Development of innovative agri-environmental contracts in contracts2.0 case study regions

Development of innovative agri-environmental contracts in contracts2.0 case study regions

In three countries that established Contract Innovation Labs in one or several case study regions explicit changes have been made in the policymaking on AECM notably inspired by contracts2.0. Elements of the innovative contract proposals are now being implemented. Many innovation labs found themselves in several stages of implementation (negotiation, testing, mainstreaming) at once. This may be due to the fact that they are working on several contracts at the same time or because only some elements of the proposed contract have moved on to the testing or implementation phase. The main challenges to implementation were, among others, the lack of support from policy, realistically aligning the innovative structures with existing regulations, and the lack of financing for important intermediaries. Some CILs also lacked the interest from farmers or struggled with the need to raise public awareness. This goes to show, that a participatory process needs to be properly set up, and considerable effort is needed for successful continuation. At the same time, the successes make a significant difference and set a motivating example. 

Belgium

In Flanders, Belgium, groups of farmers will be beneficiaries for non-productive investments under the new CAP. Contracts2.0 action partner BoerenNatuur Vlaanderen (BNVL) together with research partner INBO and the support of multiple regional stakeholders also succeeded in including results-based elements in the new AECM on botanical grassland management. Furthermore, one province is willing to scale up an agglomeration bonus for erosion control to more areas in Flanders. The Flemish case study is a good example of the real-life changes contracts2.0 was able to generate. In addition, organisers of local CILs and the PIL observed a high interest in implementing more innovative approaches in the future and while the process of incorporating new measures into the Strategic Plan somewhat exceeds the project running time, the participatory process succeeded in connecting the essential stakeholders to take the processes further. The video produced on the consortium field trip to the Flemish case study regions also depicts the positive practitioner perspectives on the project and the topic (see here).

 

Spain

In the Madrid Region, a new AECM has been added to the Madrid Rural Development Plan thanks to the work of project action partner Heliconia and project research partner UAM. A measure for non-productive investments for agri-environmental objectives now allows land stewardship entities to become beneficiaries of the aid to support farms through contracts. The Spanish project partners have also organised seminars to introduce this new measure to local stakeholders and have presented their work on multiple occasions (e.g. webinars and conferences) in the region to raise awareness. This is a positive impact of the bottom-up approach exercised within the CIL / PIL Madrid where shortcomings of current agri-environmental contracts and consequently possibilities for improvement were identified. Solutions for real-life implementation were discussed with the local stakeholders to ensure a legitimate addition to the AECM and thus, a direct impact on policy design can be reported.

Germany

Several federal states will include a collective approach for AECM, for example following the example of Dutch collectives. The bottom-up participatory approach in contracts2.0 helped foster the international knowledge exchange on the topic significantly.

Although not formally part of contracts2.0 and its CILs/PILs, the case of German federal state of Brandenburg is included here because it offers a further example of the introduction of innovative contracts, namely collective contracts. Brandenburg was the first German state legally implementing collective AECM. Inspired by the Dutch model, collective AECM were introduced with the CAP funding period starting in 2023, though as additional option next to individual AECM (instead of switching the whole system, like in the Dutch case). Jointly with the German Landcare Association (Deutscher Verband für Landschaftspflege, DVL), contracts2.0 project coordinator ZALF worked on developing mandatory and optional criteria for the institutional design and actor constellation within a collective and the design of collective contracts to derive policy implications and recommendations (in accordance with work carried out in WP2 on the analysis of existing contracts). This has been done by integrating results and experiences of contracts2.0 and a series of interviews with farmers in Brandenburg. ZALF also invited the Brandenburg ministry of agriculture, environment and climate protection (MLUK) – which was strongly engaged in promoting the collective approach – to the contracts2.0 CIL/PIL exchange in Germany. The idea of introducing collective AECM to Brandenburg was initiated by the ministry itself. By inviting a driving member of said ministry to CIL/PIL exchanges, practical aspects of the implementation of collectives and their inclusion in Strategic Plans were shared with other German federal states, serving as a successful inspiration for many. Especially interesting was the many detailed insights in the necessary regulatory framework for the legal implementation of collectives as an addition to individual AECM.
The most important aspects gathered from the farmer interviews in Brandenburg were the desire for more flexibility (concerning land tenure, occurrence of extreme weather events, contracting time), a reduction of the bureaucratic workload and financial attractiveness of the new scheme. Generally, farmers are convinced of the ecological effectiveness of the collective approach and expect increased knowledge exchange and the possibility of learning.

