Conclusions  

Constraints to public intervention may have a significant impact on policy cost-effectiveness Qualitative estimations of constraints to public intervention only concern constraints to reach the environmental objective (administration costs, costs of public funds, private costs of compliance) Costs induced by information asymmetry or regulator’s motivations may be included in transaction costs estimates but are difficult to isolate Assessment methods give an idea on the scope of costs but show clear limits to compare and interpret results (no data homogeneity) Conclusions on public policies’ efficiency must be balanced with other policy costs and pollution abatement level

Estimation of constraints to public intervention for a better policy choice. Literature overview

Introduction 

From the 1970’s, economists have assessed government failures or specific constraints to public intervention with different terminologies (i.e: public intervention costs, transaction costs, marginal costs of public funds,…) and under different aspects (i.e: information asymmetry between principal and agents, lack of motivation of the regulator to maximize collective well-being, administrative costs of policy implementation and monitoring, distortions on other markets due to the tax system,…). However, most empirical studies are rather recent on the ex-post estimation of these constraints. Given the scope of these constraints and the increasing use of economic instruments and analysis to guide environmental policy decisions, there is a need to reconsider the conditions under which public policy options are likely to be effective. Constraints estimation can improve the comparison of policy alternatives ex-ante. Objective 

Based on microeconomic theory and 8 recent ex-post studies, this literature survey aimed at identifying a typology of constraints to public intervention as well as the assessment methods used.

Marion Laurenceau1, François Destandau, Anne Rozan,

Laboratoire GSP, UMR Cemagref-ENGEES, 1 Quai Koch, BP 61039, 67070 Strasbourg cedex 1PhD student ; marion.laurenceau@engees.u-strasbg.fr ; Phone:+33 (0)3.88.24..82.32

Conceptual model

Agenda setting(objectives of policies)

Policy formulation(policy measures)

Policy implementation(control, enforcement)

Policy evaluationoutcomes (effects on target groups) and impacts (effects on the environment)

Constraints to reach the environmental objective:

- Costs for the regulator (administrative costs, transaction costs)- Costs for regulated agents (private costs of compliance)- Costs for the rest of the society (social costs of public funds)

Constraints to define the environmental objective:- Information on costs and damages- Regulator's motivations- Individual preferences aggregation

Choosing the optimum as environmental policy objective corresponds to fixing the level of externality production through economic calculus. Given the constraints to define this optimum, economic analysis generally focuses on the least-cost methods to reach a defined environmental objective.

Constraint Policy Constraint estimates Method

Markets for water rights 3-29% of average trade price 6% of price paid to transfer water

Management accounting

Water supply

Statistically significant relationship between proxies (population size and variability, water quality) and the contractual arrangement chosen

Statistical method

Pollution abatement and agri-environmental

policies

$ 0.9-9.4 million (for 4 policy scenarios with same environmental objective) 6-87% of compensatory payments (or 1-100% of total scheme costs over a year) 0.1-66% of payment to farmers or tax revenue

Management accounting

Transaction costs, administration costs

Nature conservation 38% of overall conservation costs Management accounting

Costs of public funds

Public policies Social marginal costs of public funds = 1.2 (20% of the taxes collected)

Fiscal data

Categories of methods identified:Management accounting: monetization of staff time inputs to realize administration tasks

(interviews), recording of administrative expenditures (financial and water price data, administration and legal fees ) Statistical method: statistical analysis of the relationship between data on proxies characterizing the constraints and the organization chosen

Fiscal data: estimation of the cost for the community of taxes collected by the State based on households welfare loss

Empirical studies and constraints estimation