Accounting for transaction costs in grasslands policies is particularly important, given the vast areas, dispersed location of herders and remoteness from local administrators could lead to high costs. This paper reports that transaction costs are still substantial, with the majority of costs being incurred in the category of policy enforcement. The paper highlights that more of the burden of the enforcement costs is being imposed on the lower administrative levels. The results showed the value in accounting for transaction costs in the design and assessment of eco-compensation schemes.