Contracts2.0 contributed to the realisation of the collectives in Germany through extensive research on the Dutch model, providing contacts to Dutch colleagues and the series of interviews with Brandenburg farmers that were delivered to the ministry, which took them into account when designing the new collective approach. Including the farmers’ perspectives in the contract design will arguably have a positive impact on their legitimacy and acceptance. Due to the close involvement of project partner ZALF, the German experiences and insights could also be translated into English for the other project partners’ benefit.

Currently, 5 collectives are being established in Brandenburg. The current CAP funding period is considered to be a pilot phase and trial period, in which regulations concerning the collectives are not yet “set in stone” and allow for some flexibility. Due to time constraints, no specific new measures have been introduced yet. In fact, during the current funding period, the previous (individual) measures (AECM) are now possible to be carried out collectively. However, for the following funding periods, the introduction of new collective AECM is planned.

 

© Picture: Eszter Cibik, ONPD, Hungary

Collective AES – exploring Dutch farmers’ motivation to participate

Collective AES – exploring Dutch farmers’ motivation to participate

To address the degradation of the natural environment, agri-environment schemes (AES) have been designed within the European Union’s Common Agricultural Policy. AES have been criticised for showing low ecological effectiveness. To improve the schemes’ effectiveness, a collective approach focusing on a landscape level as opposed to a single field or farm level is recommended. So far, this approach has rarely been applied across Europe. The Netherlands is an exception, where all AES have to be implemented collectively since 2016. Participation for farmers in the schemes is voluntary. Therefore, understanding farmers’ motivation to join is crucial as the uptake and implementation of measures is a prerequisite for achieving any effects.

In early 2021, we interviewed 15 farmers from six Dutch collectives about their motivation to participate in collective AES and assessed the advantages and disadvantages of collective AES from the participating farmers’ perspective.

Overview collectives participating in the study

Figure 1. Overview of participating collectives.

Methodological approach

We carried out a Q-study to learn what motivates farmers to join collective AES. Q methodology explores different perspectives on a topic by combining quantitative and qualitative elements within an interview. For the quantitative part, we asked farmers to sort 37 statements into a grid. The grid ranged from -4 (disagreement) to +4 (agreement) and allowed the participants to sort the statements relative to each other depending on their personal level of (dis)agreement. We developed the statements based on an extensive literature review, capturing as many different aspects of the debate as possible. In the qualitative part of the interview, the farmers could comment on the statements, explain their sorting choices and talk about the advantages and disadvantages of the schemes.

Filled in Q-grid

Figure 2. Example of statement sorting, with red (disagree), green (agree) and grey (neutral) statements.

Motivation to join collective AES

The analysis revealed three motivational views: collective-oriented, business-oriented and environment-oriented. Farmers sharing the collective-oriented perspective (‘the collectivists’) feel a stronger connection to the collective and are proud of common achievements. The business-oriented perspective (‘the business rationalists’) is shared by farmers who think rationally about their farm business and how collective AES and other actions fit the overall operative purpose. Within the environment-oriented perspective (‘the environmental optimisers’), farmers care strongest about the environment and how their farm can actively engage in biodiversity or climate protection.

All farmers share great affection and care for nature. They agree that taking care of the environment is part of being a good farmer. They appreciate the collectives’ collaboration with nature conservationists and citizens. Financial compensation for the measures is important, however, it is viewed as a necessity to enable required changes in farming practices rather than an additional source of income. Individual independence is crucial to all participating farmers, yet, they don’t think that cooperation within the collective threatens their autonomy but rather strengthens it. All farmers strongly reject the idea of having joined the scheme because of fellow farmers’ participation. They do not necessarily trust that their neighbours are good partners for cooperation. At the same time, they are not afraid that someone in the collective would benefit without contributing. While it is central for them that people acknowledge their efforts within the schemes, they do not perceive pressure by society that would influence their actions.

