| Pollution from nonpoint sources (NPS), and agriculture in particular, remains as one of the largest sources of water quality impairments in the United States. As is well known in the literature, there are many difficulties with designing regulations for reducing nonpoint source pollution (i.e., Tomasi, Segerson, and Braden, 1994). Uncertainty and asymmetric information are the key regulatory difficulties in the control of NPS. The main goal of this paper is to describe a potential incentive scheme that can be applied in limited information situations. The incentive scheme involves a contract written between a point source of pollution and a small group of other nonpoint polluters in the watershed to reduce a specific load of pollution. The contract allows... |
