Alternative Approaches to Compensation and Producer Rights

Andrew Schmitz, Dwayne J. Haynes, Troy Schmitz

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


When policies are changed, it is not uncommon for losers to be compensated. Economic theory and quantitative analysis are useful in determining the efficiency gains/losses associated with a policy change, but are little help in deciding what the approach to compensation should be. The amount of compensation varies, depending on, in part, the political clout of the parties being negatively affected by a policy change—compensation is what politicians and the sector demanding compensation can agree on. We formulate four approaches to producer compensation within the context of the Ontario Tobacco Transition Program, where producers would have suffered losses in the absence of compensation. The approaches range from providing zero compensation to providing compensation based on the entire value of the tobacco quota. The Canadian government chose the latter and compensated producers for the termination of the tobacco quota program based on an approach that far exceeded other possible compensation approaches.

Original languageEnglish (US)
Pages (from-to)439-454
Number of pages16
JournalCanadian Journal of Agricultural Economics
Issue number3
StatePublished - Sep 1 2016

ASJC Scopus subject areas

  • Economics and Econometrics
  • Animal Science and Zoology
  • Agronomy and Crop Science
  • Global and Planetary Change
  • Ecology


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