Abstract
As a new sustainable urban development concept, the Sponge city has an important influence on the stormwater treatment. The low-impact development (LID) system of nonpublic lands plays an important role in the entire construction of Sponge city. In the nonpublic lands’ LID system construction, a principal-agent relationship exists between the government and developer and the effect of construction mainly depends on the developer’s operation and management. Due to the asymmetry of information and the different benefit goals, the developer could be prone to take moral hazard behavior to damage the project and public’s interests. In this paper, based on the principal-agent relationship between the government and developer in Sponge city projects, principal-agent incentive models under the existence of developer’s moral hazard tendency were constructed to help the developer invest an optimal efforts level. The results show that an increase in incentive intensity would increase the developer’s optimal level of productive efforts in the presence of developer’s moral hazard tendency; this can indirectly cause an increase in total output performance of Sponge city, thus realizing a “win-win” effect between the government and developer. Likewise, a larger incentive intensity can also help reduce the developer’s moral hazard tendency. The more obvious moral hazard tendency of developer, the larger incentive coefficient should be. The findings provide reference for government seeking to specify incentive contracts from a theory perspective and curbing developer’s potential moral hazard behavior in Sponge city projects.
Highlights
In recent years, the natural hydrologic cycle was changed in cities with the rapid development of the economy and continuous acceleration of urbanization in China [1], which results in ecological damage, water environment deterioration, and runoff pollution [2, 3]
E Chinese “Sponge city” concept is similar to the water-sensitive urban design (WSUD) in Australia [10], the low-impact developments (LIDs) in the United States [11], the Blue-Green Cities (BGCs) in the United Kingdom [12], and low-impact developments urban design (LIDUD) in New Zealand [13], which have a good resilience in adapting
The government typically launches Sponge city projects to meet the needs of the public and entrust the developer to carry out the construction of the LID system on nonpublic lands by signing the contract. us, a principalagent relationship exists between the government and the developer, the government as the principal incorporated LID system construction indicators into the land leasing contract, and the developer as the agent is responsible for the construction and implementation [6]
Summary
The natural hydrologic cycle was changed in cities with the rapid development of the economy and continuous acceleration of urbanization in China [1], which results in ecological damage, water environment deterioration, and runoff pollution [2, 3]. The government typically launches Sponge city projects to meet the needs of the public and entrust the developer to carry out the construction of the LID system on nonpublic lands by signing the contract. Few scholars pay attention to the incentive mechanism for solving moral hazard problem in the Sponge city projects In view of this finding, faced with the developer’s moral hazard tendency, this paper constructs an incentive model for inhibiting developer’s moral hazard tendency, after analyzing the principal-agent relationship between the government and developer. E main contributions of this paper are as follows: (1) Based on the linear incentive framework of Holmstrom and Milgrom (1991) [35], the incentive mechanism under the existence of developer’s moral hazard behavior is constructed to expand the research on optimal incentive contracts in Sponge city projects. Some relevant recommendations are proposed. is study is aimed at reducing the developer’s moral hazard tendency, improving the operating and managing efficiency in Sponge city. e main contributions of this paper are as follows: (1) Based on the linear incentive framework of Holmstrom and Milgrom (1991) [35], the incentive mechanism under the existence of developer’s moral hazard behavior is constructed to expand the research on optimal incentive contracts in Sponge city projects. (2) is paper uses the theoretical model to analyze the impacts of the developer’s moral hazard behavior on the design of the incentive contract. e results show that the incentive measures provided by the government needs to consider the developer’s moral hazard tendency
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