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Publications > Cahiers (English)> N° 39-40, 2nd and 3rd terms 1996


Economie de l'environnement
[Environmental Economy]

Evaluer l'efficacité d'une régulation d'agents pollueurs
[Evaluating the efficiency of polluting agents regulation]

François SALANIE, Alban THOMAS (Unité d'économie et sociologie rurales de l'INRA, Manufacture Bât. F, Université des Sciences sociales, Place Anatole France, 31042 Toulouse cedex)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 15-35

Summary : French Water Agencies are in charge of managing water resources as well as promoting adequate ambient water quality, on a local basis. The main regulatory instruments for environmental policy implementation are emission charges on the one hand, and abatement investment subsidies on the other. While a policy based on emission charges is easy to implement and does not differenciate among polluting agents, it is nevertheless difficult to consider a truly Pigouvian level for the emission tax. This is because actual unit emission fees are in fact decided upon through a negociation process between Water Agencies and industrials representatives, and also because of government anti-inflationary measures.

An interesting complementary policy instrument, which is commonly used in the case of France, is a subsidy policy aimed at abatement investment. Water Agencies may provide industrials willing to invest in a treatment plant with incentives for agreeing upon a given abatement plant with design effluent concentration and effluent size.

The paper deals essentially with the incentive properties of the emission charges and investment subsidies as the two instruments available to Water Agencies. Two models are presented, which rely on recent developments in the theory of contracts with asymmetric information. In the first model, the Water Agency has only prior beliefs on industrials abatement costs, for a given abatement capital stock. Firms are characterized by a private information parameter which enters their abatement variable cost function. The model shows that in a world of imperfect emission fees, the proportion of contract-regulated industrials depends on the ratio of optimal over actual unit emission tax. If the actual tax is well under the Pigouvian level, most industrials are offered contracts, while in the case of a nearly optimal emission tax, contracts are not essential, and the regulation domain becomes empty, since pollution damages for society are fully internalized by firms.

The second model considers unobserved expectations of future activity levels by industrials. Firms may report a low activity level expected growth in the future, and may claim their need for a more efficient abatement equipment, while in reality they expect a substantially higher activity level. Their strategy would then be to use subsidies from Water Agencies for financing additional plant capacity, with roughly the same abatement rate in the future.

Key-words : environmental policy, models of regulation, water pollution.

L'efficacité privée et publique de la gestion du risque phytosanitaire : le rôle de l'information
[Private and public efficiency of pest risk management : the role of information]

Alain CARPENTIER (Unité d'économie et sociologie rurales de l'INRA, 65, rue de St Brieuc, 35042 Rennes cedex)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 37-61

Summary : The analysis of farmers' phytosanitary information use requires the specification of information as an input that is produced and used on the farm.

The information input is assumed to consist in a signal that is correlated with (future) pest infestation of the farmers' fields. This signal is received by farmers before they choose their pest applications. The quality of information is measured by the accuracy of the signal in predicting the actual infestation. Using this approach it is easily shown that farmers' attitude toward risk, information quality and pesticide application costs play crucial roles in farmers' crop protection decisions.

In order to study farmers' information use decisions we also consider the production cost of this input for farmers. Within this framework, although they appear inefficient from a public standpoint, it is assumed that systematic pesticide applications may be chosen by economically efficient farmers. Showing that the information production cost is likely to be high for a large part of French farmers' population we conclude that this cost is likely to be one of the most determinant factor explaining the current use of systematic pesticide applications by the French farmers.

Despite their weaknesses, the models developed in this paper provide some guidelines for pesticide use reduction policy design. Within the current European economic context, the use of information relative to pest infestation should result in a decrease in farmers' pesticide uses. This result is, to a large extent, supported by the fact that pesticides appear relatively cheap. As a consequence, the implementation of instruments aimed at the promotion of the use of phytosanitary information could be used as a policy intended to decrease farmers' pesticide applications. However, the promotion of information use can only be viewed as a medium or long term policy. Information use by farmers requires adjustments in quasi-fixed factors (human capital, labour) and/or structural adjustments (creations of public or private firms producing expertise services). It is also shown that farmers' willingness to pay for phytosanitary information is an increasing function of pest application costs. This result implies that farmers' pesticide demand elasticity could be important (in absolute value) in the long run, i.e. due to adjustments in information uses. It also implies that a tax on the price of pesticide would strengthen the effects of policies aimed at reducing the information production costs for farmers.

