A conceptual framework for measuring transaction costs in agri-environmental schemes: an application to the Dutch collective scheme

Abstract

This research brings together insights from the literature on the measurement of transaction costs related to agri-environmental schemes (AES) and formulates a conceptual framework for measuring these transaction costs. The framework is then applied to the Dutch AES in which farmer collectives act as a mediator between farmer-members and the Dutch government. In particular, we study the distribution of private transaction costs in the collective scheme and compare this to the distribution under the former individual approach. Results show that transaction costs have increased substantially for the collective, while they decreased for public actors. Moreover, the execution of the Dutch AES depends for a large part on volunteers, whose costs are not accounted for in official records. Although the Dutch AES appears successful in terms of coordination, we conclude that it carries substantial transaction costs for the collectives and its dependency on volunteers makes it fragile in the long term.