Advantages and disadvantages of collective AES

The collective scheme offers many advantages to farmers, notably improved ecological impacts and support from the collectives. Farmers appreciate that the collectives assist with applications and administrative tasks and facilitate exchange with fellow farmers, creating room for discussions, mutual learning, inspiration, and network building. Another significant advantage is the provision of knowledge and advice with close contact between farmers and the collectives’ field workers, who speak the farmers’ language and know what’s going on in the region.

However, farmers still wish for more flexibility and a better integration of their knowledge and experiences into scheme design and decision-making processes. Policy processes should be transparent and promises should be kept to avoid disappointment and mistrust. The consequences of joining the schemes should be communicated openly to prevent farmers’ concerns about raising conservation standards and land possibly becoming protected and excluded from farming activities. It might be worth evaluating the possibility of providing voluntary long-term contract options for certain measures to allow for better planning. Also, the government should guarantee sufficient funding to enable all applying farmers to join the schemes.

Communication with the public can still be improved to better show farmers’ achievements. Also, between the different collectives, communication could be enhanced to allow for a better exchange. A prime example is the approach to tackle predation in meadow bird management, which in some collectives works better than in others.

Outlook

A large-scale survey-based follow-up study, including non-participants in collective AES, would be needed to reach representative results. Many of the caveats for collective AES described in the literature were not confirmed, some of them were even explicitly dismissed by all participating farmers, for instance, the fear of depending on others or the risk of others benefitting without contributing. The findings indicate a potential to promote the Dutch approach to AES in other regions if organisations similar to the Dutch collectives exist (or develop), which would offer the necessary support for farmers.

In Contracts2.0, we will continue to explore how the Dutch approach can be enhanced and how AES can best be implemented collectively in other European regions, such as the French CIL Hautes-Pyrénées, the Belgian CIL Flanders or the German CIL NRW.

For more information, see Margarethe Schneider’s master’s thesis.

Economic experiments for improving agricultural policy

Economic experiments for improving agricultural policy

The EU’s Common Agricultural Policy (CAP) is constantly evolving. Its evaluation tools must develop concurrently. Including economic experiments in the toolset would be a valuable complement to capture farmers’ behavior and policy acceptance. Economic experiments are highly effective for policy evaluation. They allow testing new policies before implementation, provide evidence on their effects, and identify factors influencing policy outcomes. 

As part of the Research Network of Economics Experiments for CAP evaluation (REECAP), Contracts2.0-collegue Jens Rommel from the Swedish University of Agricultural Sciences contributed to a newly published article in the EuroChoices Journal. “Can Economic Experiments Contribute to a More Effective CAP?,” the authors ask. They examine experiments use in agricultural policy research and discuss their potential to help policy-makers understand farmer decision-making processes better.

 What are economic experiments?

Experiments are situations that allow for the study of decisions in controlled and reproducible environments. Like medical trials, where patients randomly receive medicine or a placebo, farmers are randomly assigned to different “treatments”. Treatments can, for example, simulate situations with and without CAP measures or include alternative measures’ designs. Comparing decisions in the treatments, researchers can isolate the causal impact of the policy and the relative performance of design alternatives.

 Advantages for policy evaluation

That way, experiments provide answers in a short amount of time and at much lower costs than, for example, trial and error in the “real world” would before the policy is implemented. As experiments are based on farmers’ preferences policy design and related incentives can flexibly be adjusted in advance. The use of control groups ensures to distinguish responses to different policy designs from policy effects and external factors.

Current agricultural policy simulators assume profit-maximizing behaviors only. Economic experiments often include cultural and other factors, which can generate profound insights into farmers’ complex decision-making processes.

Including economic experiments in the policy evaluation toolbox

Experimental approaches still need to find their place within the policy evaluation cycle. Collaborations between stakeholders involved in agricultural policy-making and research will be vital to ensure that economic experiments will find their place in the CAP evaluation toolbox to support a more effective CAP development.

For more information, see the original article: https://onlinelibrary.wiley.com/doi/full/10.1111/1746-692X.12324

“Food provision in the 21st century” – How Contracts2.0 contributes to the scientific discussion

“Food provision in the 21st century” – How Contracts2.0 contributes to the scientific discussion

Food provision under ever more challenging environmental conditions might soon become a central subject for decision-makers worldwide. In June 2020, Contracts2.0 researchers participated in the European Association of Environmental and Resource Economists (EAERE) conference. The session “Food provision in the 21st century”, organized by Prof. Mordechai Shechter, brought together researchers from different disciplines examining how to feed the world’s growing population sustainably. In Contracts2.0, we research value chain approaches to support the transformation of the agricultural production system.

