Economic instruments for agro-environmental measures

1. Economic instruments for agro-environmental measures Lessons learned from Payment for Environmental Services (PES) for NWRM Rob van der Veeren

2. Outline • NWRM PES and agriculture • Background: Dutch interest in agriculture • Need for economic instruments for agri-environmental management • Review of Dutch case studies • International review • Concluding remarks

3. NWRM PES and agriculture • NL sees NWRM as an ‘umbrella term’, not as a precisely defined concept. • Just as that other buzz word: Ecosystem services • Financing opportunities for NWRM may therefore overlap with opportunities for ‘payment for ecosystem services’ (PES) • So, may be we can learn from studies on PES?

4. Background: Dutch interest in agriculture • Hydromophological changes and diffuse pollution from agriculture are major problems for Water Framework Directive in the Netherlands • Solution: additional measures in agriculture • The Netherlands is increasingly threatened by sea level rise, salt intrusion and fresh water allocation problems • Solution: more water storage in rural (agricultural) areas • The Netherlands has appointed Natura 2000 areas, but corridors are needed to make them more successful • Solution: more nature corridors in rural (agricultural) areas • But imposing additional measures disturbs level playing field (Dutch agriculture obeys Nitrate Directive and other EU legislation) • Solution: innovative economic instruments

5. Wouldn’t it be nice… to have a system which could simultaneously: • Increase water storage capacity of water systems in rural areas • Increase nature corridors along water in rural areas • Decrease agricultural pressures on water (e.g. nutrient emissions) and would be attractive to farmers, because: • They meet requirements of EU legislation (e.g. Nitrate Directive) • Not only get compensated for loss of agricultural production, but are paid for land stewardship/nature conservation

6. Just an idea… • Water boards are • responsible for water management in rural areas • Interested in storage capacity, nature corridors and water quality • democraticly chosen (representatives of public interest) • paid by levies from farmers industry inhabitants in same region • Interested in cost-effective measures in the capillaries • Could they pay agriculture for agro-environmental measures to increase water storage, prevent flooding, enhance nature? (user pays principle) • E.g. by paying farmers for the opportunity to use part of their land to create wet buffer strips • Inventory of what happens in the Netherlands and abroad

7. Review of Dutch case studies • Inventory of innovative economic instruments to stimulate agricultural water management measures • Arrangements are on top of regular ‘catalogue of green blue services’ and other current policies, and voluntary • 120 case studies found; are highly diverse in: • Status (research, pilot, formal arrangement) • Spatial scale (local, province, national) • Type of arrangement (advice, technical support) • 13 case studies are analysed in more detail For English version: Please send an email http://www.helpdeskwater.nl/publish/pages/26880/verkenning_innovatieve_economische_instrumenten_voor_agrarische_watermaatregelen_overzicht_van_praktijkstudies_2010.pdf

8. General characteristics of payment schemes • For initial investment, for maintenance, or for depreciation of value • Depending on regional circumstances • Most often provinces are involved, or regional water boards • Not for ecosystem services • No direct link between financing sources (demand) and ecosystem provider (supply)

9. Factors contributing to success: process • Acceptance is key. Increases when advisors go to the farm • Realistic ambitions (according to farmers) • Allow for learning by doing; may result in new innovations • Involve farmers when selecting and implementing measures • Permanent involvement during implementation: • Courses (compensation for time spent); • Bioassays performed by farmers • One stop shop (involve agricultural organisations in this) • Short term implementation

10. Factors contributing to success: content • Adequate payment • Also compensation for maintenance and administration • Possibilities for tailor made arrangements (location specific) • Arrangement and financing secured for medium term (> 5 years) • Arrangement should suit the new CAP requirements • No definitive change in land use (agriculture > nature) • Multiple ecosystem services can be offered in combination • Costs for the payer should not be excessive; combination of objectives can help, since this often means multiple financing sources

11. International review on payment schemes for wet buffer strips • Wet buffer strips relevant for the Netherlands (flat country?), but nowhere else • Extended scope of study: also include other types of wet zones • 11 countries: Austria, Belgium, Denmark, France, Germany, Luxembourg, Netherlands, Norway, Scotland, Sweden, Switzerland • General characteristics: voluntary, for investments not for environmental benefits • Two main types: • Project based: payment to buy land and for investments • Continuous payments: To keep land converted, paid from EU RDF, some MS pay more when environmental benefits accrue • In some cases overcompensation was found to ensure participation

12. Factors contributing to success/failure • Compensation less than market conform reduces participation rate • Funding should be linked to easily understandable rules and limited administrative burden • Stable, long term, trustful funding provided by one office (one stop shop for farmers, also when various organisations are involved) • The required shift in practice should not be too drastic • Farm specific characteristics are also important: Size and type of farm, age and education of farmer, and full or part-time farming http://www.helpdeskwater.nl/publish/pages/26880/international_review_on_payment_schemes_for_wet_buffer_strips_and_other_types_of_wet_zones_along_privately_owned_land.pdf

13. Concluding remarks • Efficiency and effectiveness of instruments depend on: • Tailor made arrangements; no one size fits all • One stop shop; reduction in administrative burden • Trust in stability of longer term arrangement • Fit in CAP and other policies • Participation depends on size of payment • Current payment schemes pay for measures not for benefits

14. If you have any questions, you know where you can find me…rob.vander.veeren@rws.nl