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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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Policy-related Transaction Costs and Policy Choice

As explained in the introduction, the question of PRTCs in policy choice arises from concerns that moving from direct market interventions to new forms of targeted and decoupled agricultural policies leads to implementation costs that might outweigh the benefits. This chapter examines the role of PRTCs in defining the most cost-effective and efficient policy option for achieving given policy objectives. Section 2.2 provides a framework for comparing policy options in the context of policy reform that includes a move away from production-linked support towards measures that are more decoupled from commodity production and better targeted to specific policy objectives and beneficiaries. The main economic issues raised when trying to compare policies are highlighted. Scenarios illustrating them are presented. Section 2.3 considers policies that pursue correction of market failures relating to nature, environment and rural viability, while Section 2.4 considers policies with multiple objectives. Finally, agricultural policies with income objectives are considered in Section 2.5.

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