Future agri-environment schemes are likely to pay farmers and land managers according to environmental results rather than offering fixed payment rates for performing set land management prescriptions.

It is hoped an approach which fairly rewards knowledge, skills and effort (just like cropping) will incentivise farmers to deliver better environmental performance. A partnership between Natural England and the Yorkshire Dales National Park Authority is running a Payment by Results Pilot to test the approach in Wensleydale, Norfolk and Suffolk, and here we analyse the recently published results of those pilots.

How are results measured?

You may naturally assume this would involve pollinator or bird counts, or measures of breeding success. However, such direct measures are not possible because they cannot be accurately measured at the farm or field level.

To keep the scheme accessible and assessment costs low, proxy measures of intermediate outcomes are assessed instead – measuring the volume of seeds on a bird seed plot, for example, rather than the number of birds using it.

Key design principles of the pilot were that:

• Result measures must be able to be self-assessed by participants
• Habitat attributes upon which performance-related payment rates are based must be capable of being directly affected by changes in management and therefore under the control of the farmer

In addition to being cost effective, self-assessment helps to engage farmers in the management of their habitat and encourage in season management alterations.

Was payment by results successful?

The farmers were almost universally positive. They appreciated the equitable approach and expressed a preference for such a scheme to be locally delivered by people with a good working knowledge of the area and its farming systems. The environmental performance of all the results-based measures was better than their equivalent control sites.

For example 81 per cent of the winter bird food plots had higher scores than the mainstream scheme control sites. The farmers were motivated to pay greater attention and carry out different management practices to improve the biodiversity results and in turn increase their payments.

Is payment by results more ‘profitable’ for farmers?

In theory, no. Just like mainstream agri-environment schemes, the pilot used the standard income foregone approach. WTO and EU rules prevent the payment rates from including a financial incentive, however ministers have previously said they will challenge this position and would like to be able to include incentive payments in future schemes.

In the pilot, payment rates for the top performing meadows and plots reflected that more management time or other inputs and operations would be required to achieve that environmental result. On average, this meant that payment rates were higher than those for equivalent prescriptions within mainstream agri-environment schemes, because they included payment for the time taken by agreement holders to attend training.

If a similar structure were adopted for a future environmental scheme it would appear to favour holders of larger agreements because they would be benefiting from the higher payment rates per hectare, but it wouldn’t necessarily require more training per measure than a farmer with a smaller area of that measure.

What are the challenges to mainstreaming this approach?

• At a whole farm scale undertaking self-assessment would be time consuming and could clash with peak agricultural activities
• The need for extensive training and advice in the early stages to support the self-assessment process
• The resource required to verify results
• Potential variability in performance makes budget management difficult for managing authorities
• Result measures for only four biodiversity objectives have been tested. Scaled up to scheme level the approach still requires a significant amount of development and testing

How does payment by results fit in with future environmental plans?

There are reports that, due to the time constraints, ELM could offer conventional income foregone plus costs-based payments at launch and then the payment methodology would evolve over time to introduce payment by results as it is refined.

Further information

Contact Savills Farm Management