Improving contract design for multifunctional agriculture

The paper applies a principal-agent model to the design of Agri- environmental schemes in Emilia Romagna (Italy) in order to discuss possible policy improvments in the purchase of environmental seervices from agriculture. This results show that the way in which contracts are implemented in the area can be improved in order to encsure higher eficiency of AESs. however it also calls for caution in drawing practical conclusion, and emphasises that the actual desirability of changes in contract design is strictly connected to the type of public services produced, the value of services and the shadow costs of public funds. the resutls are also strongly affected by the assumptions made in the modelling exercise