This chapter focuses on the shortcomings of contract design of European agri-environmental schemes (AES), with special emphasis on the need for more collective actions. The AES financed by the Common Agricultural Policy (CAP) are mostly based on individual voluntary contracts signed between farmers and state authorities: farmers make a commitment to adopt pro-environmental farming practices and get a financial compensation in return, for a five-year period. However, the environmental outcomes of European AES have been disappointing. Evaluation reports point out, among other things, the weak rate of farmers’ enrollment, especially in the most vulnerable areas. When environmental benefits increase non-linearly with environmental efforts, or require specific spatial configuration, low and scattered participation can be insufficient to trigger environmental improvements and public money is spent in vain. Moreover, it is well known that the adoption of new agricultural practices often follows an s-shaped curve and by encouraging the early adopters, one can accelerate the diffusion of desirable practices. This chapter therefore focuses on how European AES can be re-designed in order to include incentives for greater enrollment and more coordinated action without increasing their costs. It provides examples of how various member states have implemented such measures.
Agri-environmental schemes in Europe: switching to collective action
7 September 2015