PAYMENT FOR ECOSYSTEM SERVICES AND
OUTCOME BASED APPROACH IN
AGRI-ENVIRONMENT PAYMENT SCHEMES
- Can we find a way forward?
Seminar report
30 November 2012
Koivulan Kartano Manor, Lohja, Finland
Produced by:
Kati Berninger
1. Introduction The event was jointly organized by the Baltic Compass and Järki projects. The Baltic Compass Project promotes sustainable agriculture in the Baltic Sea Region. The project has 22 partners in 9 countries. It is funded by the EU Baltic Sea Region Programme. Järki is a Finnish co-‐operation project of the Baltic Sea Action Group and The Nature and Game Management Trust Finland. It promotes sensible enhancement of water protection and biodiversity in agriculture. The aim of the regional meeting was to promote discussion about outcome-‐based approach in agri-‐environment payment schemes. Participants were invited to learn from existing measures from various countries, to explore the possibilities of this approach and to identify the next steps needed to move towards payment for ecosystem services. Programme: 9.00-‐9.15 Coffee, registration and opening words 9.15-‐11.15 Introduction and examples of outcome-‐based measures from different countries 9.15-‐9.45 Introduction to PES and outcome-‐based approach. Examples of outcome based measures applied in various countries in Europe, Gerald Schwarz, Thünen Institut Germany 9.45-‐10.15 Outcome based measures for the new programming period – experiences from stakeholder discussions in Lithuania and Latvia, Zymantas Morkvenas, Baltic Environmental Forum Lithuania 10.15-‐10.45 Example of outcome-‐based indicators from Finland, professor Markku Ollikainen, University of Helsinki 10.45-‐11.15 Cultural and social aspects of outcome-‐based approach, Rob Burton, Centre for Rural Research, Norway 11.15-‐14.15 Exploring outcome-‐based measures using local cases 11.15-‐12.30 Farm visit in Laakspohja Manor – introduction to local cases, Michael Hornborg, Laakspohja Manor and Eija Hagelberg, Järki Project Finland 12.30-‐13.15 Lunch 13.15-‐14.15 Exercise using local cases, Minna Kaljonen, Finnish Environment Institute 14.15-‐15.30 Discussion: possibilities to apply outcome-‐ based measures in the Baltic Sea Region 14.15-‐14.45 Results of the exercise 14.45-‐15.30 Discussion on next steps needed to move towards outcome-‐based measures Participants: Susanna Kaasinen, Baltic Deal Project, Finland Peter Wallenberg, Jordbruksverket, Sweden Rovena Grikienė, Ministry of Agriculture, Lithuania Rune Hallgren The Federation of Swedish Farmers LRF, Sweden Iiro Ikonen, ELY Centre of Southwest Finland Kimmo Härjämäki, Nature and Game Management Trust Finland Silva Wilander, TEHO Plus Project, Finland Piret Kuldna, SEIT, Estonia Maria Osbeck, SEI, Sweden Kim Andersson, SEI, Sweden Tapio Salo, Agrifood Research Finland Kimmo Rasa, Agrifood Research Finland Paula Biveson, BSAG, Sweden Mia Välimäki, BSAG, Finland Markku Ollikainen, University of Helsinki, Finland Michael Hornborg, Laakspohja Manor, Finland Staffan Lund, SLU, Sweden Dennis Collentine, SLU, Sweden Kaj Granholm, SLU, Finland Gerald Schwarz, Thünen Institut, Germany Zymantas Morkvenas, Baltic Environmental Forum, Lithuania Minna Kaljonen, Finnish Environment Institute Kaisa Riiko, BSAG, Finland Eija Hagelberg, BSAG, Finland Kati Berninger MJ-‐Prosessit Ltd., Finland 2. Morning session Eija Hagelberg opened the event by welcoming the seminar participants to Southern Finland threatened by a snowstorm. The event was organized in Lohja since countryside is a fruitful place to deliberate this issue and there was a possibility for a farm visit. She also said that the topic is new in Finland, and requires a totally new way of thinking. It was great to have the possibility of hearing examples from other countries. 2.1. Introduction to outcome-‐based approach and examples of measures Gerald Schwarz gave an introduction to the topic by defining outcome-‐based measures and their characteristics. Outcome based approach links payments to specific environmental targets. A close link is needed between farmers’ actions and environmental outputs measured by indicators. Outcome based schemes may be simple with a single objective, site specific characteristics and focus on maintenance of environmental outcome or complex with multiple objectives, landscape scale characteristics and focus on enhancement of environmental outcome. The existing examples are at the simple end of the continuum. In the short and medium term we are talking about modifying the existing agri-‐environmental measures. They will still be based on costs and income foregone or auctions. In order to move towards real outcome based agri-‐environmental measures, there is a need to change the legal and policy framework. There are several examples of outcome based agri-‐environmental measures in Europe most of them being biodiversity measures. The MEKA programme aims at conservation of semi-‐natural grassland in Germany, and payment is given for grasslands that contain at least 4 indicator species or genera from the list of 28. Farmers themselves identify the species. Flowering meadows in France is inspired by the MEKA programme organizes competitions of agri-‐ecological excellence to increase recognition of outcome based approach. The scheme for reducing N emissions in priority areas in Germany includes an outcome based component together with other, action based, components: Nitrogen surplus on all arable land of the