Flexible Incentives for Environmental Management In Agriculture: a Typology

Abstract

Flexible incentives are incentives that do not dictate how environmental objectives are to be achieved, and they are important tools in managing agro-environmental problems. They are, however, a means to an end and not and end in themselves. Successful implementation of these incentives depends on clear, enforceable performance standards. Furthermore, the best flexible incentive approach appears to be one that involves a combination of instruments that fit local, social, economic and environmental conditions. It is important to recognize, as well, that the flexible incentive approach can impose substantial transaction costs and can require a high level of both producer and agency human management skills. Thus the policy challenge is to find effective ways to lower the costs of using flexible incentives and of expanding the management capacity of those farmers and ranchers who can deliver high environmental values over the long run.