TY - JOUR

T1 - The new eco-schemes

T2 - Navigating a narrow fairway

AU - Latacz-Lohmann, Uwe

AU - Termansen, Mette

AU - Nguyen, Chi

N1 - Publisher Copyright: © 2022 Agricultural Economics Society and European Association of Agricultural Economists.

PY - 2022

Y1 - 2022

N2 - This article highlights some key challenges and trade-offs with which national policy designers have to contend in devising national eco-schemes for agriculture. We show that policy designers operate in a narrow design space which is constrained by various political and legal requirements. One key challenge is to design a reward system that allows the uptake of eco-schemes by farmers to be aligned with a given budget. We present four broad implementation models for eco-schemes and discuss their merits and shortcomings in light of stipulated requirements. These are the ‘greening model’, the ‘modified greening model’, the ‘eco-points model’ and the ‘AECS model’ in the style of the agri-environmental and climate schemes of CAP Pillar 2. We conclude that the eco-points model is likely to be the most suitable. By stipulating that individual farmers must reach a certain minimum number of points per hectare (eligibility threshold), but are not entitled to payments for points that exceed a certain upper limit per hectare (cut-off), it allows demand from farmers for inclusion in a scheme to be steered such that aggregate uptake coincides with the budget; thereby reducing the risk of over- or under-subscription while maintaining flexibility to cater for heterogeneity in site conditions.

AB - This article highlights some key challenges and trade-offs with which national policy designers have to contend in devising national eco-schemes for agriculture. We show that policy designers operate in a narrow design space which is constrained by various political and legal requirements. One key challenge is to design a reward system that allows the uptake of eco-schemes by farmers to be aligned with a given budget. We present four broad implementation models for eco-schemes and discuss their merits and shortcomings in light of stipulated requirements. These are the ‘greening model’, the ‘modified greening model’, the ‘eco-points model’ and the ‘AECS model’ in the style of the agri-environmental and climate schemes of CAP Pillar 2. We conclude that the eco-points model is likely to be the most suitable. By stipulating that individual farmers must reach a certain minimum number of points per hectare (eligibility threshold), but are not entitled to payments for points that exceed a certain upper limit per hectare (cut-off), it allows demand from farmers for inclusion in a scheme to be steered such that aggregate uptake coincides with the budget; thereby reducing the risk of over- or under-subscription while maintaining flexibility to cater for heterogeneity in site conditions.

U2 - 10.1111/1746-692X.12343

DO - 10.1111/1746-692X.12343

M3 - Journal article

AN - SCOPUS:85128299105

VL - 21

SP - 4

EP - 10

JO - EuroChoices

JF - EuroChoices

SN - 1478-0917

IS - 2

ER -