farm should be kept below 30-‐40 kg N/ha on a 3-‐year average. This measure has rather high administration costs, and only large farms participate. Key advantages of outcome-‐based payments are: -‐ environmental targeting and possibility of higher payments for higher environmental benefits -‐ more flexibility for farmers -‐ use of local environmental knowledge -‐ involvement of farmers and volunteers decrease monitoring costs -‐ the recognition of the professional skills of farmers important: it makes them feel accountable for the public service they provide Key challenges of outcome-‐based payments are: -‐ narrow interpretation of WTO rules -‐ risk of failing to deliver outcomes -‐ difficulty to develop indicators for water protection or landscape level measures Discussion: Why large farms in N scheme? The information requirements In how many farms has the risk realized? In MEKA only a small percentage of farmers. Pilot schemes were developed together with different actors, and environmental organizations promoted them. Are the auctions allowed? The Finnish authorities say it’s impossible to use them. EU regulation explicitly mentions auctions. In Scotland they are used and the EU happily accepts them. 2.2. Outcome based measures for the next programming period – Experiences from Lithuania and Latvia Zymatas Morkvenas described the work done within the Baltic Compass Project in Lithuania and Latvia on payment for ecosystem services and outcome based approach. Lessons learned from the 2007-‐2013 programming period: -‐ there is a lack of targeting of agri-‐environmental measures to priority areas: the measures are in different areas than the most polluted water courses or natural grasslands -‐ no existing methods to evaluate environmental effectiveness of agri-‐environmental measures -‐ action based measures do not allow flexibility needed in severe weather conditions, for example -‐ need to support small scale farming Programming period 2014-‐2020: -‐ support to small and medium scale farms -‐ more targeted measures -‐ priority areas -‐ simplification of the scheme Issues raised in stakeholder discussions on the outcome-‐based approach: -‐ The current ecological farming measure has outcome-‐based features, payment depends on production sales -‐ Outcome-‐based measures might increase administration burden -‐ Can we trust farmers monitoring themselves: capacity & objectivity? -‐ Methods to define indicators and monitoring? -‐ Interested in testing it, but who pays for it? Zymantas Morkvenas concluded that we need more knowledge and information/experience exchange. They are searching for partners. 2.3. Example of outcome based indicators from Finland Markku Ollikainen defined the basic question being “How to target conservation actions to environmentally most sensitive field parcels in a cost-‐effective way?” First, we should be able to identify and rank the environmentally sensitive or the most valuable parcels. Then, those parcels should be invited to participate in the agri-‐environmental schemes. The suggested answer is to use Environmental Benefit Index (EBI) for identification and ranking, and either auctions, bargaining or differentiated payments to invite the best parcels to a scheme. EBI is based on ecological information or natural scientific research results. It typically contains 2-‐4 features. If auctions are used, all submitted parcels are ranked according to the ratio EBI/bid. Markku Ollikainen described the Finnish phosphorus pilot. The measure was application gypsum, and the EBI contained 3 features: soil P status, slope and type of area bordering the parcel (terrain, ditch or surface water). In the pilot the phosphorus EBI and auctions worked well. Auction allocated parcels in a cost-‐effective way to the program, but the EBI value alone would have led to cost efficient ranking. There should be more research on how EBI performs with bargaining or differentiated flat rate instruments. There was a discussion about the risk of farmers becoming aware of the maximum rates and thus there would be no difference in bids. We could conclude that auctions are a good way to find out the costs, the optimum is to do it once or twice. 2.4. Cultural and social aspects of outcome based approach Rob Burton could not come to the meeting, but he sent his presentation and Gerald Schwarz kindly presented the main points. There are a number of problems with action-‐oriented agri-‐
environmental schemes that limit the extent to which environmental work can become culturally important to conventional farmers: -‐ Under action-‐based AESs, farmers are unable to innovate in agri-‐environmental provision o No need to learn about the connection between land management and environmental outcomes o All know what is being done in schemes, no need to talk about it è removes opportunity for social learning -‐ Designating scheme areas creates areas of non-‐responsibility o Scheme area seen as government responsibility -‐ Action-‐oriented schemes are not easily integrated into farmers’ current ways of assessing ‘good farming’ practice -‐ Without allowing innovation, action-‐oriented AESs are likely to be of little interest to younger farmers The advantages of outcome-‐based schemes would be: -‐ They would permit innovation and encourage learning -‐ They would allow farmers to choose what part of their farm to use -‐ Encourages a more detailed observation of other farmers’ land management -‐ Young farmers will be able to develop an interest in producing environmental goods The need to apply some kind of trust to farmers if we want to use outcome-‐based measures was discussed. The outcome would gain cultural value by becoming a part of being a good farmer. 