Determinants of the perceived administrative transaction costs caused by the uptake of an agri-environmental program

Abstract

Farmers’ subjectively perceived that administrative transaction costs are of high importance for the uptake of agri-environmental programs with direct effects on the effectiveness and efficiency of these programs and the well-being of farmers. This paper empirically estimates private administrative transaction costs resulting from an uptake of the newly introduced grassland-based milk and meat program in Switzerland, based on farmers’ perceived administrative workload. Using ordered logit models, we analyze how the administrative tasks and farm and farmer characteristics influence the perceived administrative workload. We find that the time spent on monitoring or inspection tasks has no effect. In contrast, an outsourcing of program-related administrative tasks significantly reduces the perceived administrative workload. We also find that a better understanding of agricultural policy regulations significantly reduces the farmers’ perceived administrative workload. We recommend that public administration improve the communication of agricultural policy regulations, rather than investing in the simplification of administrative forms.