Food provision challenges

By 2050 the world’s population is projected to reach a staggering 10 billion people. To keep pace with the growing population’s demand for food, supply must grow by 56 percent by 2050. At the same time, the farming system needs to reduce its impact on the environment.1 Currently, half of the world’s food is produced in an unsustainable way, which in the medium term will further deteriorate natural systems’ productive capacity. Declining biodiversity, water overexploitation and pollution, and the loss of fertile soils are symptoms of the current agricultural practices. Therefore, it is a pressing question whether it is possible to provide enough food for a growing global population while maintaining environmental goals?2

Food gap

Figure 1. By 2050 global food production needs to increase by 56 percent. Source:

wri.org/sustfoodfuture

Scenarios and solutions

The session presented solutions that included the consumption side (e.g., diet changes, reduced food waste) and the production side (e.g., water use, fertilizer use, land management changes, irrigation). Prof. Dieter Gerten (Potsdam Institute for Climate Impact Research) showed scenarios under which on-farm water management can simultaneously boost crop yields and decrease water use. Dr. Claudia Ringler (International Food Policy Institute) emphasized the critical functions of groundwater and presented possible scenarios for its conservation. Yael Pantzer (Slow Food Europe) focused on access to good, clean, and fair food, also highlighting cultural and political aspects. International social justice plays a critical role, as the needs and objectives of low-income countries might differ substantially from those of European countries. She stressed that food security is not only about the production of sufficient amounts of food but also about its quality and accessibility.2

The presented scenarios and solutions show that it is possible to halt environmental deterioration from agricultural activities and maintain food security for a growing population. However, the question remains how mankind will make the necessary changes to deal with the many challenges. Notably, biodiversity loss and climate change are the most burning topics and call for immediate radical changes in food production and consumption. If we continued business as usual, we will soon transgress planetary boundaries.3

Contracts2.0 research on eco-labels

In Contracts2.0, our research supports the necessary transformation towards a more sustainable food system. One example of our work is creating collaborative models to include the value of agri-environmental public goods in product prices. Accomplishing this requires understanding consumers’ demand for environmentally-friendly practices in food production. In 2020 we carried out qualitative interviews with experts in the food industry to explore their preferences and expectations for labeling products for ecosystem services and biodiversity. Labels could signal to consumers the types of public goods produced by farmers, whose work and fields they usually cannot observe, potentially increasing their willingness to pay a price premium. The results, presenting the food industry’s views of product labeling for the effective and efficient provision of ecosystem services, will be published in a paper under the lead of Christoph Schulze.

Currently, we are conducting a study assessing consumers’ willingness to pay a price premium on grocery products labeled as produced by farmers who engaged in nature protection activities. So-called eco-labeling can help to increase the market share of environmentally friendly products, create bottom-up pressure, and incentivize food producers to change their practices. We will assess the demand for eco-labeled products and how they relate to organic products.

Achieving change

The research on industries’ and consumers’ demand for eco-labels is only a snap shot of all of our efforts in Contracts2.0. Together with stakeholders across Europe we develop agri-environmental contracts that fit regional contexts and objectives. With our research we make a small contribution to the sustainable transformation of the agricultural production system in Europe. However, to achieve lasting global change much effort is needed from all of us to reduce the growth in food demand, increase food production without expanding agricultural land, reduce emissions from agricultural production and protect and restore natural ecosystems.

To learn more about the innovative contract designs in Contracts2.0 follow these links:

  1. Limburg – Netherlands
  2. Groningen – Netherlands
  3. Koolstofboeren – Belgium
  4. Gulpdal – Belgium
  5. Northwest England – UK
  6. Hautes Pyrenees – France
  7. Madrid Region – Spain
  8. Bornholm – Denmark
  9. Agora Natura – Germany
  10. Hipp – Germany
  11. North Rhine Westphalia – Germany
  12. Örseg National Park – Hungary
  13. Unione Comuni Garfagnana – Italy
References:

1 Searchinger, T., Waite, R., Hanson, C., Ranganathan, J. (2019). Creating a sustainable food future. A menue of solutions to feed nearly 10 billion people by 2050. World Resources Institute, Washington DC.

