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Improving environmental decisions: A transaction-costs story

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  • Pannell, David J.
  • Roberts, Anna M.
  • Park, Geoff
  • Alexander, Jennifer

Abstract

A multidisciplinary team of researchers made efforts to influence the design and implementation of environmental policy in Australia. A focus of these efforts was the development of the Investment Framework for Environmental Resources (INFFER). In addition, the team undertook a range of communication activities, training, user support, and participation in committees and enquiries. Transaction costs were relevant to these efforts in a variety of ways. Environmental managers perceived INFFER to involve relatively high transaction costs. A balance was struck between the system having simplicity (and low transaction costs) and delivering environmental benefits. Transaction costs were factored into the planning and prioritisation processes developed. For example, public and private transaction costs are accounted for in the calculation of benefit:cost ratios and in the choice of policy mechanisms. There are diverse roles that transaction costs play in the processes of developing, implementing and influencing environmental policy programmes. A key observation is that appropriate strategic investment in transaction costs can improve decisions and increase net benefits from an environmental programme. A well-designed decision process can involve incurring transaction costs at one stage in order to save transaction costs at a later stage.

Suggested Citation

  • Pannell, David J. & Roberts, Anna M. & Park, Geoff & Alexander, Jennifer, 2013. "Improving environmental decisions: A transaction-costs story," Ecological Economics, Elsevier, vol. 88(C), pages 244-252.
  • Handle: RePEc:eee:ecolec:v:88:y:2013:i:c:p:244-252
    DOI: 10.1016/j.ecolecon.2012.11.025
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    13. Dustin Garrick & Bruce Aylward, 2012. "Transaction Costs and Institutional Performance in Market-Based Environmental Water Allocation," Land Economics, University of Wisconsin Press, vol. 88(3), pages 536-560.
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    Cited by:

    1. Marshall, Graham R., 2013. "Transaction Costs, Collective Action And Adaptation In Managing Social-Ecological Systems," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152166, Australian Agricultural and Resource Economics Society.
    2. Coggan, Anthea & Buitelaar, Edwin & Whitten, Stuart & Bennett, Jeff, 2013. "Factors that influence transaction costs in development offsets: Who bears what and why?," Ecological Economics, Elsevier, vol. 88(C), pages 222-231.
    3. McCann, Laura, 2013. "Transaction costs and environmental policy design," Ecological Economics, Elsevier, vol. 88(C), pages 253-262.
    4. repec:wsi:wepxxx:v:03:y:2017:i:01:n:s2382624x1650020x is not listed on IDEAS
    5. repec:eee:forpol:v:80:y:2017:i:c:p:141-149 is not listed on IDEAS
    6. Mundaca, Luis & Mansoz, Mathilde & Neij, Lena & Timilsina, Govinda R, 2013. "Transaction costs of low-carbon technologies and policies : the diverging literature," Policy Research Working Paper Series 6565, The World Bank.
    7. Krutilla, Kerry & Alexeev, Alexander, 2014. "The Political Transaction Costs and Uncertainties of Establishing Environmental Rights," Ecological Economics, Elsevier, vol. 107(C), pages 299-309.
    8. Swallow, Kimberly A. & Swallow, Brent M., 2015. "Explicitly integrating institutions into bioeconomic modeling:," IFPRI discussion papers 1420, International Food Policy Research Institute (IFPRI).
    9. Pannell, David J., 2013. "Value for Money in Environmental Policy and Environmental Economics," Working Papers 146501, University of Western Australia, School of Agricultural and Resource Economics.
    10. Crase, Lin & O'Keefe, Sue & Dollery, Brian, 2013. "Talk is cheap, or is it? The cost of consulting about uncertain reallocation of water in the Murray–Darling Basin, Australia," Ecological Economics, Elsevier, vol. 88(C), pages 206-213.
    11. Marshall, Graham R., 2013. "Transaction costs, collective action and adaptation in managing complex social–ecological systems," Ecological Economics, Elsevier, vol. 88(C), pages 185-194.
    12. Cacho, Oscar J. & Lipper, Leslie & Moss, Jonathan, 2013. "Transaction costs of carbon offset projects: A comparative study," Ecological Economics, Elsevier, vol. 88(C), pages 232-243.

    More about this item

    Keywords

    Transaction costs; Policy mechanism choice; Benefit:costs analysis; Prioritisation; Planning;

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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