3. Farm visit The participants visited the farm Laakspohja Manor owned by Michael Hornborg & Nina van der Pals. The farm has actively moved towards more environmentally friendly production during the last few years. Earlier the farm had conventional production of mainly grains. It has now been converted to organic animal production with both sheep and beef cattle. Horses are an important source of income. This farm has cultural historical values and is situated beside the settlements of Lohja town by the Lohjanjärvi Lake. Part of the farm is on an important groundwater area. The owners of Laakspohja farm have taken these limiting factors into consideration and turned them into advantages: The farm now produces environmentally friendly meat to the people living nearby, provides beautiful scenery to passers-‐by, and lovely riding terrains to horse lovers. The farm has many aspects that could be applied in an outcome-‐based approach, and that is why the farm was ideal for a field visit and was a good motivator for the afternoon working groups. One of the owners, Michael Hornborg, actively took part in the whole event. 4. Afternoon session The task was to design in groups a concrete measure using indicators or outcomes related to the example farm and the topic of the group. There were three groups concentrating on their specific topics: water protection, landscape and recreation and biodiversity. 4.1. Water protection group Participants: Minna Kaljonen (Chair) Mia Välimäki (Secretary) Susanna Kaasinen Silva Wilander Markku Ollikainen Peter Wallenberg Kim Adersson Rune Hallgren Piret Kuldna Tapio Salo Kaisa Riiko Kimmo Rasa The group first discussed general issues related to outcome-‐based approach and the possible indicators for outcomes. The current system doesn’t give the results needed to improve the quality of the environment. The outcome-‐based approach could be motivating to farmers. There is a need to find solutions farmers themselves have made and develop ways to facilitate them. Possible outcomes relevant for water protection would be nutrient balances and soil P status. The group discussed in length the problems related to nutrient balances. Another, more relevant approach would be to identify vulnerable zones using an erosion risk index, which could be linked to the soil P status as well. There is much evidence on their relation to nutrient run-‐offs. These indicators were identified relevant also in targeting water protection measures at the Laakspohja Manor. For nitrogen, the outcome is much more uncertain and dependent on cultivation practice, for example. Quantifying outcomes in water protection is difficult, the ‘sensitivity approach’ (such as combining the erosion risk and soil P status) was considered more applicable. The sensitivity approach could help to target actions to those parcels or fields where most needed, and in this way affect outcomes. This approach would rely on modelling the sensitive areas and assumptions arising from there. Modelling and its implications to outcome-‐based approach and farmers’ choices were discussed at length in the group. One argument was that such an approach would not leave many alternatives for farmers to really choose the actions. Also counter arguments were raised. The group considered differentiated payments as an alternative to an outcome-‐based approach. For example, payments differentiated according to sensitivity to erosion and nutrient vulnerability could be considered as a way to achieve better outcomes in water protection. The group also touched upon the issue of multiple benefits: how to take them into account when designing policy measures. Wetlands were mentioned as one example. In the discussion it was emphasized that the measures should be simple enough. One should talk to farmers in farmers’ language, and scientist should go to talk to farmers. This is the kind of interaction that creates acceptable and implementable measures. 4.2. Landscape group Participants: Eija Hagelberg (Chair) Paula Biveson (Secretary) Michael Hornborg Staffan Lund Dennis Collentine Maria Osbeck Kaj Granholm The group discussed some general issues related to the topic. We shouldn’t limit the scope to RDPs only, but we should see the multiple benefits of different actions. Even a greener CAP is not sufficient, but we need to do more. Ecosystem services for the public are more attractive than environmental benefits. The group worked on a case example from Laakspohja Manor. The vegetation framing the lake had overgrown and prevented villagers/passers-‐by to enjoy the scenery. Michael Hornborg & Nina van der Pals (later: Farmer) had cut the trees and created nice scenery points for public to enjoy. A nice walk around the lakeshore could be built, but the town owns some of the land. This could be an example of outcome-‐based approach. Neighbors pay for the opening of the landscape by buying meat. There are multiple benefits and multiple stakeholders. The benefits for village inhabitants are open view/scenery, and nice, shorter access to the farm to enjoy their supply (riding, watching animals, buying meat, cafe etc.). The town would have satisfied inhabitants, and a higher valuation of the village as a living area. The farmer would gain a good image, and easier access for customers to the farm. Cooperation between farmer/landowners (in this case the town) is needed. Challenges for cooperation are: -‐ Who is responsible for planning the cooperation? How is it financed? Where to find expertise? -‐ Public authorities might not be willing to participate and/or fund -‐ Hired land-‐> the contracts are due for different times. How to impose simultaneous, joint actions, when retroactive contract clauses can’t be introduced? -‐ If the benefits are public and open for all like access to lakeside, how to calculate who needs to pay for it, villagers in communal taxes, region or EU? -‐
