A Crisis Eclipse
Why is farmland biodiversity loss a food system issue that we can't afford to lose sight of?
After years of increasing attention, sustainability in Europe and the UK’s agrifood systems is being de-prioritised by current disruptions.
But as we’re forced to think again about resilience - Framework’s sharing an interview reminding us that biodiversity loss and ecological breakdown still present dangers…
… and that better valuing biodiversity, ecological health and ecosystem services remains as important today as when the project began almost two years ago.
Part One of an interview with Professor Stefanie Engel, Humboldt Professor at the University Of Osnabrück and lead of Framework Work Package 6: Farmer Behaviour and Incentives.
WP6 is assessing how the enrolment of farmers in the design and monitoring of new schemes influences the implementation of biodiversity sensitive farming approaches.
Q. Thank you so much for giving us some of your time - just to get us started, would you like to describe for us who you are and why you do what you do?
Sure! If I start with the why - I'm very much motivated by the need to address major environmental challenges like biodiversity loss, climate change, water pollution and so on. I've been really interested in these issues from the start of my career.
I’m an Environmental Economist by training and I'm interested in understanding environmentally-relevant human behaviour and how to motivate more sustainable behaviour.
And most of my work has been on the design of economic incentive policies, such as payments for environmental services, mostly, and more recently also on participatory approaches. And maybe I can also say over time I have moved away from standard economics to include behavioural economics - insights on human decision making. So this is really on the border of psychology and incorporating a much more complex model of human decision-making and what motivates humans.
Q. You hold a position named after Alexander Humboldt - one of the first to think ecologically and about how humans cause climate and environmental impacts.
Are you inspired by him at all?
Absolutely! Humboldt was one of the first to realise and to point out how different aspects of systems of social-ecological systems are interconnected with each other! And I would say this realisation also motivates my work in many interdisciplinary settings, as I've been mostly at interdisciplinary institutes. Also, this Framework Project is, of course, an interdisciplinary project. I'm currently at an Institute for Environmental Systems Research. So that's very much in line with Humboldt's ideas and indeed, I find him quite inspiring - we cannot really distinguish between a social and an ecological system , the two are really interconnected. And I think he was one of the first to point out these interconnections, how human activities affect ecological system and also ecological system affects humans.
Q. How did you end up working with farmers and with the agricultural sector?
Was it always obvious to you that you wanted to tackle environmental crises through agri food structures? Or did you have a realisation? How did you make that connection?
That's a good question. I don't think it was always obvious, I think my interest was broader. But somehow, maybe because also some of my initial work was in in the Global South and in countries where the rural sector was also very important. And somehow I ended up working on issues that related to land use a lot? And I got a lot into these payments for environmental services as an interesting incentive approach in these land use issues. And only more recently, really, we started working also on EU agriculture.
But I think it's obviously a very important sector, and I mean, 25 percent of the global carbon emissions come from the agricultural food sector, the biodiversity crisis is very much linked to the agricultural sector as well. So a lot of the solution also has to come from the agricultural sector. And I think it's a part that is often - in environmental economics where I come from - not so much researched.
A lot of people focus on the energy sector, for example, and not as many on the land use issues and agricultural issues. So I find them very important and interesting to work on.
Q. So how have incentive schemes shaped our landscapes?
We can take the example of the EU, which is also the focus of the Framework Project! The EU in its Common Agricultural Policy (CAP), spends around fifty eight billion euros per year on agricultural subsidies, right? And these subsidies are very much shaped by what society valued in the past, I would say, namely securing food production, supporting rural development.
Subsidies largely promote output - with only little regard to environmental impact. And as a consequence, they create many unsustainable outcomes. So our food systems, like I said, already are responsible for around 25 percent of global greenhouse gas emissions, particularly actually nitrous oxide and methane, which have higher global warming potential than CO2.
Also, the agricultural sector is a major contributor to the biodiversity crisis and also to water problems. For example, the region where I live here in northern Germany is a very strong example of how intensive meat production causes major water pollution.
But also, over time, society's values have changed. So beyond food security and rural development, which are still important, we now also strongly value as a society: climate mitigation, biodiversity conservation and water quality but also scenic beauty from diverse agricultural landscapes! And these things are public goods, so we need to provide incentives for their provision.
So, these agricultural subsidies are in principle, a promising option actually to do that! But the way they are directed right now, they are not directed towards these things we care about as a society nowadays. We also know, of course, like food security is still an important goal that society also still cares about. But we know also by now that it can be undermined by unsustainable practises. So, for example, monocultures and intensive animal production are much more vulnerable to the spread of diseases and pests and also intensive crop production causes soil degradation and loss of pollinators. So this type of intensive agricultural, one can say, undermines its own basis of future productivity. So it also endangers food security in that sense. And moreover, also, when you look at the distribution of these subsidies, this distribution is very unequal - so around 80 percent of the subsidies under this Common Agricultural Policy of the EU goes to 20 percent of the agricultural enterprises, which really works against diverse landscapes and issues of rural development. So these issues and these changed societal values are still not sufficiently represented in the Common Agricultural Policy, in these economic incentives that we put in place.
