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Estimates of Public Sector Transaction Costs in NRCS Programs

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  • McCann, Laura
  • Easter, K. William

Abstract

When evaluating the economic efficiency of policies to reduce nonpoint source pollution, administrative or transaction costs are usually not taken into account. While the importance of transaction costs has been recognized in the theoretical literature, the fact that they are not incorporated in empirical analyses means that, in effect, these costs are given a zero value. This issue is examined quantitatively using data collected by the National Resource Conservation Service (NRCS). Transaction costs are found to be a significant portion (38 percent) of overall conservation costs. This provides strong support for including these costs in economic evaluations of alternative policy instruments.

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  • McCann, Laura & Easter, K. William, 2000. "Estimates of Public Sector Transaction Costs in NRCS Programs," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(3), pages 555-563, December.
    • Handle: RePEc:cup:jagaec:v:32:y:2000:i:03:p:555-563_02
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    References listed on IDEAS

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    1. Laura McCann & K. William Easter, 1999. "Transaction Costs of Policies to Reduce Agricultural Phosphorous Pollution in the Minnesota River," Land Economics, University of Wisconsin Press, vol. 75(3), pages 402-414.
    2. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
    3. Ronald C. Griffin & Daniel W. Bromley, 1982. "Agricultural Runoff as a Nonpoint Externality: A Theoretical Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(3), pages 547-552.
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    Cited by:

    1. 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.
    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. Frank A.G. den Butter, 2012. "Managing Transaction Costs in the Era of Globalization," Books, Edward Elgar Publishing, number 14748.
    4. Cattaneo, Andrea & Hellerstein, Daniel & Nickerson, Cynthia J. & Myers, Christina, 2006. "Balancing the Multiple Objectives of Conservation Programs," Economic Research Report 7257, United States Department of Agriculture, Economic Research Service.
    5. Abler, David, 2004. "Multifunctionality, Agricultural Policy, and Environmental Policy," Agricultural and Resource Economics Review, Cambridge University Press, vol. 33(1), pages 8-17, April.
    6. Metcalfe, Todd & Bosch, Darrell J. & Pease, James W. & Alley, Mark M. & Phillips, Steve B., 2007. "Yield Reserve Program Costs in the Virginia Coastal Plain," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), pages 1-16, October.
    7. McCann, Laura M.J. & Hafdahl, Adam, 2003. "Agency Perceptions Of Alternative Salinity Policies: The Role Of Fairness," 2003 Annual meeting, July 27-30, Montreal, Canada 22097, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Claassen, Roger & Duquette, Eric & Horowitz, John & Kohei, Ueda, 2014. "Additionality in U.S. Agricultural Conservation and Regulatory Offset Programs," Economic Research Report 180414, United States Department of Agriculture, Economic Research Service.
    9. 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.
    10. 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.
    11. Kang, Shiteng & Kroeger, Timm & Shemie, Daniel & Echavarria, Marta & Montalvo, Tamara & Bremer, Leah L. & Bennett, Genevieve & Barreto, Samuel Roiphe & Bracale, Henrique & Calero, Claudia & Cardenas, , 2023. "Investing in nature-based solutions: Cost profiles of collective-action watershed investment programs," Ecosystem Services, Elsevier, vol. 59(C).
    12. DeBoe, Gwendolen & Stephenson, Kurt, 2016. "Transactions costs of expanding nutrient trading to agricultural working lands: A Virginia case study," Ecological Economics, Elsevier, vol. 130(C), pages 176-185.
    13. Yang, Wanhong & Bryan, Brett A. & MacDonald, Darla Hatton & Ward, John R. & Wells, Geoff & Crossman, Neville D. & Connor, Jeffrey D., 2010. "A conservation industry for sustaining natural capital and ecosystem services in agricultural landscapes," Ecological Economics, Elsevier, vol. 69(4), pages 680-689, February.
    14. 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.
    15. Safa Baccour & Jose Albiac & Taher Kahil, 2021. "Cost-Effective Mitigation of Greenhouse Gas Emissions in the Agriculture of Aragon, Spain," IJERPH, MDPI, vol. 18(3), pages 1-19, January.
    16. Fan, Shengyue & Yang, Jinfei & Liu, Wenwen & Wang, He, 2019. "Institutional Credibility Measurement Based on Structure of Transaction Costs: A Case Study of Ongniud Banner in the Inner Mongolia Autonomous Region," Ecological Economics, Elsevier, vol. 159(C), pages 212-225.
    17. Coggan, Anthea & Whitten, Stuart M. & Bennett, Jeff, 2010. "Influences of transaction costs in environmental policy," Ecological Economics, Elsevier, vol. 69(9), pages 1777-1784, July.
    18. McCann, Laura M.J., 2001. "Transaction Costs of Agri-Environmental Policies in Vietnam," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125787, Australian Agricultural and Resource Economics Society.
    19. Matthew Richardson & Pengfei Liu & Michael Eggleton, 2022. "Valuation of Wetland Restoration: Evidence from the Housing Market in Arkansas," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(3), pages 649-683, March.
    20. Schöttker, Oliver & Wätzold, Frank, 2017. "Cost-effectiveness of buying land for conservation versus paying land-users for conservation measures – the case of preserving an oligotrophic lake in a Natura 2000 area in North Germany," MPRA Paper 80661, University Library of Munich, Germany.
    21. Laura M.J. McCann, 2009. "Transaction Costs of Environmental Policies and Returns to Scale: The Case of Comprehensive Nutrient Management Plans," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 561-573.
    22. Salomon Espinosa Diaz & Francesco Riccioli & Francesco Di Iacovo & Roberta Moruzzo, 2023. "Transaction Costs in Agri-Environment-Climate Measures: A Review of the Literature," Sustainability, MDPI, vol. 15(9), pages 1-18, May.
    23. Nantongo, Mary & Vatn, Arild, 2019. "Estimating Transaction Costs of REDD+," Ecological Economics, Elsevier, vol. 156(C), pages 1-11.
    24. Paolo Canonico & Ernesto Nito & Gianluigi Mangia & Lorenzo Mercurio & Mario Pezzillo Iacono, 2013. "Regulation issues in the Italian local transport system: aligning transactions and governance structures," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(4), pages 939-961, November.

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