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How are public transaction costs in regional agri-environmental scheme delivery influenced by EU regulations?

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Implementing agri-environmental schemes (AES) induces private and public transaction costs (TCs). To date, research has investigated TCs stemming from the relationship between (regional) administrations and farmers. However, implementing AES within the EU's Common Agricultural Policy (CAP) offers partial reimbursement of payments but implies an additional transaction and TCs. This paper investigates the effects of EU regulations on occurrence and composition of regional public TCs qualitatively by using Hesse, Germany, as a case study. Using insights from political science theories, I present results from interviews with administrative units: EU-required structural and procedural prerequisites shape the regional implementation and draw the focus towards expense of EU-based TCs. Moreover, there are spillovers onto farmers’ TCs. Thus, the CAP framework is an important influencing factor, and resulting TCs may reduce the budgetary benefit obtained from the reimbursement.
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Keywords: Germany; Transaction costs; agri-environmental schemes; institutional environment; policy implementation

Document Type: Research Article

Affiliations: Institute for Agricultural Policy and Market Research, Justus Liebig University, Senckenbergstr. 3, 35390, Giessen, Germany

Publication date: June 3, 2014

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