Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality

Madhu Khanna, Murat Isik, David Zilberman

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

This paper quantitatively analyses the cost-effectiveness of alternative green payment policies designed to achieve a targeted level of pollution control by heterogeneous microunits. These green payment policies include cost-share subsidies that share the fixed costs of adoption of a conservation technology and/or input reduction subsidies to reduce the use of a polluting input. The paper shows that unlike a pollution tax that achieves abatement through three mechanisms, a negative extensive margin effect, a negative intensive margin effect and a technology switching effect, a cost-share subsidy and an input reduction subsidy are much more restricted in the types of incentives they provide for conservation of polluting inputs and adoption of a conservation technology to control pollution. Moreover, they may lead to varying levels of expansion of land under production. Costs of abatement with alternative policies and implications for production and government payments are compared using a simulation model for controlling drainage from irrigated cotton production in California, with drip irrigation as a conservation technology.

Original languageEnglish (US)
Title of host publicationThe Economics of Agri-Environmental Policy
PublisherTaylor and Francis
Pages75-92
Number of pages18
Volume2
ISBN (Electronic)9781351146968
ISBN (Print)9780815397694
StatePublished - Nov 30 2017

Keywords

  • Conservation
  • Environmental policy
  • Green payments
  • Technology adoption

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

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  • Cite this

    Khanna, M., Isik, M., & Zilberman, D. (2017). Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality. In The Economics of Agri-Environmental Policy (Vol. 2, pp. 75-92). Taylor and Francis.