Exploring macro-environmental factors influencing adoption of result-based and collective agri-environmental measures: a PESTLE approach based on stakeholder statements

From Firenze University Press Journal: Bio-based and Applied Economics (BAE)

University of Florence
6 min readOct 18, 2024

Theresa Eichhorn, Institute of Agricultural and Forestry Economics (AFO), Department of Economics and Social Sciences, University of Natural Resources and Life Sciences

Lena Schaller, Institute of Agricultural and Forestry Economics (AFO), Department of Economics and Social Sciences, University of Natural Resources and Life Sciences

Katri Hamunen, Natural Resources Institute Finland (LUKE), Bioeconomy and Environment

Tania Runge, Coordination Unit Climate, Soil, Biodiversity, Thünen Institute, Braunschweig

A more sustainable agricultural system in the European Union (EU) is not only a societal demand, but also an ecological necessity to tackle climate change, counteract biodiversity loss, and protect the EU’s natural resources. By providing public funding, the legal framework of the European Common Agricultural Policy (CAP) has a prominent role in fostering agriculture’s transition to sustainability. Contracts for Agri-Environment-Climate Measures (AECMs) under the second pil-lar of the CAP are pluriannual commitments, specifical-ly designed to reduce the negative impacts of agriculture on the environment and to mitigate the effects of climate change (European Commission, 2017). The main chal-lenge for AECMs is to ensure an efficient use of funds in addition to delivering the intended environmental effects. AECMs are facing multifaceted criticisms in this regard, such as the lack of empirical evidence supporting their effectiveness, imprecise targeting through insuf-ficient consideration of the heterogeneity of farms and their local circumstances (European Court of Auditors, 2011), as well as missing (financial) incentives for farm-ers to produce the best environmental result through their entrepreneurial activity (WBAE, 2020). New pathways within the design of AECMs are required: approaches such as result-based payments or collective implementation can contribute to a more effective and efficient design of AECMs. Result-based schemes aim at providing environmental improvement through paying for the achievement of specific environ-mental objectives instead of prescribing and compen-sating management practices to farmers. Consequently, farmers can flexibly decide how they want to achieve environmental improvement (Burton & Schwarz, 2013). Collective approaches have the objective to activate land managers to jointly provide agri-environmental-climate public goods (AECPGs), often accompanied by formal-ised cooperation (Runge et al., 2022). In fact, result-based and collective AECMs were eligible for receiving EU co-financing within the past CAP period (2014–2022), although they have been applied to a very limited extent in the Member States (WBAE, 2020). In the new CAP Strategic Plans Regulation ((EU) 2021/2115), Article 70(5), it is recommended that: “Member States may promote and support collective schemes and result-based payment schemes to encourage farmers or other beneficiaries to deliver a significant enhancement of the quality of the environment at a larger scale or in a measurable way.” (European Parliament and the Coun-cil of the European Union, 2021). Moreover, Recital 71 of Regulation (EU) 2021/2115 states that “[s]upport under payments for management commitments may also be granted in the form of (…) result-based interventions”. Result-based payment schemes are further specifically mentioned in the EU’s biodiversity strategy 2030 (Euro-pean Commission, 2020). With the new emphasis on environmental performance in the CAP, result-based schemes gain importance as a fast-evolving and distinc-tive approach. For illustration, at the time the survey was conducted, a result-based pilot project for nature conservation (biodiversity) was implemented in Austria, which, in the meantime, has been transferred into a fully eligible measure under the Austrian agri-environmental programme for the period 2023–2027 (AMA, 2023). Also in Germany, already in the previous CAP period some Federal States had programmed result-based measures for extensive permanent grassland which now led to the programming of a respective eco-scheme measure targeting flowering species (BLE, 2022). As regards col-lective approaches, they may operate as an extension of many other forms of contracts aiming at a more effec-tive delivery of environmental goods and services, e.g. at a landscape scale. While in the last CAP