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Result-based agri-environmental payments

In recent years result-based agri-environmental payments have gotten a lot of attention, on EU‑level, within the OECD and from managing authorities in several countries. One reason is that result-based payments have the potential to be more efficient and more appealing for farmers than the practice-based models traditionally used as incitements for farmers’ environmental practices.

The idea of result-based payments is that they do not include requirements of specific practises to be used. Instead the farmers can choose how to achieve the desired results, e.g. decreased leakage of nitrogen or increased biodiversity, and farmers are paid in accordance with the results that they achieve.

A test with field elements and forest edges

A three-year pilot study with result-based payments has been carried out in a region of southern Sweden. The aim of the pilot was to investigate whether or not a result-based model actually works in practice and if it has significant advantages compared to previous management and practice-based payments. In this pilot we included payments for:

  • Linear elements (stone walls, ditches and permanent field fringes)
  • Point elements (solitary trees, field islets and culture cairn)
  • Forest edges (transition zones between field and forest)

We found that the model was positively received by the participating farmers and also had the potential to be more efficient than previous practice-based schemes. Though, to enhance the environmental qualities of the field elements rather than just conserve the current status, incentives may have to be stronger than in the test.

The project has provided useful experiences of pros and cons of result- based payments for field elements. These experiences about indicator designs, payment levels and farmer information are useful when possibly introducing such a payment scheme in the future.

Contribution to an OECD-study - policy simulations and choice experiments with farmers

Sweden has contributed to the OECD-report “Making Agri‑Environmental Payments More Cost Effective. The report identifies design principles that can be considered best practice for cost-effective agri-environmental payment schemes. It considers both governmental budgetary constraints and the need for schemes to attract sufficient farmer participation to be environmentally effective.

The report includes literature reviews, a Policy Spectrum Framework that classifies payment types based on key design features for achieving cost-effective outcomes and policy simulations undertaken to assess the cost-effectiveness of different payment designs. Sweden has contributed with a choice experiment with Swedish farmers to explore their preferences for different types of payments, ranging from practice-based to results-based payments.