EFFECT: Environmental public goods From Farming through Effective Contract Targeting

Demands on European agricultural landscapes are increasing. Food security concerns from a growing global population, increasing demands for low-impact diets and for environmental quality of the countryside put multiple, and often conflicting, pressures on land resources and management. While short-term agricultural profitability has become better aligned with longer-term sustainability, meeting environmental and climate targets remains among the most pressing European policy issues. As stressed recently by the European Commission (COM, 2017), the forthcoming Common Agricultural Policy (CAP) reform will contain an improved delivery model enabling member states to direct more resources towards both mandatory and voluntary instruments to enhance the provision of environmental and climate public goods (ibid p. 19). Although the CAP will continue to be a unifying policy, it is being proposed that member states should be encouraged to adapt or design new policy instruments for national implementation. These should still pursue commonly-agreed environmental and climate policy targets, but be better suited to member states’ individual institutional, agricultural and environmental contexts.

Flexible approaches to agri-environmental schemes are already in use across the EU. However, many initiatives are costly and/or ineffective in boosting environmental and climate service provision, have skewed distributional impacts, increase farmers’ risks, or implementation is too bureaucratic triggering excessive transaction costs, which in turn reduce participation rates. It is therefore essential that a package of innovative contractual arrangements is developed - and also empirically tested, to reduce inefficiencies and observe potentially unintended outcomes. Environmental and agricultural stakeholders alike need better guidance on when and where different contractual arrangements are likely to generate significant impacts in cost-effective ways.

The overarching objective of EFFECT will be to develop a theoretically well-founded and empirically well-adapted package of new contractual frameworks, enabling farmers to reconcile agricultural productivity with enhanced delivery of environmental and climate public goods and services to the benefit of society at large. EFFECT pursues this through an integrated transdisciplinary research and innovation effort. We combine existing insights from natural science and agronomy about the relationship between agricultural practices and environmental and climate impacts with theoretical and empirical insights from law, political sciences and economics to develop novel designs of agri-environmental contracts. We further combine efforts from researchers and multiple stakeholders to ensure that lessons learned from previous initiatives and ground-testing of our contract framework are validated and shared through a cross-European innovation and diffusion process. Our ambition is also to demonstrate examples of actual use of our co-developed agri-environmental contract framework. Furthermore, EFFECT will strengthen the durable impact of contract innovation through capacity-building among decision makers and development of systems of long-term policy impact evaluation.