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-s...

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Bibliographic Details
Published inEcological economics Vol. 73; pp. 179 - 187
Main Authors Camacho-Cuena, Eva, Requate, Till
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.01.2012
Subjects
Agriculture
Economic experiments
economics
Environmental policy
Experiments
Non-point source pollution
nonpoint source pollution
Pollution
pollution control
Regulation
Risk
Risk attitude
Non-point source pollution
Environmental policy
Risk attitude
C9
Economic experiments
Q52
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Summary: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.
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ISSN:0921-8009
1873-6106
DOI:10.1016/j.ecolecon.2011.10.019