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CONtract SOLutions for Effective and lasting delivery of agri-environmental-climate public goods by EU agriculture and forestry

Periodic Reporting for period 1 - CONSOLE (CONtract SOLutions for Effective and lasting delivery of agri-environmental-climate public goods by EU agriculture and forestry)

Reporting period: 2019-05-01 to 2020-10-31

The recent European Green Deal and follow up initiatives launched by the European Commission (e.g. Farm to Fork strategy, 2030 Biodiversity strategy) put a strong focus on issues related to climate change, biodiversity and environmental protection in general. Since decades, the agricultural policy in the EU has been partially re-oriented towards the provision of public goods in rural areas acknowledging societal demands. In the legislative proposal for the next programming period of Common Agricultural Policy (CAP) it is foreseen to pursue this path by further strengthening the green architecture of the CAP.
Climate services, biodiversity conservation and environmental protection have typically the nature of public goods, whereby the non-excludability and non-rivalry characteristics prevent the market from working for these goods, generating the well-known problem of free-riding. In addition, the difficulty in the provision of public goods is related to challenges such as trade-offs between environmental performance and farm profitability, the time lag between changes in practices and impact, and the potential mismatch between the scales of actions and effects. As a result, several Agri-Environmental-Climatic Public Goods (AECPGs) are characterised by under-provision.
The general objective of CONSOLE is to boost innovation in the lasting delivery of AECPGs by EU agriculture and forestry. Contract types addressed are environmental-related land tenure-based contracts; contracts with collective implementation/cooperation; result-based/result-oriented contracts and value chain-based contracts.
Specific objectives (from DoA) are to:
1. Develop an operational contractual framework which would serve the development of improved and new contracts;
2. Distil lessons learned from past and ongoing experiences;
3. Develop understanding of the acceptability and ease of implementation of innovative contract solutions;
4. Assess the economic, social and environmental performance of new and innovative contract design options by in-depth empirical exploration and model simulation;
5. Build a CoP with practitioners and actors involved and interested in AECPG provision;
6. Making CONSOLE results operative and easily accessible for a wide target audience of interested actors and stakeholders.
Activities in the first period have focused mainly on objectives 1 and 2 above.
Two main results were achieved during the first reporting period.
First, an operational framework was developed, able to support the design of contractual solutions for the voluntary provision of AECPGs. The framework entails the representation of four interconnected dimensions: a) context variables related to the farming/forest system; b) contractual features; c) contract’s performance variables; d) process description. Context variables include a wide variety of aspects such as farm structure, social/cultural context and environmental priorities. They affect the feasibility and the impact of contract solutions. Contractual features include characteristics such as object of contract (e.g. AECPG addressed), actors/parties involved, reference parameter for payment etc. In practice tailored mixes of contract parameters prevail on rigid categories. Key parameters for performance evaluation are also identified, such as effectiveness, longevity, acceptance, flexibility, equity/fairness, etc. Processes (e.g. incentive distribution) describe the connection among points a), b) and c) and how they contribute to the final contract performance.

The second major result is the outcome of the analysis of ca. 120 case studies of a wide spectrum of contract solutions from within and outside the EU. Half of the case studies have been examined via literature review, the others were examined by means of a uniform expert-based protocol. The latter 60 cases were presented as factsheets and made available on the project’s website, reporting contractual specifications (contractual features and contract’s performance variables) in detail as well as reasons for success and failure.
The analyses of case studies showed that many real-life cases of implementation combine different contract types. It became obvious that collective implementation can be a precondition for environmental effectiveness, particularly for AECPGs that can hardly be improved by measures on single plots (e.g. water quality). Result-based contracts mainly target specific AECPGs and can increase engagement of land-managers due to flexible management choices. Recommendations for contract design and implementation derived from the case studies are: 1.) Targeting contracts to specific regions allows to better address regional criticalities and enhances the farmers’ and foresters’ interest and understanding of measures. 2.) Involving land-managers in target-setting and the development of agri-environmental measures leads to higher compatibility with their businesses and can create win-win situations. 3.) Involving control authorities in the design of indicators in result-based schemes can guarantee integrability into RDPs. 4.) Fostering bottom-up approaches and involving regional key actors as coordinating units enhances commitment and motivation in collective approaches. 5.) Guaranteeing good levels of equity and fairness enhances acceptance particularly in value-chain based solutions. Overall, it became clear that result-based and collective solutions do not fit in every context situation, as they often demand high levels of knowledge and collaborative skills. Value chain approaches are often only suited if consumers’ awareness is high.
The progress beyond the state of the art achieved so far is largely embedded in the result description illustrated in section 2. In particular this consists in: 1) a framework for designing and implementing new AECPGs contract solutions; 2) lessons learned from existing experiences.
In the next period, the project will focus on four main sets of activities:
a) understanding acceptance and preferences of farmers and stakeholders about new contract solutions (WP3);
b) simulating and assessing performances of new contracts solutions (WP4)
c) improvement and operationalisation of the framework (WP1);
d) testing of the framework in collaboration with the Community of Practice (CoP) established by the project (WP5).
The final version of the operational framework will include the following:
a) a catalogue showcasing existing successful experiences and good practices in AECPGs contracting;
b) improved AECPGs contracts solutions suitable to be used as models for future design and implementation;
c) a “design guide” intended as a systematic and comprehensive process for the design of AECPGs contracts;
d) first documentation and supporting materials, including glossary and training material.
The outcome of the project is expected to contribute to improve the uptake and efficiency of new contract solutions for AECPG delivery in the framework of the new CAP. This will impact the overall sustainability of the farming and forestry sector and ability to adapt to climate change, as well as the social acceptability.