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To Cheat or Not To Cheat: Moral Hazard and Agri-environmental Policy

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Abstract

This Address examines the moral hazard problem in agri-environmental policy. It begins with a theoretical analysis of moral hazard in this context, including the identification of eight potential causes of cheating behaviour among farmers. But is cheating behaviour among farmers actually a problem for agri-environmental policy? And if it is, which are the statistically significant causes of concern? The answer seems to be: “we don't know” as there are currently no empirical analyses of the moral hazard problem and its causes in agri-environmental policy. On this basis I analyse a set of policy solutions – to a problem for which we have no evidence of its causes or extent!

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