Exploring the potential for
using conservation tenders
in an English context
Stephen Chaplin
English Context (1)
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England has a comprehensive programme of agri-environment agreements as part of
the European funded Common Agricultural Policy (CAP) Rural Development
Programme for England (RDPE).
These agreements are delivered through our Environmental Stewardship scheme
(ES).
ES is a multi-objective scheme. Primary scheme objectives:
– Maintaining and enhancing biodiversity.
– Maintaining and enhancing landscapes.
– Public access.
– Protecting and maintaining the historic environment.
– Resource protection.
– Climate change (mitigation and adaptation).
Secondary objectives:
– Flood management.
– Genetic resource conservation.
It seeks to increase the delivery of these non-market public goods by supporting
changes in land management practice and providing support for associated one-off
capital investments as part of 5 or 10 year agreements with land managers.
Agreements are also supported by the provision of funded advice.
English Context (2) – Current scheme
Environmental Stewardship
ELS
HLS
5 yr Agreements
10 yr Agreements
Untargeted
Targeted
Intensity £30ha/yr
Menu-based approach, free choice from
~60 management options
Entry threshold 30pts ha (1point = £1 IF)
Intensity ~£200ha/yr
No Capital works
Capital works programmes
Coverage - Budget for ~7m ha
Coverage – Budget for ~1.9m ha
Predominantly maintenance of existing
features/management practice and minor
adjustments to management practice
Considerable scope for major change in
management and restoration of features.
Demand led
Budget led, ‘by invitation’
English Context (3)
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Currently there are over 51,000 ES agreements covering in excess of 70%
of the agricultural area of England (6.4mha).
Annual scheme spend is approximately £440 million.
The scheme payments (for changes in land management) are based on
the typical cost of participation following the income forgone, additional
costs and transaction costs methodology required by the EU Rural
Development Regulation/WTO.
This means that:
– individual holdings may be under/over compensated depending on
their performance relative to the ‘typical’.
– the extent of over/under compensation is also strongly linked to the
accuracy of the commodity/input price forecasts.
Worth noting that we have a separate Catchment Sensitive Farming (CSF)
scheme. This is capital items and advice only and operates on a
competitive annual bidding round. Standard costs, applications are
prioritised based on their fit with local catchment priorities.
Outputs - Agreements
Outputs – ELS Options Top 5 (Area Ha).
Outputs –ELS Options Top 5 (Length Km)
Outputs – HLS Options Top 10 (Cost £).
Would like to know more?
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• The potential for over (and under-compensation) as a result
of the fixed price approach has been recognised for many
years.
• Empirical studies have confirmed low levels of additionality
for some scheme management options.
• [insert chart]
• Consequently, there is considerable interest in England in
the potential of alternative approaches to deliver
improvements in the value for money of the schemes.
Alternative Approaches
Payment Calculations
• Differentiated payments (regions, farm structural characteristics)
• Payment review frequency/approach.
Payment by Results
• Payment conditional on achievement of results.
Different Approaches to Procurement
• Reverse Auctions.
• Spatial co-ordination (may run counter to models seeking to
optimise economic efficiency)
• Agglomeration bonus
• Collective contracts
There has been no mainstream application of
reverse auctions to agri-environment scheme
delivery in England. Why?
Challenges (1)
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Inertia/Culture change
– 50,000+ existing agreements expiring at different times.
– Culture change, agreement holders grounded in current payment
rates.
– Acceptability of outcome-based payments, linked to lack of skills to
deliver environmental outcomes and risk of success/external factors.
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Design
– Permanent vs reversible changes
– One-off investments vs annual revenue payments
– Scale - Heterogeneity in cost of compliance to deliver same benefit.
– Multi-objectivity vs single objectives
– Handling spatially determined features eg priority habitats, designated
sites, historic landscape features etc
Challenges (2)
• Bid Evaluation - cost effectiveness
– Comparability across multiple objectives.
– Outputs vs outcomes and availability of evidence/tools to
support assessment of effectiveness.
• Handling Spatial co-ordination
– Importance of spatial coordination for many environmental
issues increasingly recognised. Different types of coordination required:
• Core sites (often spread across multiple land holders)
• Buffering sites (edge effects)
• Connectivity (spatial arrangement)
• Threshold effects
– Conventional auctions tend to run counter to this.
Challenges (3)
• Transaction costs
– Private, how to reflect including for unsuccessful.
– Public, cost pressures. ES delivery cost 3.9% in 2013/14 £477
million of RDPE funding, Staff/overhead cost of £9m (549 FTE)
(1.8%) and IT running cost £10.2m (2.1%). Significant
pressure to reduce this further.
• Control
– Measuring effectiveness (outcome-based or activity based
payments)
– Compliance - sanctions/enforcement, especially for outcomebased payments)
– EU requirements eg annual cross-check etc determines when
payment can be made etc
– Timescales for environmental monitoring
Cost Effectiveness
O
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National Payment
rates
Differentiated
payments
Reverse Auctions
Collective contracts
Payment by Results
Spatial coordination
Contact
Stephen.chaplin@naturalengland.org.uk