental Policy, Targeting, Agribusiness, Environmental Economics and Policy, Q15, Q18, Q58,

On the use of targeting to reduce moral hazard in agri-environmental schemes

This paper investigates the role of targeting in the context of agri-environmental schemes involving monitoring and penalties and well suited to a geographically-based distinction between participants. By separating participants into a target and a non-target group the aim of targeting is to reduce the moral hazard problem. The paper analyses three approaches to targeting and the focus is on reducing the extent of cheating by participants in the non-target group. By complementing the adoption of targeting with appropriate adjustments to the monitoring/penalty parameters it is shown how such an approach can exploit the risk aversion of participants to completely eliminate cheating by those participants in the non-target group.Environmental Economics and Policy,

The state of resource taxation in Australia: 'An inexcusable folly for the nation'?

This article discusses the principal claims made for the Resource Rent Tax (RRT) by Garnaut and Clunies‐Ross (1975, 1979) relating to its efficiency and potential for generating tax revenue relative to other forms of resource taxation, and also their concern about the greater uncertainty of these revenues. An analysis of the risk‐return trade‐off associated with a shift from ad valorem royalties to an RRT finds this shift to be worthwhile. Estimates are also provided of the foregone tax revenue from the North West Shelf associated with the use of ad valorem royalties rather than the RRT.Resource /Energy Economics and Policy,

Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes

This paper examines the issue of incentive-compatibility within environmental stewardship schemes where incentive payments to farmers to provide environmental goods and services are based on foregone agricultural income. The particular focus of the paper is on the role of land heterogeneity, whether in terms of agricultural value or environmental value, in leading to divergences between the actual and the socially optimal level of provision of environmental goods and services. It is shown that such goods and services are systematically over or under-provided depending on the characteristics of land heterogeneity both within and between landscape regions. It is therefore concluded that incentive payments should be based on social willingness-to pay for the provision of environmental goods and services.

In Search of Sophia: Seeking wisdom in adult teaching and learning spaces - An Autoethnographic Inquiry

This thesis explores the relatively under-theorised relationship between wisdom and adult teaching and learning. Whilst studies of wisdom are usually couched within a psychological framework, and/or one related to gerontology, this work poses key questions about what wisdom means, whether it can be taught, and the extent to which its elusive and allusive character has rendered it marginal to the design and delivery of adult and lifelong learning. Using autoethnography as both method and methodology, and by drawing on a diverse range of sources, including six interviews, this pursuit of wisdom is anchored in the reflexive relationship between the author and her subject of study. Key ontological and epistemological questions are posed as I seek meaning in relation to my lifeworld and lifespan. I also examine autoethnography’s efficacy whilst acknowledging criticisms within the academy, including accusations of narcissistic irrelevance. This study also incorporates the use of ‘writing as inquiry’ by way of offering a further challenge to the more traditional bounds of the social sciences. The interview material is couched within a fictionalised framework, and the whole thesis unfolds, conterminously, as both analysis and quest. In keeping with the methodological approach, the thesis concludes by offering a synthesis of certain of its propositions, rather than resolution. By adopting Sophia, the ancient goddess of wisdom, as metaphorical guide, the basic proposition that is shared across the text is the epistemologically fragmented nature of our understanding of wisdom and her relegation in a frenetic world which can be obsessed with the measurable as against the deepening of understanding. Yet the paradoxical nature of wisdom’s manifestations might also offer a degree of hope, should we heed her call…I argue that she is intimately intertwined with learning itself and with the potential for heartfelt and imaginative openness to the wisdom of ‘unknowing’ and the possibility of transcendence. However, Sophia demands our imaginative, authentic, loving and courageous attention in the process: in writing; in the classroom; in understanding the play of history, culture and the self. This autoethnographic inquiry is my response to that demand