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Co-design of novel contract models for innovative agri-environmental-climate measures and for valorisation of environmental public goods

Periodic Reporting for period 3 - Contracts2.0 (Co-design of novel contract models for innovative agri-environmental-climate measures and for valorisation of environmental public goods)

Okres sprawozdawczy: 2022-05-01 do 2023-04-30

Agriculture often maximises marketable goods production but has adverse environmental effects. Therefore, states offer compensation payments for delivering ecosystem services, e.g. through Agri-environmental schemes (AES). Although AES are the highest nature conservation expenditure in the EU, their effectiveness to reach ecological targets remains questionable and regulations are often highly impractical for practitioners. Many farmers struggle to maintain the economic viability of their farms, facing serious trade-offs between short-term profitability and sustainable production.
Therefore, 28 partners from 12 EU countries cooperated in Contracts2.0 to develop new practical and ecologically effective contract-based solutions, which incentivise the increased provision of environmental public goods. The aim was to co-design contracts that allow farmers to effectively and permanently reconcile environmental sustainability and economic viability.

Central to the project are innovation labs in 9 European countries where interdisciplinary research and practice collaborated. The “Contract Innovation Labs” (CILs) modelled and tested approaches for the following contract types together with local stakeholders:
● Payments for ecosystem services such as agri-environment climate measures (e.g. results-based and collective payment schemes);
● land-tenure-based contracts, and
● arrangements connecting actors within a value chain.
“Policy innovation Labs” (PILs) discussed the feasibility of the contracts as strategic policy instruments. Recommendations for future agricultural policies were developed. This included outlining the necessary changes to policy frameworks or barriers to overcome for these contracts to be realised.
The project analysed innovative contracts regarding their institutional design, environmental effects, and transaction costs as well as represented entrepreneurial attitudes and business models. A multi-criteria model was built to perform SWOT analyses. In addition, the project conducted economic and behavioural experiments such as Discrete Choice Experiments (DCE) on results- and label-based approaches as elements of novel contract designs. The results were published in several scientific papers. A policy brief about the use of behavioural approaches and experimental economics methods for a science-based approach to designing future agri-environmental schemes was distributed.

Further, contracts2.0 included practical experiences and tacit knowledge wherever possible through >130 (virtual) interactions with practitioners and policymakers using online tools and physical workshops in addtion to scientific research. Practitioners were involved in the formulation of "European lessons-learned for alternative contract models from practitioner perspective”. A Policy Green Paper presents policy solutions to overcome challenges to implement innovative contracts and to harmonize them with the current CAP.

The last year of the project was used to synthesise these diverse results from different knowledge bases and are presented a comprehensive synthesis report. Based on this, a summarising guide for policy makers called "Co-Creating Contracts" was finalised (published e-book in English and German).
The final conference on April 26, 2023 in Brussels presented and connected main findings. It allowed the diverse international participants to interactively study and discuss the real-life contexts of research results and case studies. Further, the methodological approach and further research possibilities were jointly reflected upon.

The different outputs and conference posters and presentations are openly accessible via the website and Zenodo.
The project’s conceptual framework tackles the concept of contracts and combines disciplinary strands of Payment for Ecosystem Services literature, agri-environmental policy schemes, and contract governance. The potential impacts will largely be in the academia but, following engagement and presentations at European and national levels may also impact policy stakeholders and their decision making. Contracts2.0 considered a variety of participatory and scientific methods, and case studies. We were therefore able to consider diverse perspectives resulting in relevant interdisciplinary outputs.

Most contracts are hybrids. Therefore, we revised our contract typology, which now uses ‘collective’ and ‘results-based’ as descriptors of characteristics. We distinguish “design process” and “design principles” to reflect the importance of the temporal dimension in designing, implementing, monitoring and evaluating new contracts. “Design principles” consist of contract characteristics and governance context. While new contracts offer promising solutions, many questions remain about their technical and institutional setup. Different barriers hinder the implementation of new contracts. The interplay between these barriers creates context-specific conditions, which need to be considered when designing and implementing new contracts.

CILs and PILs mobilised a variety of agro-ecological, socio-economic, institutional, and legal practitioners. They address real-life needs and create open, inclusive participation, cooperation, and reflective social learning spaces. The CILs self-evaluated regional and national contracts for their environmental effectiveness, economic viability, and longevity. Based on this evaluation, they co-designed new contracts. The PILs assessed how the practitioners’ suggestions can be integrated in current policies, how they may inform new policies and what enabling policy frameworks could look like. Facilitating the exchange and communication are paramount in the process of designing contracts.
Control, simplification, and a more prominent role of farmers and farmers’ advisory services support implementing different contract types. Although there are no ready-made solutions, combining opportunities can create synergies. The exchange between the PILs with a similar focus was encouraged to strengthen the collective learning process by sharing differing and complementing experiences and ideas on the design and implementation of new approaches.

The DCE provide new insights into farmers’ preferences for results-based contracts and consumers’ preferences for labels. Our review of DCE studies provides a framework that researchers can use for studies in this field, impacting future research and policy-making processes. These results will provide building blocks for the inclusion of results-based agri-environment measures in the policy mix of the European Union and worldwide.

In addition to contributing to the knowledge base surrounding the topic described above, contracts2.0 also reflects on the methodology, especially the participatory co-design process, and provides valuable insights on how to manage and foster stakeholder involvement and collaboration in research projects, a topic that is currently gaining in relevance in both the academic and political sphere. Contracts2.0 facilitated exchange between practice and policy, complemented by scientific evidence and knowledge provided by the diverse project consortium.
Contracts2.0 team in the field during the kick-off meeting in May 2019.
CIL and PIL members on a field trip in Austria.
Dream Landscape visualisation CIL Groningen.
Members of the Italian CIL on a field trip during a workshop.
Project conceptual framework.