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The application of agri-environmental policies (reg. EEC 2078/92 and reg. EU 1257/99) has produced a wide literature about the best policy design options. The data arising from the first ex post evaluation exercises have contributed only partially to the discussion about how such measures should be implemented. This paper simulates the results of different policy design options under adverse selection and moral hazard using data obtained from the monitoring of regulation 2078/92 in Emilia-Romagna (Italy). The results show the interplay between policy instruments, monitoring costs and payments. As a consequence a more consistent design of such policy parameters is required.


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