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Why do Farmers Spend Different Amounts of Transaction Costs in Agri-Environmental Schemes?

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  • Weber, Anja Michaela
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    Abstract

    Agri-environmental schemes provide payments for farmers in return for environmental services. Implementation induces transaction costs (TCs). Borne by farmers (private TCs), their amount may inhibit participation. Research shows substantial variances in private TCs within single schemes, which are largely unexplained to date. Furthermore, no distinction has yet been made in research whether farmers spent TCs due to scheme-prescribed tasks, or voluntarily to achieve "transaction gains.‟ This might be an important factor in farmers‟ perceptions of TCs. The overall aim of this analysis is to explain within-scheme TC variances. TCs are defined functionally as “costs of participation.” The variance in TC spending is assumed to represent a different willingness to participate due to underlying motives. This is tested by ANOVAs and Pearson's correlations with the example of a German AES. Results show that all assumed motives are significant but differ along the implementation process and imply that different functions have TCs. Thus, general public reimbursement of private TCs, as allowed in current EU regulations, might therefore be inappropriate.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 115738.

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    Date of creation: 02 Sep 2011
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    Handle: RePEc:ags:eaae11:115738

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    Keywords: Agri-environmental Schemes; Transaction Costs; Hesse; Germany; Agricultural Finance; Environmental Economics and Policy;

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    1. Per Kristian Rørstad & Arild Vatn & Valborg Kvakkestad, 2007. "Why do transaction costs of agricultural policies vary?," Agricultural Economics, International Association of Agricultural Economists, vol. 36(1), pages 1-11, 01.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    3. Arild Vatn, 2002. "Multifunctional agriculture: some consequences for international trade regimes," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 309-327, July.
    4. Quillerou, Emmanuelle & Fraser, Rob W. & Fraser, Iain, 2010. "Adverse Selection in the Environmental Stewardship Scheme: Evidence in the Higher Level Stewardship Scheme?," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91676, Agricultural Economics Society.
    5. Dahlman, Carl J, 1979. "The Problem of Externality," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 141-62, April.
    6. Katherine Falconer & Pierre Dupraz & Martin Whitby, 2001. "An Investigation of Policy Administrative Costs Using Panel Data for the English Environmentally Sensitive Areas," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 83-103.
    7. McCann, Laura & Colby, Bonnie & Easter, K. William & Kasterine, Alexander & Kuperan, K.V., 2005. "Transaction cost measurement for evaluating environmental policies," Ecological Economics, Elsevier, vol. 52(4), pages 527-542, March.
    8. Evy Mettepenningen & Ann Verspecht & Guido Van Huylenbroeck, 2009. "Measuring private transaction costs of European agri-environmental schemes," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 52(5), pages 649-667.
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