Cost-benefit analysis of the Dutch nature policy: Transaction costs and land market impacts

This paper analyses the financial and economic costs and benefits of the large scale National Ecological Network (NEN) nature conservation project in the Netherlands, taking into account transaction costs and land market impacts of different institutional arrangements. The net financial costs associated with achieving the current plan are equivalent with an annual amount €876 per hectare. Of the costs, transaction costs amount about 16% or €140 per hectare. The substantive land purchases involved in the plan will lead to land price increase of 20%. Nature management by agriculture turns out to be a relatively cheap option.

► We analyze the financial and economic costs and benefits of a large scale Dutch nature preservation project. ► We take into account transaction costs of different institutional land management arrangements. ► We account for the impact of government land purchases or takings on the land market. ► Net financial costs are equivalent with an annual amount €876 per hectare. ► Transaction costs amount about 16% of total costs (€140 per hectare).