The Implementation Costs of Agricultural Policies

image of The Implementation Costs of Agricultural Policies

Concerns about the cost of implementing and monitoring agricultural policies are mounting with the development of more decoupled and targeted policies. While these costs are inherent in the policy process, reducing them will bring benefits in terms of better use of public funds, and minimising the overall economic costs of policies. The report suggests ways to do so without compromising the aims of the policies. Ways to reduce costs include sharing experiences across agencies, regions or countries, exploiting already existing administrative networks, integrating government and private information systems, reducing the number of agencies and using the latest information technologies.

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A Case Study of Policy-related Transaction Costs in Land Conservation Programmes in the United States

The Conservation Reserve Program (CRP) has been the largest land retirement programme, and the largest US conservation programme of any kind. CRP is a voluntary programme that offers annual rental payments, incentive payments for certain activities, and cost-share assistance to establish approved cover on eligible cropland. As of June 2004, there were 34.8 million acres enrolled in CRP, with 2.8 million of those acres in partial-field enrolments under the continuous signup, Conservation Reserve Enhancement Program (CREP), and the Farmable Wetland Program (FWP). More than 660 000 contracts were in force with more than 390 000 farmers covering this acreage. The annual rental cost was almost USD 1.7 billion, and the average rental cost per acre was USD 48. About 60% of CRP acreage was planted to grasses, 16% to trees or woody vegetation for wildlife, and 5% was dedicated to wetland restoration. The programme is authorized at 39.7 million acres for enrolments under 10-15 year contracts through 2007. The current CRP program targets land retirement to increase the cost-effectiveness of the programme, and adjusts the payment to closely match the market value.

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