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Private transaction costs of participation in water quality improvement programs for Australia’s Great Barrier Reef: Extent, causes and policy implications

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  • Coggan, Anthea
  • van Grieken, Martijn
  • Boullier, Alexis
  • Jardi, Xavier

Abstract

The direct private cost to landholders of participating in programs that result in improved farming activities (IFAs) is generally well understood. However, the private indirect or transaction costs, such as the cost of a landholder’s time and the expense to learn about IFAs and apply for assistance to implement these changes on-farm, are not so well understood. Where these have been studied, they have been shown to be extensive. We assess the extent and causes of private transaction costs incurred by sugarcane growers participating in the Australian Government’s Reef Rescue scheme which pays farmers to adopt environmentally beneficial farm management practices. Utilising a mail-out-mail-back survey of 110 growers, we found that the average total transaction cost per farm of participating in the program was AU$8389. The average total transaction costs per farm as a percentage of the average funding provided was 38 per cent. We also assessed which type of improved farming activity (soil, nutrient, pest or water management) generated the greatest transaction costs and how landholder characteristics such as bounded rationality, opportunism and social connection impacted on the extent of transaction costs.

Suggested Citation

  • Coggan, Anthea & van Grieken, Martijn & Boullier, Alexis & Jardi, Xavier, 2015. "Private transaction costs of participation in water quality improvement programs for Australia’s Great Barrier Reef: Extent, causes and policy implications," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    • Handle: RePEc:ags:aareaj:283217
    DOI: 10.22004/ag.econ.283217
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    Cited by:

    1. van Grieken, M.E. & Roebeling, P.C. & Bohnet, I.C. & Whitten, S.M. & Webster, A.J. & Poggio, M. & Pannell, D., 2019. "Adoption of agricultural management for Great Barrier Reef water quality improvement in heterogeneous farming communities," Agricultural Systems, Elsevier, vol. 170(C), pages 1-8.
    2. Sina Shahab & Leonhard K. Lades, 2020. "Sludge and Transaction Costs," Working Papers 202007, Geary Institute, University College Dublin.
    3. Star, Megan & Rolfe, John & Barbi, Emily, 2019. "Do outcome or input risks limit adoption of environmental projects: Rehabilitating gullies in Great Barrier Reef catchments," Ecological Economics, Elsevier, vol. 161(C), pages 73-82.
    4. Christian Ritzel & Gabriele Mack & Marco Portmann & Katja Heitkämper & Nadja El Benni, 2020. "Empirical evidence on factors influencing farmers’ administrative burden: A structural equation modeling approach," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-16, October.
    5. Indranil De & Rooba Hasan & Mubashshir Iqbal, 2022. "Natural Treatment Systems and Importance of Social Cost Benefit Analysis in Developing Countries: A Critical Review," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
    6. Shahab, Sina & Clinch, J. Peter & O’Neill, Eoin, 2018. "Accounting for transaction costs in planning policy evaluation," Land Use Policy, Elsevier, vol. 70(C), pages 263-272.
    7. Robert J. Johnston & Tom Ndebele & David A. Newburn, 2023. "Modeling transaction costs in household adoption of landscape conservation practices," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 341-367, January.
    8. Xiaoyan Zhuo & Hongbing Li, 2022. "A Study on Cost Allocation in Renovation of Old Urban Residential Communities," Sustainability, MDPI, vol. 14(11), pages 1-20, June.
    9. David Asante Edwin & Evam Kofi Glover & Edinam K. Glover, 2020. "When Tradition Meets Modernity in Land Registration: Evidence from Dagbon, Ghana," Land, MDPI, vol. 9(11), pages 1-28, October.

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