Key-words : pesticides, risk, information, efficiency.

Les instruments économiques de réduction de la pollution diffuse en agriculture
[Economic tools for reducing non-point pollution in agriculture]

Christine LE ROCH (Université Pierre Mendès France, BP 47, 38040, Grenoble cedex 09), Amédée MOLLARD (Unité d'économie et sociologie rurales de l'INRA de Grenoble, équipe de recherche Régulation et Agriculture, Université Pierre Mendès France, BP 47, 38040, Grenoble cedex 09)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 63-92

Summary : Theoritical models of taxation of polluants cannot be directely applied to the case of nitrate pollution because of its very diffuse character. Hence, if effective pollution cannot be taxed, one alternative is to tax the sale of fertilizers. But this type of taxation will not result in a reduction of nitrate emissions unless there are other viable techniques for producing nitrates that will really lead to a reduction of the risks of pollution. However the lack of substituability in production severely reduces the possibility of changing agricultural techniques, and having more efficient agricultural techniques do not necessarily lead to less pollution. We think that the tax base should be enlarged to the whole range of agricultural systems and techniques that lead to pollution. This will help to generate resources for enabling subsidies for the search for solution techniques developed by agronomists, so that they can be adopted by farmers. Therefore to sum up the idea is to search for the ways of putting into place an appropriate " tax-subsidy " scheme and to reflect the future evolution of intensive agriculture.

Key-words : non-point pollution, nitrogen fertilizing, welfare economics, economic instruments, environmental policy, sustainable agriculture, intensive production systems, groundwater.

Régulation multi-facteurs : gel de terre et mesure agri-environnementale de réduction d'intrant
[Optimal co-ordination of set aside and polluting input reduction policies in the agricultural sector]

Pierre-Alain JAYET and Philippe BONTEMS (Unité d'économie et sociologie rurales de l'INRA, Laboratoire d'évaluation des stratégies et des politiques pour l'agri-alimentaire, 78850 Thiverval-Grignon)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 93-121

Summary : In this paper, we intend to analyse the co-ordination of public incentives in simultaneous regulation of two agricultural production factors. This analysis lies on the Principal-Agent paradigm popularised by several authors since a seminal paper by Baron and Myerson (1982) up to a complete review by Laffont and Tirole (1993). Regulation here involves agricultural supply excess and environment impacts of agricultural production. We consider a number of heterogeneous farms for which a productivity index can supply private information, involving asymmetric situation between agents, i.e. the farms on one hand, and the regulation authority on the other hand. Policy tools are a land set aside program and a reduction of polluting input. The set aside program could be useful to reduce the pollution emitted whereas reduction of the polluting input consumed could also be efficient to control indirectly the production level. Our analysis takes advantage of a recent paper of Bourgeon, Jayet and Picard (1995), which details the set aside approach. For each policy, we characterise the mechanism design based on contractual commitments defined as factor reduction effort and compensation transfer, in the alternative cases of private or common information. Analysis is limited to the case of land homogeneity inside each farm. We show how the public authority has to optimally propose to farms only one of the two contracts, or none, according to the specific characteristics of each farm. This leads us to define more precisely the partition of farms into three parts, i.e. the part concerned by set aside, that concerned by input reduction, and that which is socially better to be excluded of contracting. More usually, the greater is the difference between social preferences for producers and taxpayers, the more different are the cases of private and common information. Obviously at last, optimal regulation leads to co-ordinate agricultural policy and environment policy, in order to take advantage of interactions between the two types of policy tools implemented by the authorities. Moreover, as commonly proved in numerous applications of the theory, optimal regulation leads to limit private informational profits as their socially acceptable level. A forthcoming extension of this analysis should be that of the situation of heterogeneous land inside each farm, to define conditions under which the public authority has interest to propose simultaneously both types of contract to a set of farms.

