Search

When governments regulate externalities, they inevitably create, modify or reassign property rights. Although these rights have important distributional implications, they are rarely at the center of economic evaluations of policy instrument choice, where the main focus is on allocative efficiency. This is problematic for two reasons. First, the allocation of rights may not receive the attention it deserves, and decisions about rights and more technical policy advice are easily mixed up. The second reason is a circularity problem: proposed (Pareto) efficient regulations modify the same property rights that determine what economists identify as an efficient environmental target. To avoid these difficulties, we propose a perspective in regulation that brings the allocation of rights to the front. We classify basic regulatory options based on how rights are allocated between polluters and potential victims and across income groups and we outline how these options may be implemented through choice of policy instruments. We then propose a regulatory procedure that takes the interdependence of rights and environmental targets into account. Based on this analysis, we discuss the potential of a rights-centered approach for designing environmental policies with desirable distributional outcomes and assumptions about the rights to environmental resources. [ABSTRACT FROM AUTHOR]

Abstract Reducing emissions from deforestation and forest degradation (REDD+) is generally believed to be a cost-effective mitigation strategy against climate change. Some suggest, however, that costs of REDD+ are underestimated because many studies either exclude or undervalue transaction costs. A major challenge in this field of research is the absence of a common framework and methodology for assessing such costs. This paper uses the notion of governance structures to suggest a generic definition and methodology for measuring transaction costs. The methodology is subsequently used in an analysis of transaction costs for REDD+ pilots in RDS Rio Negro, Brazil and Kilosa, Tanzania. Results indicate higher unit costs – costs per ton of reduced CO 2 – of establishing the REDD+ governance structures in Kilosa, while unit costs of using those structures are higher in RDS Rio Negro. The results also show that while REDD+ was originally conceived as a market i.e., a direct trade between buyers and sellers, it could also take on a non-market governance structure or a mixture of market and non-market elements. These different forms of governance structures have implications for transaction costs. [ABSTRACT FROM AUTHOR]

This paper analyzes the expanded role of private actors and markets in environmental governance. The public goods dimension of environmental services renders privatization and trading challenging. To illustrate the key issues involved, a series of privatization efforts and market creations are reviewed. Despite the focus on privatization, the empirical material shows that the role of the state is still very pronounced. It defines the commodities and property rights, and plays a key role in setting up and regulating the markets. In the case of payments for ecosystem services, public authorities even appear as the dominant ‘trader’. Privatization and markets may reduce costs of delivering the service, while this is not universally true. Moreover, the service delivered often is transformed to make trade possible. Finally, high transaction costs may prohibit the creation of markets. The conflict between public goods delivery and private profit motive makes public control both important and difficult. Finally, several distributional issues following this neo-liberal development are highlighted. [ABSTRACT FROM AUTHOR]

In this paper the characteristics and functioning of PES is analyzed from an institutional perspective. While in theory PES is seen as a market solution to environmental problems — as an alternative to state (hierarchical) and community governance — a review of a large amount of case studies shows that PES in practice depends rather fundamentally on state and/or community engagement. Hence PES are foremost a reconfiguration of the roles of public bodies and communities becoming core intermediaries or ‘buyers’. First, to establish PES, rights to the land that delivers the environmental service must be clarified. This demands public action. Second, transacting over environmental amenities is very costly. Creating ‘markets’ for environmental services depends therefore crucially on state and community facilitation. Hence ‘buyers’ are often public agencies. High transaction costs also influence price setting. Payments do not follow the market format as intermediaries frequently are setting the price, with users often being unaware even of the fact that they pay. Finally, the distinction between payments as incentives and as fair compensations is emphasized. While payments may strengthen community relations and simplify action for environmental care, they may also introduce a purely instrumental logic and in some cases worsen the environmental status by crowding out environmental virtues. For the future, greater awareness of these dynamics is warranted. [Copyright &y& Elsevier]

Policy related transaction costs (TCs) is an important issue when evaluating different policy options. However, TCs are often not taken into account in policy evaluations, but may be as important for efficiency as the direct production costs. Different policies may result in different TCs, and the main aim of this article is to explore possible reasons for these differences. We compare the level of TCs for 12 different agricultural policy measures in Norway, and we analyze the causes of the differences along three different dimensions: asset specificity, frequency, and point of policy application. At the national level we find that all three dimensions are of importance when explaining the differences, while variation in TCs incurred by farmers are mainly due to differences in point of policy application and asset specificity. Data show that direct price support has the lowest TCs, while more direct payments for environmental amenities has the highest. [ABSTRACT FROM AUTHOR]