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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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Introduction and Chapter 1. Policy-related Transaction Costs of Agricultural Policies

In the OECD, the issue of PRTCs was raised in the context of work on the multifunctionality of agriculture. It was recognised in the analytical framework developed for the OECD’s conceptual work on multifunctionality (OECD, 2001a) that when the most efficient intervention to address market failures associated with multifunctionality is sought, “transaction costs, including administrative costs associated with various options, should also be taken into account”. This issue was explored at the Workshop on “Multifunctionality: Applying the OECD Analytical Framework – Guiding Policy Design” that took place on 2-3 July 2001, based on a framework paper prepared by the Secretariat (OECD, 2001b) and on two consultants’ papers (Challen, 2001; Vatn, 2001). The results of the discussion that took place are incorporated and further developed in a report on the policy implications of OECD work on multifunctionality (OECD, 2003a). Another OECD report Multifunctionality in agriculture: What role for private initiatives? looks at non policy-related transaction costs in the context of public good provision (OECD, 2005b).

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