Key-words : theory of incentives, agriculture, environment, set-aside, input reduction.

L'évaluation contingente : controverse et perspectives
[Contingente valuation : controversal issues and perspectives]

Jean-Pierre AMIGUES (INRA ESR Toulouse, Université des Sciences sociales, La Manufature, Place Anatole France 31042 Toulouse cedex), Brigitte DESAIGUES (Université Paris I, 12, place du Panthéon 75231 Paris cedex 05 et Laboratoire d'analyse et de recherches économiques (LARE), Université de Bordeaux IV), Quang VUONG (INRA ESR Toulouse, chemin de Borde Rouge, Auzeville, BP 27, 31326 Castanet-Tolosan cedex et IDEI, Université des Sciences sociales, Place Anatole France, 31042 Toulouse cedex)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 123-150

Summary : In recent years, increasing public awareness of the detrimental effects of the economy on the environment has foced policymakers to acsess the value of various public goods such as clean air and water, plant and animal preservation, recreational sites and activities, beauties, etc....

Over the last two decades, economists have developed and applied the method of contingent valuation to measure the value of various public goods. Recently a debate has raised among economists about the validity and rationality of the method. This debate pointed out some difficulties of contingent valuation studies. Measurement of the so called non use or preservation values has proved difficult. People may be sensitive to the warm-glow effect, and their answers may reflect more their willingness to pay for the environment in general than for the environmental good they are asked to value. Various solutions have been proposed to deal with these problems. We present and discuss them and we analyse the prominent elements of the current debate around the contingent valuation method. We develop the idea that currently used referendum methods have a too poor information content to provide reliable answers when the value of the good exhibits an important non use value component. We then explore the conjecture that the lack of incitations in the procedure may be a cause of unreliability of answers in contingent studies. Going back to the auction tradition of contingent valuation, we propose alternative ways of resolving some of the difficulties encountered in the practice of contingent valuation studies.

Key-words : Contingent valuation, auctions models, environment.

Evaluation contingente et paysages agricoles. Application au bocage de Loire-Atlantique
[Contingent valuation and agricultural landscapes. An application to the Loire-Atlantique hedgerow landscape]

François COLSON and Anne STENGER-LETHEUX (Laboratoire de l'INRA, rue de la Géraudière, BP 527, 44026 Nantes cedex 03)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 151-177

Summary : The CAP after 1992 recognized the production of positive externalities by peasans. These externalities are essentially composed of agricultural landscapes which generate use and non use benefits for the consumers. These benefits have to be valuated so that the landscapes can be internalized into the market. The contingent method which is suitable for this valuation, has been applied for the preservation of agricultural landscapes in different countries of EEC. Our objective was to answer to the following question : will the consumer have a willingness to pay (WTP) to help the peasans to produce and to maintain landscapes while he already sustains agriculture by tax ? We assumed that the consumer's behavior would differ between conservation and restoration. We assumed as well that the method of payment and the quantity of landscapes would influence the willingness to pay.

We applied the contingent valuation to estimate the willingness to pay for preserving the agricultural landscapes of France and the willingness to pay to restoring the hedgerow landscapes in one region (Loire-Atlantique). With a mail survey and using a payment card (PC) and a set of photos, about 3000 households have been asked to valuate their willingness to pay for the two scenarii, conservation and restoration. We elaborated two versions of the questionnaire which differ by the variation of payment card for the conservation and by the quantity of hedgerow landscapes to be restored in Loire-Atlantique : PC1 and totality of hedgerow landscapes in the first version and PC2 and the half of the same area in the second one. The estimated average WTP for the conservation of agricultural landscapes is 530 francs per year and per household. Household's income, age and educational level are the main explanatory variables of the WTP. The estimated average WTP for the hedgerow landscapes restoration is 67 francs per year and per household. This WTP differs from the last one by its explanatory variables - which are more subjective factors- like the appreciation of households on landscapes or on the efficiency of the agricultural supports. We underlined the influence of the payment card on WTP and we established an inclusion bias ((53 francs for the total area and 41 francs for the half). The latter confirmed the fact that the quantity is not a determinant variable in the valuation of environmental goods.

