Exploring the Effect of Perceived Transaction Costs on Farmers’ Attitudes toward Participation in Agri-Environment-Climate Measures (AECMs)

Abstract

There is growing interest in research and policy to provide alternatives for developing and supporting sustainable business models in the agricultural sector. Agri-environment–climate measures (AECMs) were devised with the intention of compensating land users for potential income losses generated from the uptake of more appropriate, less intensive management practices in areas considered environmentally sensitive. Nonetheless, the effectiveness of these public initiatives is influenced by farmers’ decision to participate, which in turn is influenced by the level of transaction costs (TC) they must bear when engaging in these programs. Most studies have approached this topic from a quantitative perspective, trying to measure and estimate transaction costs; however, there is a lack of qualitative studies exploring the perceptions of farmers around these costs and analyzing how such perceptions influence their attitude toward AECM participation. This study presents the results of thirty semi-structured interviews conducted among farmers involved in different AECMs across seven European countries, in which their perceptions about transaction costs were explored through the assessment of the time required to perform certain activities. The objective was to gain deeper insights into the way in which the perceived level of TC can affect farmers’ attitudes and decisions toward the implementation of environment-friendly management practices through AECMs. Results showed that such perceptions are influenced by several factors, such as the presence or absence of intermediaries helping farmers to carry out some of the most time-consuming activities, the organizational structure of the contract, and the experience farmers acquire through repeated participation.