2 Policy Session: Food provision in the 21st century, Organizer and Chair: Prof. Mordechai (Moti) Shechter

3 Gerten, D., Heck, V., Jägermeyr, J., Bodirsky, B. L., Fetzer, I., Jalava, M., … & Schellnhuber, H. J. (2020). Feeding ten billion people is possible within four terrestrial planetary boundaries. Nature Sustainability, 3(3), 200-208.

Written by Katarzyna Zagórska from the Faculty of Economic Sciences at the University of Warsaw. This note was taken based on presentations given during selected sessions at the 26th Annual Conference of the European Association of Environmental and Resource Economists, which took place online on June 23 – June 25, 2021. The conference was organised by Technische Universität Berlin (TU Berlin) and Humboldt-Universität zu Berlin (HU Berlin). More information and the full programme available at the conference website: http://www.eaere-conferences.org/

Practitioners picture desirable farming landscapes for 2040 – Future Dream Contracts

Practitioners picture desirable farming landscapes for 2040 – Future Dream Contracts

“How do agricultural practitioners envision desirable farming landscapes and ideal agri-environmental contracts?” In a detailed report, we collect and present answers to this question. We found that practitioners across Europe envision farming landscapes shaped by viable agricultural practices that strengthen and enhance ecosystem services. It is important that actors in the farming systems share the same values, cooperate and mutually recognise each other’s expertise to make the shared vision a reality. The social setting turned out the most critical change driver, followed by the legal and political framework and land use and environmental conditions. In this post, we share some of our key findings to illustrate what practitioners believe is necessary to unite the socio-economic viability of farming with the production of agri-environmental public goods in our farming landscapes.

Developing desired landscapes and dream contracts

To answer our initial question, we carried out 28 workshops and consultations in 13 Contract Innovation Labs (CILs) in nine countries across Europe, with a total of 354 participants over the past year. With farmers, environmental NGOs, nature associations, researchers, agricultural advisors and public administrations, we envisioned dream farming landscapes and ideal agri-environmental contracts to facilitate the sustainable transformation of the farming system (see Figure 1). This approach is based on the potential of positive future visions to stimulate sustainable change within the farming system in a participatory way.

 

Figure 1. Steps from dream contract development to implementation.

Based on key information provided by stakeholders from each CIL we analysed case-specific situations and problems using swot analysis. We then asked CIL participants to picture a desirable future dream landscape in the year 2040. We encouraged participants to prepare lists of enabling and limiting factors for realising the dream landscape. Finally, we asked them to envision agri-environmental contracts that would facilitate transformation toward the desired state. The participants reflected the contracts from different perspectives such as environmental effectiveness, socio-economic viability, duration and monitoring. Lastly, we developed dream contract trajectories – paths to reach the envisioned state.

Common dream landscape patterns

Based on short descriptions the CILs prepared of the dream landscape, we singled out 99 diverse dream landscape elements, which we clustered into eight landscape building blocks: viable and sustainable agriculture, regulating ecosystem services, social cohesion, biodiversity, multifunctionality, enabling landscape managers, health and wellbeing, and cultural ecosystem services. We ordered these building blocks into four almost-equally weighted categories: multifunctionality, agriculture-related topics, environmental-related topics and social context.

The category multifunctionality is relatively broad and refers to the simultaneous provision of different goods and services of the landscape or through agricultural activities. In the category of agriculture-related topics, the most common landscape element is viable and sustainable agriculture. Viable and sustainable agriculture should be profitable, provide opportunities for new generations of farmers, generate and process quality local produce, apply sustainable farming practices, use and produce renewable energy and optimise livestock production. The category of environmental-related topics includes the landscape elements regulating ecosystem services and biodiversity. Social context consists of the elements social cohesion, health and well-being and cultural ecosystem services. Social cohesion is an essential element indicating the importance of cooperation, shared values, the connection between communities and the landscape, and vibrant rural living (see Figure 2).

Figure 2. Representation of the dream farming landscape in CIL Oost-Gronningen. Several dream landscape patterns are illustrated.

Enabling and limiting drivers of change for the dream landscape

Change drivers are natural or human-induced factors that directly or indirectly trigger a change in an ecosystem. Direct drivers, such as habitat conversion and climate change, are pressures that directly affect ecosystem processed. Drivers that operate at a more diffuse level are indirect change drivers, such as socio-political, economic and technological factors.

