Deforestation as an externality problem to be solved efficiently and fairly

The international community recently agreed on a mechanism called REDD+ to reduce deforestation in tropical countries. However the mechanism, by its very nature, has no reason to induce a Pareto optimal reduction of deforestation. The aim of this article is to propose an alternative class of mechanisms for negative externalities that implements Pareto optimal outcomes as Nash Subgame Perfect Equilibria, and that satisfies some fairness properties, in particular two original axioms of environmental responsibility. Outcomes are individually rational and the scheme does take into account environmental responsibility in the sense of our two axioms. However, envy freeness, even in a weak form adapted to the deforestation problem, turns out to be hard to achieve without dropping the other properties.

The REDD scheme to curb deforestation: A well-designed system of incentives?

Bioprospection is, largely, meant to help reducing deforestation and, the other way around, stopping deforestation enhances the prospects of bioprospection. The need for a global agreement to the problem of tropical deforestation has led to the REDD (Reducing Emissions from Deforestation and Degradation) scheme, which proposes that developed countries pay developing countries for CO2 emissions saved through avoided deforestation and degradation. The remaining issue at stake is to definer the rules defning payments to countries reducing their deforestation rate. This article develops a game-theoretic bargaining model, simulating the on-going negotiation process which is currently taking place within the Convention of Climate Change, after the Copenhagen agreement of December 2009. It shows that the conditions under which developing countries are left to bargain over the allocation of the global forest fund may lead to an ineffective system of incentives. Below a given level of contributions from the North, the mechanism fails to curb the deforestation. Beyond this level, it induces perverse effects: the larger the North's contribution, the larger the deforestation rate. Consequently, the mechanism is most effective only at a specifc threshold level which, given the unobservability of countries'preferences, can only be found by a repeated "trial and error" implementation process.

Adoption of environmentally-friendly agricultural practices with background risk: experimental evidence

Farmers choose to avoid some risks by not engaging into practices with uncertain profits. Yet, they still face background risk beyond their control, such as climate change. The impact of background risk on decisions to adopt risky environment-friendly agricultural practices is analysed through a theoretical model and a public good experiment. We find that background risk discourages adoption, despite the fact that it affects both environmentally-friendly and conventionally farmed land equally. An incentive payment increases adoption but is significantly less efficient in the presence of both foreground and background risks. Results shed light on potential synergies between greening the CAP and supporting risk management

Adoption of environmentally-friendly agricultural practices with background risk: experimental evidence

Farmers choose to avoid some risks by not engaging into practices with uncertain profits. Yet, they still face background risk beyond their control, such as climate change. The impact of background risk on decisions to adopt risky environment-friendly agricultural practices is analysed through a theoretical model and a public good experiment. We find that background risk discourages adoption, despite the fact that it affects both environmentally-friendly and conventionally farmed land equally. An incentive payment increases adoption but is significantly less efficient in the presence of both foreground and background risks. Results shed light on potential synergies between greening the CAP and supporting risk management

Adoption of environment-friendly agricultural practices with background risk: experimental evidence

Agriculture is one of the economic sectors most exposed to exogenous risks such as climate hazards and price volatility on agricultural markets. Agricultural policies targeting the adoption of environment-friendly but potentially risk-increasing practices cannot ignore this challenge. Farmers have indeed to decide if they take the foreground risk associated with the adoption of environment-friendly practices, while simultaneously facing exogenous background risk beyond their control. Using a theoretical model and a public good experiment, we analyse the adoption of agri-environmental practices and the effect of agri-environmental subsidies in a context where risks are both foreground and background. While most of the literature on background risk focuses on its impact on individual decisions, we analyse the influence of background risk in a context of strategic uncertainty (contribution to a public good). The results highlight the potential synergies between greening the CAP and supporting risk management. We find that background risk discourages the adoption of green practices, although it affects all farmland independently from the farmer’s choice of practices (environment friendly or conventional). An incentive payment per hectare of land farmed with green practices increases the adoption of risk-increasing practices but is significantly less effective in the presence of background risk

Réduire la déforestation d'une manière efficace et équitable

International audienceThe international community recently agreed on a cost-e¤ective mechanism called REDD+ to reduce deforestation in tropical countries. However the mechanism would probably fail to induce an optimal reduction of deforestation. The aim of this article is to propose an alternative class of mechanisms for nega- tive externalities that is both e¢ cient and satis.es some fairness properties. It implements the Pareto optimum as a Nash Subgame Perfect Equilibrium. It is also individually rational, it takes into account environmental responsibility. An d a weak form of envi- ronmental responsibility can also be combined with envy freeness

Choice overload, coordination and inequality: three hurdles to the effectiveness of the compensation mechanism?

In this paper we test the effectiveness of a compensation mechanism when a negative externality is produced. It allows agents suffering from the negative externality to compensate those who reduce its production. Transfers are implemented via a two-stage design which is 10 an adaptation of Varian’s mechanism. It has been previously tested in the lab with different types of games, and its effectiveness turns out to depend on the experiment, for unclear reasons which we try to decipher in this paper. Three possible explanations, choice overload, mere coordination and inequality, are proposed and studied. We show that, other things equal, the larger the size of the strategy space, the lower the mechanism’s efficiency (choice overload ef15 fect). Perhaps surprisingly, the data show that the appearance of additional equilibria does not jeopardize effectiveness (no mere coordination effect). Finally, inequality of outcomes plays a key role (fairness effect)

Behavioral insights for the analysis of green tips

People in several countries are overwhelmed with green tips in order to encourage them protecting the environment. The effectiveness of these tips, however, highly depends on the context and the person targeted by the tips. In particular, we contend that some green tips may do more harm than good when individuals have cognitive and behavioral biases. Without purporting to be exhaustive, we explain some of these biases and mechanisms by which green tips may lead to a net environmental degradation. We also emphasize that it is possible to complement green tips with debiasing strategies to guarantee their performance. We present some of these strategies, notably the foot-in-the-door technique, commitment strategies, the strategic use of small changes and individuals' pursuit of identity. Finally, several policy implications are developed

From agile software development to agile complex industrial products development ? A literature review

International audienc

From agile software development to agile complex industrial products development ? A literature review

International audienc