Case Study #7

Collective contract arrangements for spatial coordination of water quality enhancement

Voluntary contracts are expected to play a larger role in agricultural nutrient
management policies in order to meet Water Framework Directive (WFD) targets
in the future. The current regulation, which has been in place since 2017, offers
individual contracts to farmers; paying them for implementation of abatement
measures. The contracts are funded through national and EU Rural Development
funds and are presumed to improve targeting of environmental impact. Previous
research has shown that cost saving from spatial coordination could be substantial
due to heterogeneity in environmental effectiveness of abatement practices and
costs of abatement across landholdings. However, the current contract mechanism
does not facilitate coordination between farmers. EFFECT will develop and test
collective contract designs to achieve spatial coordination in abatement and in turn
potentially improve cost-effectiveness of the contracts. Furthermore, we will test
alternative contractual arrangements which may reduce potential barriers to
collective action and improve coordination EFFECT will test the collective
contracts using field experiments with farmers in catchments that are selected
based on environmental constraints, types of agricultural holdings and measures of
social capital in the farming community. The agricultural knowledge center,
SEGES, with extensive experience in advising farmers on emission abatement
practices, will be the practice partner in EFFECT for this case.