Key-words : agricultural landscapes, hedgerow landscapes, contingent valuation, political aspects.

La méthode des prix hédoniste : principes et application à l'évaluation des biens environnementaux
[The hedonic price method : principles and application to environmental good valuation]

Philippe LE GOFFE (ENSAR, Economie, gestion et sciences sociales, 65, rue de St Brieuc, 35042 Rennes cedex)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 179-198

Summary : Hedonic pricing analyses prices of differentiated goods with respects to their various attributes. Environmental applications of this method make the assumptions that the value of the environment is included within the price of housing or wages. A relationship between housing prices or wages in one hand, and their physical plus environmental attributes in the other hand, is considered with the aim of eliciting the demand function for public good and the welfare changes induced by environmental policies.

A theoretical model of implicit market was presented by Rosen (1974). The attributes of the goods are both introduced within the utility and bid function of the consumer, and within the cost and offer price of the producer. The hedonic price function is the geometric place of equilibrium between supply and demand for the various goods with different sets of attributes. In equilibrium, implicit price of an attribute derived from this function equals the marginal willingness to pay for the attribute considered. However, the market equilibrium assumption can be broken down due to lack of information, transaction and moving costs, or discontinuity in hedonic price function.

The initial single market approach for identifying the demand for environmental attributes consisted in estimating simultaneously the marginal bid and marginal offer price, in taking the implicit marginal price as endogenous. However a difficulty of the approach is coming from the simultaneous determination by the consumer of the attribute level and its marginal implicit price. In fact the two parameters are endogenous to the model. One solution would consist in working on data coming from separated markets.

In case of environmental change, the individual welfare variation may affect the owner, the tenant or both of them, according to the length of the feedback, the expansion of the environmental policy and the moving possibilities of the households. In all cases this variation is limited upward by the hedonic price function change and downward by the compensating variation between the two environmental levels.

The estimation of the hedonic price function is constrained by many practical problems as definition of pertinent environmental criteria, consumer perception or expectation of environmental change, market segmentation. In addition, econometric problems should be emphasised : model specification and functional form, multicolinearity.

Finally, hedonic pricing is limited by methodological constraints, but also by the nature of values to be measured (use value only) and the field of application (mainly urban). However, when applied to assets such as noise or air quality in town areas the methodology may bring satisfying results.

Key-words : hedonic price, implicit market, environment, willingness to pay, demand, welfare, benefit, damage.

Evaluation de la fonction de demande en eau d'irrigation et application de la méthode des prix hédonistes
[Evaluation of irrigation water demand and application of the hedonic price method]

Béatrice MICHALLAND (Groupement de Clermont-Ferrand, CEMAGREF, Domaine de Laluas,
63 200 Riom)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 199-222

Summary : Usually, water managers allocate water according to "water needs", which are defined, in the case of irrigation, by the amount of water required to reach a given crop yield. Then, the allocation is calculated as if the water demand was inelastic. This approximation is unacceptable from an efficiency viewpoint. Therefrom, it is important to suggest to water managers economic methods in order to evaluate the water demand function, which links the water unit cost paid by the user to his water consumption.

Five methods describe here, the irrigation water demand. They differ one from another by the analysis viewpoint (production function or consumption function), the forecast type (short, medium or long term) and the analysis scale (the farm, the irrigation system or the region). The most well-known method consists in modelling the farm production function and in solving the producers' maximisation problem for a given water unit cost. But the water demand function can also be estimated by analysing farm investments, profit function, actual water consumption or agricultural lands' price. The substitution price method and the profit function method are issued from the producer theory. In the case of the substitution price method, a relation between the quantity of capital, work and water actually consumed and the cost of capital and work is searched, assuming that substitutions are possible between capital, work and water. In the case of the profit function method, the quantity of water consumed is supposed to be optimal (maximise the farmer's profit) given the input and output prices and the fixed production factors. On the opposite, the water consumption method and hedonic method focus on the farmer's consumption decisions, in term of either water or agricultural lands.

