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ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments

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  • Sauer, Johannes
  • Walsh, John

Abstract

This study empirically investigates the cost-effectiveness of different agri-environmental policy instruments. We compare the Environment Stewardship Scheme (ESS) as an example for a management agreement type instrument, to the Nitrate Vulnerable Zones (NVZ) as an example for a command-and-control type instrument. Both instruments are currently applied in the UK. Based on a simple cost model considering also relevant transaction costs and risk we use different regression and resampling techniques to estimate the marginal effects of different factors with respect to the instruments‟ relative cost-effectiveness and to identify factors for cost variation over space and time. We control for the actual level of compliance by using compliance weighted average scheme cost ratios. The findings suggest that the ESS instrument has a higher cost-effectiveness whereas the NVZ instrument is more expensive on a general level. However, if the focus is on compliance weighted cost ratios, the picture changes somewhat. Further, we find a significant regional variation in the cost-effectiveness for both instruments as well as a significant variation over time.

Suggested Citation

  • Sauer, Johannes & Walsh, John, 2011. "ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108963, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc11:108963
    DOI: 10.22004/ag.econ.108963
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    Cited by:

    1. Sauer, J. & Walsh, J. & Zilberman, D., 2014. "Agri-Environmental Policy Effects at Producer Level – Identification and Measurement," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    2. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Behavioural Change through Agri-Environmental Policies ? – A Distance Function based Matching Approach," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134783, Agricultural Economics Society.
    3. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Producer Behaviour and Agri-Environmental Policies: A Directional Distance based Matching Approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124877, Agricultural and Applied Economics Association.

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