The collective provision of environmental goods: A discussion of contractual issues

  • Franks J
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Although many species have a larger range than the average sized farm,
most agri-environment schemes (AES) involve contracts with individual
land managers. However, in the Netherlands `collective contracts' allow
neighbouring land managers to co-ordinate environmental management at
the landscape rather than the farm-scale. Findings from a study of Dutch
Environmental Co-operatives (ECs) are used to discuss how collective
contracts for environmental goods affect the following contractual
issues associated with AES: transaction costs, asymmetry of information,
the `hold-up', `end-of-contract' and `assurance' problems and incomplete
contracts. As a prerequisite for effective collective contracts requires
land managers holding communal aims and interests, the techniques used
by ECs to form like-minded groups are also reviewed. Government support
for collective contracts can be justified because they: (1) reduce
transaction costs; (2) improve ecological effectiveness; and (3)
increase the policy options available. Government support for ECs can be
justified (1) as compensation to members for the additional costs they
incur co-ordinating group actions; (2) to assist collectives buy-in
expert advice; and (3) because they increase participation rates by (a)
helping counter the `hold-up', `assurance' and `incomplete contract'
problems, and (b) by framing decisions in ways that shift attitudes,
values and aspirations among members.

Author-supplied keywords

  • Co-operatives
  • Environmental policy
  • Landscape-scale
  • Management
  • Market failure
  • Public goods

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  • Jeremy R. Franks

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