Single Payment Scheme

In 1985 the first funded Environmentally Sensitive Area (ESA) was started in England and this was the beginning of a number of funded farm conservation schemes. Since then there have been various CAP-supported agri-environmental schemes introduced. In England about two-thirds of the farmed land is covered by one of the agri-environment schemes. The current CAP single payment scheme also has a number of environmental management requirements - crosscompliance. 

Unfortunately, there exists no closed-form solution for the transform St a + i(j)). This directly implies that we need a new method for the approximation of the single exercise probabilities Tlj a [ ] assuming a multi-factor model with more than one payment date. On the other hand, the transform Et (n) can be solved analytically for nonnegative integer numbers n. This special solutions of Et z) can be used to compute the n-th moments of the underlying random variable V To Ti ) under the Ti forward measure. Then, by plugging these moments in the lEE scheme we are able to obtain an excellent approximation of the single exercise probabilities (see e.g. section (5.3.3) and (5.3.4)). 

Proposition 1 If the Optimization Problem SP j, a) has a non-empty feasible set, then there exists a single-period compensation scheme that implements action a G A j) in the single-period problem at a minimum cost to the principal. This compensation scheme solves the optimization problem SP j a) and makes a transfer payment Sjj a) to the agent, whenever a transition to state k is observed. The expected single-period cost of compensation is Zj a). 

To this point, we have considered only an investment made at a single point in time at a known interest rate, and we learned to evaluate the future value of this investment. More conf Heated transactions involve several investments and/or payments of differing amounts made at different times. For more conf Heated investment schemes, we must keep careful track of the amount and time of each transaction. An effective way to track these transactions is to utilize a cash flow diagram, or CFD. Such a diagram offers a visual representation of each investment. Figure 9.2 is the cash flow diagram for Exanfle 9.10. which is used to introduce the basic elements of the discrete CFD. 

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