In total, we identified 130 change drivers in our case studies that we assigned to five themes: social impact, legal policy and political context, land use and environmental impact, agro management viability and economic viability (see Figure 3). Across all cases enabling (N=62) and limiting (N=68) drivers are almost balanced. However, each case has a unique profile, which influences the likelihood of achieving the desired dream landscape. The most common them is social impact. It includes enabling drivers such as increased consumer demand, farmers’ intrinsic motivation and cooperation amongst farmers. The limiting drivers within this theme were a lack of trust and awareness.

 

 

Figure 3. Distribution of change drivers in five themes.

Unlike the three other themes, social impact as well as land use and environmental impact are described mainly by enabling drivers, meaning they are major building blocks for the dream farming landscapes. The limiting drivers are mostly related to economic viability (e.g., market fluctuations), the policy context (e.g., the uncertainty of current and future CAP developments) and agro management viability (e.g., uncertainty on the effects of farming practices) (Figure 4).

 

Figure 4. Limiting and enabling factors across themes.

Dream contracts for dream landscapes

Each CIL developed one or several dream contracts. These dream contracts are legal conduits to strike a balance between farmers’ or land managers’ economic interests and societies’ interests for the provision of environmental public goods and services. We analysed them for general characteristics, benefits, involved actors, payments and monitoring.

General contract characteristics include the targeted land use and contract length. Dream contracts targeted diverse land-use types such as grassland (N=12), arable crops (N=10) and permanent crops (N=7). Often, a contract combines several of these land-use types. The ideal contract length in most CILs ranges from five to ten years.

The dream contracts envision a wide range of benefits that go well beyond mere financial compensations for farmers (Figure 5). Overall, we identified 96 benefits that mostly help either society or farmers.

Figure 5. Envisioned dream contract benefits.

We split the financial benefits for farmers into indirect and direct monetary benefits. Direct monetary benefits include income support, cost savings and product added value.

All cases reported the involvement of one or more intermediary organisations. In eleven out of thirteen cases, a farmer group plays a crucial role to broker knowledge, manage payments, coordinate measures, carry out monitoring and build social cohesion.

In eight out of thirteen cases, funding is envisioned to come from the public sector, for example through agri-environment and climate schemes. Two cases aim for private funding and three cases envision a mix of private and public funding. Generally, we observe great interest for collective and results-based approaches, value-chain contracts and combinations thereof. Six out of thirteen cases like to experiment with combining contracts that include action-based and results-based features.

Almost all dream contracts envision that monitoring is carried out in results-based schemes and action-based schemes. We see a strong willingness from practitioners to be involved in monitoring.

Our results in the greater context

We do not claim that our results represent the whole farming community in Europe as they are entirely based on the perceptions of the participants in our 13 CILs, some of whom participated in several workshops. Furthermore, most participants are already engaged in contracts and are interested in reconciling farmer objectives with societal needs for agri-environmental public goods. Nevertheless, our results give interesting insights into practitioners’ perceptions about desirable changes in present agri-environmental contracts. Practitioners are keen to contribute to societal benefits, experiment with novel contract designs, and play a more active role in designing and monitoring agri-environmental contracts. These findings can support  the design of innovative Agri-environmental contracts and the corresonding policies and Strategic Plans within the New Delivery Model.

To learn more about our findings click HERE.

To learn more about each CIL’s dream landscape and dream contract follow these links:

  1. Limburg – Netherlands
  2. Groningen – Netherlands
  3. Koolstofboeren – Belgium
  4. Gulpdal – Belgium
  5. Northwest England – UK
  6. Hautes Pyrenees – France
  7. Madrid Region – Spain
  8. Bornholm – Denmark
  9. Agora Natura – Germany
  10. Hipp – Germany
  11. North Rhine Westphalia – Germany
  12. Örseg National Park – Hungary
  13. Unione Comuni Garfagnana – Italy

Written by Sven Defrijn (Boerennatuur Vlaanderen), Marina Garcia Llorente (Universidad Autónoma de Madrid), Edward Ott (Leibniz Centre for Agricultural Landscape Research), Photo Title: © Illiya Vjestica on Unsplash