I know transaction costs are tricky to measure. I would like to know what's the best method to measure public transaction costs (TCs) related to agri-environmental schemes... I've read in some articles that it's possible to use the percentage of working time spent on a particular AES-related activity as a proxy... but then I struggle with the type of questions that can be asked to elicit such information... because when it comes to public TCs I assume it's not only the government who is involved but also all the other actors that intervene in the design of the scheme...
You are right, usually TC are quantified by taking the opportunity cost approach, through measuring the time needed as a proxy for certain activities.
The intermediaries, who facilitate the implementation of AES, invest a lot of time organising AES. Thus, I think relevant questions would be:
- How long do you on average need to approach a farmer?
- How long do you on average need to consult a farmer for a particular AES until the farmer decides for implementing a scheme?
- How long do you on average need to help a farmer along the process of implementing a measure?
- etc
I guess in first instance it is important to break down all the activities that intermediaries or other government officials undertake in the process of acquiring farmers for AES. These might highly differ, depending on the type of AES. From interviews I can tell that TC highly fluctuate and that very similar projects might result in highly different TC. Time needed for certain activities is really just a rough estimate of TC and highly questionable in my opinion.
Thank you very much Christoph Schulze. I appreciate your feedback. Those questions are good examples. I think you are right also about how TCs may highly differ from one project to another... I suppose that different types of schemes also involve different TCs... If you come to know any articles where I can find a good methodology to measure them please let me know, I'm in the process of creating a qustionnaire. Thanks again.
In 2013, there was a Special Issue in Ecological Economics on Transaction Costs and Environmental Policy.
https://www.sciencedirect.com/journal/ecological-economics/vol/88/suppl/C
I'm not sure I they provide good hints or instructions for preparing a survey. A colleague of mine was struggling with that issue as well. Other literature we were looking at was:
Buckley, P.J. and Chapman, M., 1997. The perception and measurement of transaction costs. Cambridge journal of economics, 21, 127–145.
Challen, R. (2001) ‘Non-government approaches to the provision of non-commodity agricultural outputs: a transaction-cost perspective’, OECD Workshop on Multifunctionality, 2–3 July, p.18, Paris.
Dupraz, P. and Ducos, G., 2007. Agri-environmental contract adoption under fixed and variable compliance costs. PhD workshop. Rennes: European Association of Agricultural Economists.
Hobbs, J., 2004. Markets in metamorphosis: the rise and fall of policy institutions. In: G. Van Huylenbroeck, W. Verbeke, and L. Lauwers, eds. Role of institutions in rural policies and agricultural markets. Amsterdam: Elsevier, 199–212.
Krutilla, K., & Krause, R. (2011). Transaction costs and environmental policy: An assessment framework and literature review. International Review of Environmental and Resource Economics, 4(3–4), 261-354.
McCann, L. (2013). Transaction costs and environmental policy design. Ecological Economics, 88, 253-262.
Mettepenningen, Evy, Verspecht, Ann and Van Huylenbroeck, Guido (2009) 'Measuring private transaction costs of European agri-environmental schemes', Journal of Environmental Planning and Management, 52:5,649 — 667
Ridier, A., Képhaliacos, C. and Carpy-Goulard, F. (2011) ‘Private transaction costs and environmental cross compliance in a crop region of Southwestern France’, Int. J. Agricultural Resources, Governance and Ecology, Vol. 9, Nos. 1/2, pp.68–79.
Rørstad, P. K., Vatn, A., & Kvakkestad, V. (2007). Why do transaction costs of agricultural policies vary?. Agricultural economics, 36(1), 1-11.
Wang, N., 2003. Measuring transaction costs: an incomplete survey. Ronald Coase Institute, no. 2.
Cheers,
Chris
Am in the thought that a standardised face to face questionnaire with likert scale varibles containing both closed and open questions will be off help. The advantage of this type of structured questions is that it can be used to asses perception of the TCs. P
The problem of the above approach is that it time consuming and costly
Thanks
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