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Estimating Transaction Costs Of Alternative Policies To Reduce Phosphorous Pollution In The Minnesota River

Author

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  • McCann, Laura M.J.
  • Easter, K. William
Abstract
As point sources of pollution reduce their emissions due to water quality control efforts, nonpoint sources have become relatively more important. In the case of agricultural nonpoint source pollution, the policy instruments recommended by economists are not observed in practice. This study was designed to measure the magnitude of transaction costs associated with policies to reduce agricultural nonpoint source pollution and to determine whether transaction costs help explain the prevalence of the policies actually observed. Interviews with staff from governmental agencies were conducted to estimate transaction costs associated with four policies to reduce agricultural phosphorous pollution in the Minnesota River. The tax on phosphate fertilizers had the lowest transaction costs (U.S. $0.94 million), followed by educational programs on best management practices ($3.11 million), the requirement for conservation tillage on all cropped land ($7.85 million), and expansion of a permanent conservation easement program ($9.37 million). Taxes thus may have advantages with respect to transaction costs as well as abatement costs.

Suggested Citation

  • McCann, Laura M.J. & Easter, K. William, 1998. "Estimating Transaction Costs Of Alternative Policies To Reduce Phosphorous Pollution In The Minnesota River," Staff Papers 13919, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13919
    DOI: 10.22004/ag.econ.13919
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    References listed on IDEAS

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    Cited by:

    1. Herath, Deepananda P.B. & Weersink, Alfons, 1999. "Transaction Costs, Economic Instruments And Environmental Policies," 1999 Annual meeting, August 8-11, Nashville, TN 21588, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Gordon, Simon, 2003. "Economic Instruments For Nonpoint Source Water Pollution: Options For The Swan-Canning River System," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57873, Australian Agricultural and Resource Economics Society.
    3. Katherine Falconer & Pierre Dupraz & Martin Whitby, 2001. "An Investigation of Policy Administrative Costs Using Panel Data for the English Environmentally Sensitive Areas," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 83-103, January.

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