Environmental Policy Uncertainty and Marketable Permit Systems: The Dutch Phosphate Quota Program

G.A.A. Wossink, C. Gardebroek

Research output: Contribution to journalArticleAcademicpeer-review

18 Citations (Scopus)

Abstract

Tradable permits are generally considered as an efficient instrument to regulate pollution by individual producers. However, uncertainty about changes in or possible discontinuation of the program could make individual farmers reluctant to invest in tradable permits. This article uses the option approach to derive a theoretical model that shows the impact of policy uncertainty on investment in tradable quota. The empirical assessment provides weak evidence for the existence of option values due to policy uncertainty for phosphate quota in swine production in the Netherlands.
Original languageEnglish
Pages (from-to)16-27
Number of pages11
JournalAmerican Journal of Agricultural Economics
Volume88
Issue number1
DOIs
Publication statusPublished - 2006

Keywords

  • agricultural policy
  • investment
  • efficiency
  • values
  • costs

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