Agency Perceptions of Alternative Salinity Policies: Are They Measuring Transaction Costs?
2017
McCann, Laura M.J.
Economics has looked at the decision process of politicians but the decision processof agency staff has primarily been the purview of sociologists. Agencies affect the final formof regulations, they may enforce or ignore regulations that exist, and they provideinformation to the political process. Policies recommended by economists for non-pointsource pollution control are seldom implemented by government agencies.This study examined the relationship between preferences for a particular policy andthe perceived farmer cost, farmer resistance, efficacy in salinity reduction, fairness, andadministrative costs. The latter were included to find whether transaction costs ofimplementing policies affect preferences and whether this could help explain the existence ofcurrent policies.To test this hypothesis, a survey of people working on the salinity issue wasconducted. Contrary to what one might expect, perceptions of farmer cost and farmerresistance were not highly correlated. When preference was regressed against farmer cost,farmer resistance and administrative costs, only farmer resistance was significant. Wheneffectiveness and fairness were included as explanatory variables, they were highlysignificant and the coefficients were quite large. Including perceived effectiveness andfairness greatly improved the explanatory power of the model.
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