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

Lefebvre, Marianne, Midler, Estelle and Bontems, Philippe (2020) Adoption of environmentally-friendly agricultural practices with background risk: experimental evidence. TSE Working Paper, n. 20-1079, Toulouse

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Official URL: http://tse-fr.eu/pub/124137

Abstract

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.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2020
Place of Publication: Toulouse
Uncontrolled Keywords: Common Agricultural Policy, Agri-environmental measures, Background risk, Lab, experiment, Public good game
JEL Classification: C93 - Field Experiments
D81 - Criteria for Decision-Making under Risk and Uncertainty
Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
Q18 - Agricultural Policy; Food Policy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 25 Mar 2020 08:40
Last Modified: 03 Jun 2020 12:39
["eprint_fieldname_oai_identifier" not defined]: oai:tse-fr.eu:124137
URI: http://publications.ut-capitole.fr/id/eprint/34207

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