An Experimental Study On The Policy Design Of Agricultural Non-point Source Pollution

Agricultural non-point source pollution(ANPSP)has become a main source of water damage in many countries including China.It also has impacts on global land health and sustainable use of natural resources.According to the first Chinese pollution census bulletin published in 2010,the main source of water pollution in China is agriculture rather than industry.In some areas,ANPSP has caused serious damages.In particular,the Cyanobacteria Event taking place in Lake Tai in late May,2007,has proved to be a major crisis,resulting in a difficult access to drinking water for approximately 2 million people for at least one week,of which ANPSP is the leading cause.According to the Asian Development Bank,ANPSP has caused direct economic losses as much as 0.5%-1%of China's GDP.As early as 2004,the China Council for International Cooperation on Environment and Development indicated that,the key to solve the problem of ANPSP for the Chinese government is to develop a policy framework and related supporting systems instead of pollution control technologies and relevant knowledge.In spite of this,the Chinese government remains to focus on pollution control technology rather than management instruments for a long time.The policy tools for the control of ANPSP are very scare.Meanwhile,research on policy design is relatively absence.It would be of great academic value and practice significance to investigate potential mechanisms.Although some research has been conducted to explore farmers' willingness for potential policies with choice model(CM),this was not enough.CM method cannot be used to investigate the efficiency,effect,or to compare performance of different policy instruments in deep.Experimental economics is an alternative choice.Therefore in this paper,the author conducts an experimental approach to investigate policy design on the control of ANPSP in China,which has important innovative significance in China.Firstly,this paper developed an experimental research framework on the policy design of the control of China's ANPSP.This paper demonstrated the necessity for the introduction of experiment method,selected the subsidy and the education tools for experimental research,which have been widely used in practice in China.On this basis,this paper proposed the framework for experimental study on the design of subsidy policy and education policy,respectively.Secondly,this paper conducted an experimental approach to investigate the subsidy policy design.The author examined whether three different forms of peer monitoring and punishment tools(monetary punishment,non-monetary punishment and both punishment)can improve the efficiency of a policy combination which pairs an "all-or-nothing" team contract with an auction mechanism,and therefore can improve the cost effectiveness and effect of current subsidy policy in reality in China.The experimental results indicated that,all three forms of peer punishment tools significantly improve the efficiency and the reliability of "all-or-nothing" team contract.Peer monitoring and punishment also contribute to a better performance of the team entry auction mechanism.It broke the theoretical Nash equilibrium of subject's bidding and abatement strategy and enabled the auction mechanism to work more effectively.Thirdly,this paper conducted an experimental approach to investigate the education policy design.By introducing ambient tax to the education tool,this experiment aims to explore whether the policy combination is more effective than single policy tool for the control of ANPSP.Specifically,the author examined the policy performance of the ambient tax,the education tool,and the policy combination from three dimensions,the achievement of environmental objective(policy effect and policy persistence),the realization of social welfare(policy efficiency),and the guarantee of social equity(individual investment).The results are as follows.(1)In terms of policy effect,both the policy combination and the ambient tax can significantly reduce group investment,and the policy combination performs better.The education tool does not work.In terms of policy persistence,the policy combination performs best.After the policy ceases,group investment in the policy combination treatment rises the most slowly,the level even lower than that before the implementation of this policy.Both the ambient tax and the education tools have a poor performance of persistence.(2)In terms of policy efficiency,the policy combination also has the best performance,whereas the ambient tax can cause losses of social welfare.(3)In terms of social equity,the policy combination also performs best since it not only reduces information asymmetry in the group,but also ensures the achievement of collective environmental goal.In conclusion,the policy combination has the best performance,and the education tool does not work when used alone.This study provided experimental evidence for previous empirical research.Finally,on the basis of the above experimental research,the paper can get the following behavior insights and suggestions for policy designs:(1)The Chinese government should gradually convert traditional agricultural subsidies to agricultural environment subsidies under the premise of without affecting farmers livelihood,and should introduce auction to the subsidy mechanism to improve cost effectiveness.(2)The government should try to establish certain interest links among farmers in the future,to induce farmers to implement peer punishment and to join in the water quality improvement activities voluntarily and actively.(3)The Chinese government should realize the importance of the education tool and consistently implement it.However,the education tool might be effective only when used with other tools.(4)Ambient-based mechanisms especially the ambient tax could be a potential choice for the policy design in China.(5)The government should try to utilize various policy combination,because policy combination are usually more effective than single policy tools when designed appropriately.