The article gives more attention to the hedonic method, which has not yet been used in France to estimate the irrigation water demand function. The numerical application presented is based on data from the Midi-Pyrénées region (France). Having no access to a large number of complete individual transaction data, we have preferred to work at a " small agro-regional " scale, for which we could gather simultaneously information on the agricultural land market, agronomic potentialities, space organisation, irrigation practices. Two main hypothesises have been made :
1/ the " small agro-regions " are homogeneous and can be characterised by the mean of the data encountered in that zone, 2/ the irrigation rate is an indicator of the water accessibility level. Studying the agricultural land prices of 61 " small agro-regions " associated to 16 land characteristics' variables gives us two major results : the agricultural land price is slightly correlated to the water accessibility level but it depends essentially on the agronomic soil potentiality (crop yield and potential speculation).

Key-Words : irrigation, water demand, hedonist price, agricultural land market, France.

Nouvelle PAC et nouveaux projets d'irrigation
[New CAP and investments in irrigation facilities]

Juliette COHEN, Pierre DUPRAZ, Dominique VERMERSCH (INRA, Unité d'économie et sociologie rurales de Rennes, 65, rue de St Brieuc, 35042 Rennes)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 223-250

Summary : In France, there is an increasing trend in irrigated land, especially where there are cereal and oil seed crops. In connection with the reform of the Common Agricultural Policy, major changes have affected irrigating farmers. This reform combines a decrease in farm prices with compensatory direct payments and a land set-aside scheme (restricted to professional farm operators). The implementation of the scheme takes into account regional diversity since payments are based on a flat rate per hectare which is determined using a reference yield for each " département ". Besides, special reference yields concerning irrigated crops are set apart in 55 " départements " to reflect the higher yields of irrigated land. Nevertheless there is an upper limit for this compensation, since only land equipped with irrigation facilities by 1992, is considered. The potential behaviour of a representative farmer facing this scheme is derived from a single microeconomic model. There is some evidence that it would not be profitable to develop facilities in order to irrigate more land. This conclusion holds for a drop in price as well as for the upper limit of total subsidy. It is questionable where there is a significant difference between reference and actual yields. A dramatic increase in world prices similar with the increase of 1995 could make profitable investing in irrigation facilities.

This scheme involves a top premium part on water input which benefits irrigating farmers. They are entitled with property rights over water resources which are revealed through the payment scheme. Farmers'rights may prevail upon the rights of other categories of water users. This distribution of property rights does not reflect the social value of water in its alternative uses. Thus the CAP reform leads to paying pecuniary externalities, and results in a monetary transfer which benefits intensive cropping systems. This scheme does not benefit low input farming which creates amenities. Such a mechanism supports farm concentration, cost-competitive farming systems while environmental friendly practices are not encouraged.

Key-words : microeconomics, externalities, optimal taxation, agriculture.

Jeux, coopération et problèmes environnementaux globaux, dilemme du prisonnier, jeu du croisement, jeux évolutionnistes
[Games, co-operation and global envionmental change]

Gilles ROTILLON (Université du Maine, Département d'économie, avenue Olivier-Messiaen,
BP 0638, 72017 Le Mans cedex), Tarik TAZDAÏT (Université de Marne-la-Vallée, département d'économie, Cité Descartes, rue Galilée, 77420 Champs-sur-Marne)

In : Cahiers d'Economie et Sociologie Rurales, n° 39-40, 1996, pp 251-268

Summary : This survey deals with co-operation in the presence of global environmental change. We examine the influence of the different factors which play a signifiant tole in such a context. Thus, by using game theory reprensentation, we can note that there are many possible co-operative behaviours : some countries act unilaterally when others join a coalition. Consequently, we can't study these problems in a prisonner's dilemma perspective. It seems more realistic to evoke the chicken game for a collective co-operation, and the trust game (or the sequential prisonner's dilemma with ecologial conscience) for an unilateral commitment. In fact the major result of the various works is that a solution exists for global environmental problems, but it is not necessarily a universal solution : co-operation is generally the work of a limited group of countries.

Key-words : environmental issues, prisonner's dilemma, chicken game, trust game.

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