When you think back on your school days, do you still remember what it was like when exams were fast approaching? You should have studied, but there were many other important things you wanted to do at that moment. Suddenly, even cleaning your room seemed more appealing than studying for the exams. When that happened, parents often encouraged their children to study by offering a small reward for a good test result. You might even get an improved grade on your report card as a “bonus”.
You might think that this topic is very far-fetched from today’s agriculture and agri-environmental subsidies. And that is, indeed, the case at the moment. Clearly defined measures and deadlines are key to environmental subsidies. “Do this or don’t do that before this specific date. But also remember that there is this special situation, where you have to remember to do the exact opposite with this cultivated plant after this specific date.” Remembering the exact conditions and dates of the measures is like mindlessly parroting a phrase that means nothing to you. When you are on the field, living the busy everyday life of a farmer, the conditions are easily forgotten, and simply learning some information by heart does not help you understand why exactly you have to do it.
The Goals Are Clear – Implementation Is the Challenge
Few wish to question the objectives underlying agri-environmental subsidies, as they are good and clear. The aim is to achieve a better state of the environment by preserving and increasing the number of diverse agricultural areas. Barely anyone would question the value of heritage biotopes for Finnish nature. Field characteristics improve when arable land has genuine plant cover for as much of the year as possible. Establishing buffer strips and reducing tillage also helps reduce erosion and nutrient leaching.
While the targets underlying the conditions set for subsidies are, as such, good, it is difficult for farmers to set their own farm-specific objectives or to experiment with new ways of achieving them. At the moment, the conditions set for subsidies limit farmers’ innovations and their ability to respond to changing environmental conditions. As a result, following specific deadlines, rather than the actual outcomes, becomes the focus.
Rewards Should Be Based on Results
Agricultural subsidies can be developed to be more performance-based. As the name suggests, the focus of performance-based subsidies is on outcomes or desired changes rather than the means to achieve them or the deadlines by which the outcome is expected to be achieved. Farmers and other operators get an opportunity to make extensive use of their professional skills, knowledge of their own fields, forests and environment, and new ideas. The focus shifts from doing the activity to achieving results. Not unlike the reward you were paid for doing well in an exam. Everyone was not forced to learn the same way. This allowed readers to read, experimenters to experiment, and everyone to develop the way they learn things. Instead of measuring the time you spent on studying, the focus was on the exam result achieved.
Performance-based subsidies are not without their problems. Changes in nature and the environment are often slow and rarely straightforward. Weather conditions and other environmental factors inevitably affect the outcomes. It takes time to produce measurable results. A key element of a performance-based subsidy is that its payment takes exceptional circumstances and the time required for changes to take effect into consideration. The subsidy could also be paid in parts, one for carrying out the measures and the remainder for the results achieved. At best, a performance-based subsidy frees up time from having to remember the dates set out in the rules to creating innovative activities, further reduces the need for supervision and rewards success – just like back in the time of school exams.
This text was produced based on the Finnish Food Authority’s performance-based financing models pilot. The pilot is implemented as a complementary project to Priodiversity LIFE, Finland’s largest nature project.
Author: Jussi Tuumi, Senior Specialist