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Abstract: A multidisciplinary team of researchers made efforts to influence the design and implementation of environmental policy in Australia. A focus of these efforts was the development of the Investment Framework for Environmental Resources (INFFER). In addition, the team undertook a range of communication activities, training, user support, and participation in committees and enquiries. Transaction costs were relevant to these efforts in a variety of ways. Environmental managers perceived INFFER to involve relatively high transaction costs. A balance was struck between the system having simplicity (and low transaction costs) and delivering environmental benefits. Transaction costs were factored into the planning and prioritisation processes developed. For example, public and private transaction costs are accounted for in the calculation of benefit:cost ratios and in the choice of policy mechanisms. There are diverse roles that transaction costs play in the processes of developing, implementing and influencing environmental policy programmes. A key observation is that appropriate strategic investment in transaction costs can improve decisions and increase net benefits from an environmental programme. A well-designed decision process can involve incurring transaction costs at one stage in order to save transaction costs at a later stage. [Copyright &y& Elsevier]

Abstract: Environmental policy instruments generate transaction costs to public and private parties. There is a growing literature reporting on the size of transaction costs produced by environmental policy instruments. This paper extends that literature through an analysis of the factors that influence transaction costs in environmental policy and how this influence occurs. The theory based factors that influence transaction costs are categorised as: 1) transaction characteristics; 2) transactor characteristics; 3) nature of the institutional environment; and 4) nature of the institutional arrangements. We examined how these factors influenced transaction costs through the analysis of two Australian-based development offset schemes with different policy designs. We found evidence of all four theory-based categories of influence in the policy case studies. The degree of influence and how each factor influenced transaction costs varies across the two policies and between parties. Policy design as a component of the institutional environment had a particularly large bearing on transaction costs of offset buyers and the policy administrator. An important contribution to transaction cost theory assumes the institutional environment as given. [Copyright &y& Elsevier]