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Indicators need to be decided. Who plans and who makes the final decision? Should there be public, transparent indicators only or could part of the indicators be private, non-‐
announced? Incentive for the action needs to be found. How? Who has the incentive? On what grounds? Is it acceptable? Is it enough? How to organize monitoring? What are the public goods? Creating partnerships. Who are the stakeholders and who should get the financial benefits? Some solutions: -‐ Environmental advisory services should be extended from farmers also to the land-‐use authorities in municipalities -‐ Municipalities should hire the land with precondition that different agri-‐environmental measures need to be implemented/can be introduced during the contract period. -‐ The incentive for towns to act could be the national or EU funding for rural development. If the town doesn’t apply for the money, it goes somewhere else. Public funding can be used as seed money or to accelerate transition. 4.3. Biodiversity group Participants: Iiro Ikonen (Chair) Kimmo Härjämäki (Secretary) Zymantas Morkvenas Rovena Grikienė Gerald Schwarz Kati Berninger The group discussed a selection of different outcomes related to biodiversity, and potential indicators to measure these outcomes. One key outcome would be a change from cultivated grassland towards more natural grassland. Potential indicators would be the occurrence of certain species or genera: -‐ amount of nectar plants -‐ amount of bumblebees -‐ occurrence of indicator bird species -‐ dung beetle diversity -‐ amount of earth worms Birds might not be a good indicator since they are moving a lot and their occurrence may not be directly linked to land management. Plants indicate more directly the conditions of the land parcel. Supervision of outcome-‐based measures was discussed. Environmental outcomes should be supervised, not activities, even if the current measures were maintained. In the current system only a fraction of farms is supervised for direct payments or cross compliance each year, so we cannot expect that ecosystem service provision would be supervised at a 100 % rate. While discussing natural grasslands, the need to prioritize the management of existing traditional biotopes emerged. This is more urgent than creating new natural grasslands. Also other indicators than species/genera could be used here. Indicators describing the physical quality of the ecosystem like openness could be used. Different traditional biotopes have different target values for openness, but in all of them overgrowth due to lack of management threatens their existence. Looking at the example of Laakspohja, it became evident that targeted action on sandy soil habitats is needed. Grazing in forests could be re-‐introduced. Also landscape heterogeneity was discussed. A mosaic landscape is also a diverse landscape, but it is difficult to measure heterogeneity. This could be possible to monitor using satellite images. Farmers or landowners could monitor the species themselves or volunteers could be used. For example in Finland there is a broad network of ornithologists, who voluntarily count birds. However, we cannot count on volunteer in the long term. We should not underestimate the capability of landowners to identify species, for example flowers they used to see in their childhood. They may also be very motivated to see them coming back. The outcome itself (for example finding beautiful flowers or re-‐gaining the childhood landscape) could already be such a strong motivator that the payment is not any more the key reason for a management decision, but a nice supplement. 4.4. How to move forward? Kati Berninger presented a process of promoting outcome-‐based approach in agri-‐environment payment schemes. (see figure below). At the moment we are in the phase of developing ideas, which could be refined into draft measures. These draft measures would be modified according to farmers’ comments on their implementability. The draft measures should be tested in pilot projects. The pilot projects in different countries would form a network, which would communicate and exchange experiences. Each local situation is unique, but we can still learn from each other. During and after the pilot phase, there is a need to convince national governments and the commission that outcome based schemes are feasible. Then, in the long term, there would be an opportunity to a more broad application of outcome-‐
based schemes. We will definitely need to continue the discussion and launch pilot projects in various countries. This could be a topic of a new international project. Pilot projects may also be started using national funding.