period only the Netherlands made extensive use of collective implemen-tation for its agri-environmental schemes, in the new programming period (2023–2027) there are also other countries offering collective measures with CAP fund-ing, e.g. Ireland (DAFM, n.d.) and Germany in the Fed-eral State of Brandenburg (MLUK, 2023). Still, despite their potential positive impacts on the environmental effectiveness of AECMs, several factors can hinder the implementation and uptake of collective and result-based approaches. The implementation of result-based schemes may be impeded by (i) elevat-ed administrative and transaction costs compared to action-based systems due to the requirement for result measurement, limited experience, and often small-scale experimental designs (Eichhorn et al., 2022; Schwarz et al., 2008), (ii) difficulties in determining accurate indica-tors for measuring environmental progress (Allen et al., 2014; Burton & Schwarz, 2013); and (iii) potential conflicts with WTO regulations (Matthews, 2019; Melèn-dez-Ortiz et al., 2009). Factors hampering farmers’ will-ingness to participate are (i) the fear among farmers of lacking sufficient knowledge and skills to successfully perform result-based schemes (Massfeller et al., 2022), (ii) general scepticism towards novel approaches (Stolze et al., 2015), (iii) difficulties in understanding how these contracts work in practice (Wezel et al., 2018), (vi) per-ceived higher risk due to environmental uncertainty, and (vii) no secured remuneration (Derissen & Quaas, 2013). Also collective approaches face hurdles, such as lack of farmers’ willingness to cooperate (Franks, 2011), insuffi-cient coordination (Olivieri et al., 2021), and missing of pre-existing networks or lack of capacity (Prager, 2022). Up to now, the state of knowledge on factors sup-porting or hindering the implementation of novel schemes is largely based either on case studies investi-gating mostly single or few contract solutions in a spe-cific context (e.g. Birge et al., 2017; de Sainte Marie, 2014; Derissen & Latacz-Lohmann, 2013; Prager, 2022; Zabel, 2019), on farmers’ surveys mainly addressing farmers’ intention to perform such novel schemes (e.g. Massfeller et al., 2022; van Dijk et al., 2015), or on studies con-centrating on contract related factors, such as contract design features (contract length, payment mode etc.) (Bredemeier et al., 2022; Schulze & Matzdorf, 2023). What is still missing, however, is a structured gath-ering of knowledge about macro-environmental factors influencing the adoption of result-based and collective agri-environmental measures. This is where this study comes in. Macro-environmental factors (such as tech-nological, political, natural factors) refer to external forces and conditions that can have a significant impact on a business or organisation’s operations and perfor-mance and are beyond the control of the business, but can influence its success or failure (Kotler et al., 2018). In our case, we looked at factors, which cannot be influ-enced by farmers directly, but have an impact on farm business decisions. A PESTLE analysis framework was used to identify these macro-environmental factors that promote or hinder the implementation of novel contract types in a holistic, structured and multidisciplinary way (Yüksel, 2012). Our analysis is based on an online survey of 85 stakeholders from Austria and Germany conducted in spring 2021. Within this survey, stakeholders identi-fied a comprehensive set of factors based on six PESTLE categories (Political, Economic, Social, Technological, Legal, and Environmental). The survey targeted a wide range of stakeholders involved in the promotion, design, implementation and control of AECMs, with actors from government agencies, environmental organisations, agri-cultural associations, and private sector companies. By including policy makers/administrators/advisors from local up to national level, we were able to gather strate-gic, as well as practical (phenomenological) knowledge (Raymond et al., 2010). The importance and originality of this study is that it (1) compares two novel contractual AECM approaches in one analysis, (2) strongly focuses on the opinion of stakeholders on external factors, which are much less examined within the agriculture policy literature and (3) provides a structured analysis of the external factors by applying the PESTLE approach, a strategic tool from business analysis, for the first time to study AECMs.

DOI: https://doi.org/10.36253/bae-14489

Read Full Text: https://oaj.fupress.net/index.php/bae/article/view/14489

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