The Failure Of The Dutch MINAS Policy: A Transaction Cost Analysis
Free (open access)
S. A. L. Wright
The paper analyses the Dutch MINAS policy, a tax combined with nutrient accounting. Its aim was to reduce nitrate levels in groundwater from agriculture sources. MINAS was beset with problems from the outset. Therefore, the aim of the paper is to determine the reasons for the ‘erosion’ of the policy. The paper begins with a theoretical analysis of the design of the instrument, the conclusion being that, according to economic theory, the instrument appears to be well designed. Despite this, MINAS still experienced problems, which were so pervasive that the functioning of the instrument became seriously undermined. The paper identifies certain key events, specific problems with the design of MINAS, which resulted in some farmers receiving very high unjustified taxes, and external socio-economic pressures, which in combination fuelled widespread resistance to the policy and hence escalating transaction costs due to the increasingly large administrative burden. The paper concludes that whilst it may have been possible for policy makers to avoid some of the identified problems it is considered that the majority were beyond their control. However, it was perhaps inevitable from the outset that such a system would encounter problems due to the very high degree of precision that was attempted and thus policy makers could be criticised for not opting for a simpler system. The paper is critical of the application of a tax/nutrient accounting system to control nutrient leaching. The study is based on empirical research, specifically a series of interviews with key personnel within organizations linked with MINAS. Keywords: policy erosion, MINAS, transaction costs, administrative costs, nitrate pollution, environmental tax, nutrient accounting.
policy erosion, MINAS, transaction costs, administrative costs, nitrate pollution, environmental tax, nutrient accounting.