Factors Influencing the Perceived Economic Benefits of Innovative Agri-Environmental Contracts

Abstract

Continued innovation in contract design may enhance the delivery of agri-environmental climate public goods (AECPG), but barriers to adoption arise in terms of how farmers perceive the economic benefits. Therefore, this paper examines survey data from Ireland and the Netherlands to analyse whether land managers agree that results-based, collective action, value chain and land tenure contracts for the delivery of AECPG are understandable, applicable to their farm and economically beneficial. Using Probit models, we also identify groups of land managers who perceive the different contract types as being economically beneficial, and these findings can inform policymakers of farmer groups who need adequate consideration during the design of agri-environmental contracts. For example, greater incentives could encourage older farmers to enrol in results-based contracts in Ireland and value chain contracts in the Netherlands. We also find a link between contract duration and the perceived economic benefits of collective action contracts in both countries, with land managers in Ireland desiring a longer duration. We highlight that policymakers and land managers in Ireland could apply lessons from the design of agri-environmental contracts in the Netherlands, where they are more common and varied. Greater knowledge exchange between users and non-users of such contracts would also help bridge the gap between theory and practice in both countries.