Agri-environmental policy and moral hazard under multiple sources of uncertainty

Yuki Yano, David Blandford

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


Risk aversion has been considered a factor in mitigating the moral hazard problem in agri-environmental policy. If farmers face multiple sources of uncertainty, however, risk aversion could contribute to the problem. Focusing on a required reduction in the use of a potentially damaging input under an agri-environmental scheme, we address the implications of risk aversion for a farmer's decision on compliance. We show that risk aversion can indeed mitigate the moral hazard problem, but, if a required change in production practices increases output risk, the impact of risk aversion is ambiguous.

Original languageEnglish (US)
Pages (from-to)141-155
Number of pages15
JournalEuropean Review of Agricultural Economics
Issue number1
StatePublished - Mar 2011

All Science Journal Classification (ASJC) codes

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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