Governing agri-environmental schemes: lessons to be learned from the new institutional-economics approach

The authors analyze agri-environmental schemes (AES) from the perspective of new institutional economics (NIE). The field of NIE studies the effect of institutions on the decisions of economic actors. Policy is intended to shape institutions and thus influence behavior. NIE is therefore particularly suitable for the analysis of policy programs such as AES. Their aim is to explain some of the management problems that have arisen in AES and to contribute to finding solutions by using insights from NIE. To this end a specific Dutch AES is used as a case study, in which a number of administrative problems are analyzed. These problems prove to be similar to those that have been identified in other European AES, and are related to the ecological efficacy of this particular type of policy program, its economic efficiency, its administrative sustainability, and the level of sociopolitical support it enjoys. The explanation for the problems identified is based on NIE; this approach is also used to identify solutions. The solutions derived from this theory are then compared with the solutions that have been applied in reality. The authors conclude with a discussion of what these lessons imply for AES in general.