Regulatory Policy Design for Agroecosystem Management on Public Rangelands

This paper develops a model to analyze regulatory design for agroecosystem management on public rangeland. We define and compare the efficiency of the most prominent regulatory instruments on public rangeland—input regulation, cost‐sharing/taxation, and performance regulation. We show that given informational asymmetries between ranchers and regulators within federal land management agencies, performance regulation can achieve first‐best outcomes when regulators can perfectly monitor ranch‐level ecological conditions and do not face constraints due to budget limitations or restrictions on the level of penalties they can assess, but that under imperfect monitoring and/or budgetary/penalty constraints, input regulation and cost‐sharing/taxation can dominate performance regulation.