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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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Summary and Conclusions

In the general context of agricultural policy reform, this study suggests ways to reduce PRTCs and explores the role of policy-related transaction costs (PRTCs) in defining the most efficient option for achieving policy objectives. Although PRTCs have largely been neglected in agricultural policy design and analysis for a long time, they are attracting increasing interest with the development of more targeted policies. PRTCs are defined as all costs arising from interactions between and within government agencies, private organisations and programme participants at all stages of policy implementation, starting with the initial gathering of information and the policy design, the selection of eligible farmers, the distribution of transfers, the monitoring and control stages, and ending with the final evaluation of the policy outcomes relative to objectives. For budgetary payments, implementation costs are sometimes strictly defined as the costs of delivering payments and monitoring farmers’ eligibility and compliance. There are questions as to which costs can be considered as PRTCs. Technical assistance, for example, is sometimes excluded from PRTCs and considered as an outcome.

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