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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 diversity 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 who adopted some elements of INFFER incurred higher transaction costs than they did using traditional, simpler methods for planning and prioritising. The benefits that could be generated by bearing specific transaction costs were carefully considered, and a balance was struck between the system having simplicity (and low transaction costs) and delivering valuable environmental outcomes in the long term. Transaction costs were factored into the planning and prioritisation processed developed for INFFER. For example, public and private transaction costs are accounted for in the calculation of the Benefit: Cost Ratio for each project, and in the analysis of which type of policy mechanisms would be most suitable. The researchers’ experiences highlight the importance of transaction costs and the diverse roles that they play in the processes of developing, implementing and influencing environmental policy programs.

Suggested Citation

  • Pannell, David J. & Roberts, Anna M. & Park, Geoff & Alexander, Jennifer, 2012. "Improving environmental decisions: a transaction-costs story," Working Papers 125851, University of Western Australia, School of Agricultural and Resource Economics.
  • Handle: RePEc:ags:uwauwp:125851
    DOI: 10.22004/ag.econ.125851
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    File URL: https://ageconsearch.umn.edu/record/125851/files/WP120005.pdf
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 259 – Increasing environmental benefits
      by David Pannell in Pannell Discussions on 2013-12-02 21:00:50

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    Cited by:

    1. Krutilla, Kerry & Alexeev, Alexander, 2014. "The Political Transaction Costs and Uncertainties of Establishing Environmental Rights," Ecological Economics, Elsevier, vol. 107(C), pages 299-309.
    2. 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.
    3. 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.
    4. 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.
    5. Shahab, Sina & Clinch, J. Peter & O'Neill, Eoin, 2019. "An Analysis of the Factors Influencing Transaction Costs in Transferable Development Rights Programmes," Ecological Economics, Elsevier, vol. 156(C), pages 409-419.
    6. 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.
    7. McCann, Laura, 2013. "Transaction costs and environmental policy design," Ecological Economics, Elsevier, vol. 88(C), pages 253-262.
    8. 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.
    9. Swallow, Kimberly A. & Swallow, Brent M., 2015. "Explicitly integrating institutions into bioeconomic modeling:," IFPRI discussion papers 1420, International Food Policy Research Institute (IFPRI).
    10. 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.
    11. Georgina W. Njiraini & Djiby Racine Thiam & Anthea Coggan, 2017. "The Analysis of Transaction Costs in Water Policy Implementation in South Africa: Trends, Determinants and Economic Implications," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 1-30, January.
    12. Phan, Thu-Ha Dang & Brouwer, Roy & Hoang, Long Phi & Davidson, Marc David, 2017. "A comparative study of transaction costs of payments for forest ecosystem services in Vietnam," Forest Policy and Economics, Elsevier, vol. 80(C), pages 141-149.
    13. Vergamini, Daniele & Viaggi, Davide & Raggi, Meri, 2020. "Evaluating the Potential Contribution of Multi-Attribute Auctions to Achieve Agri-Environmental Targets and Efficient Payment Design," Ecological Economics, Elsevier, vol. 176(C).
    14. 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.
    15. 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.

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    Keywords

    Environmental Economics and Policy; Institutional and Behavioral Economics; Resource /Energy Economics and Policy; Teaching/Communication/Extension/Profession;
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