A significant part of these subsidies is still based on on per-hectare-payments, so they favour large output large farms. And that is not always in the interests of sustainability. That is an example. There are subsidies that promote intensive animal production, for example, that that are not in the interests of sustainability. On the other hand, there are also examples of agri-environmental payments that do pay for sustainable practises such as: changed times of mowing, wildflower strips on the side of fields and so on... so those are the more positive examples, right? So you see both, you see subsidies going towards unsustainable practises or just not being linked to any need to have sustainable practises! And, on the other hand, a small part of the payments goes also to these more sustainable practises but it's not a sufficiently large amount or a large proportion of the total.
Q. You've had a long career studying these economic models. When you look at the environmental incentive payments of the CAP, where would you say that most of the work remains to be done?
I think there has been some positive changes in general and in the policy debate, so for example, this concept of Ecosystem services has emerged and has become more widespread and it it highlights the benefits that ecosystems create for humans. So, for example, beyond just the production of food, so for example, ecosystems provide regulatory services like the role of the soil for climate change mitigation or cultural services like the role of agricultural landscapes, for recreation, for our wellbeing. So that's definitely a positive development. And there have been a number of assessments really pointing out the importance of these services by now, both at the European level and national levels and also international levels, there have been such assessments. And I think also the idea of using economic incentives to promote more sustainable behaviour has become more widespread. So this idea was actually developed by environmental economists in the 70s! And it's been very much part of my study programme.
But over time, we can observe that the ideas have spread more and are more acceptable in general. In other policy sectors, we see now more Eco Taxes, emissions trading and so on. And in the agricultural sector, we see at least this idea of agri environmental payment schemes spreading you know - that one would make payments conditional on farmers adopting specific practises that promote environmentally friendly outcomes or more environmentally friendly outcomes. And some reforms of the Common Agricultural Policy have taken place in this direction.
So the proportion of agri-environmental payments has increased a bit. There has been also this greening of the CAP, meaning that a significant portion of the direct payments is at least made conditional on some very basic [sustainability] requirements being fulfilled. So those are steps in the right direction, but they are far from really being enough to promote the transformation that we need. So much more is needed in this direction.
Q. What do you think about the the new CAP that's going to come in place in January 2023?
I think it's still very much insufficient in many ways. I think a positive point is that a bit more room is given to the member states to decide on on how to use these subsidies. So that gives them a little bit more room for manoeuvring and for adapting to the local conditions, which I think is a good thing. But there is still a risk that too little of these payments is really used to really promote and be conditional on these more sustainable practises.
Q. So how does one go from data on agroecosystems to incentives?
Hmm. First of all, that's really an interdisciplinary task, so from an environmental economics perspective, we first need information from natural scientists on what our alternative management practises? And what are the impacts on ecosystem services? And from an economics perspective, there are then two options to inform the design of such incentive schemes.
First - we can aim to really try to value the societal benefits from the ecosystem services provided that would tell us sort of the upper limit of what we might want to pay in our society for such services.
And there are quite a number of methods for such evaluation that exist but one also has to say that they have a variety of limitations. Nevertheless, it can be useful in some circumstances but there is a second, more pragmatic, and easier approach -
that is to estimate - what is the added cost for farmers to adopt the more sustainable practises? And then to set the incentive at a level that just compensates that cost or just a little bit more. The Common Agricultural Policy actually compensates just that cost, on average, and in theory this can help to achieve more with limited budgets. But it sometimes is also not really enough to induce behavioural change.
So I would say the ideal payment should be just above these costs in order to also cover transaction costs for farmers of making the changes and applying to these schemes. You already mentioned the high beaurocratic cost also to farmers of dealing with all these tools, understanding these tools! Towards understanding these rules. And also, this payment should provide a real incentive for change, so should be a little bit above the cost, in my view!
Q. What incentive schemes does the future of agriculture need in order to address the biodiversity loss and climate crises?
I think we need we need to direct agricultural subsidies more towards promoting what society values, that's clear. So a broader set of ecosystem services and biodiversity, not just food production and output. And we need to really reward biodiversity sensitive and climate friendly practises rather than production per-see. And at the same time, it's clear that we need to also support particularly smaller farms and farms in marginal areas to manage this transition in face of market pressure. So this goes very much in line also with directing part of the subsidies to securing a more diverse, multi-functional, agricultural landscape.
Then for biodiversity protection - it's also important to to make sure that the measures that farmers take are spatially coordinated because to really effectively promote biodiversity, it's not useful to have very scattered, for example, wildflower strips just here and there but it's also important what a spatial pattern looks like.
So here there is a promise of more collective approaches like [Framework’s] Farmer Clusters bringing farmers together to develop joint solutions. Also, making payments into groups of farmers or based on group outcomes could be interesting but it's also important to see that payments alone are not enough. We need to also consider psychological factors.
So, for example, a farmer’s self-identity as producers stands in the way of measures that might reduce agricultural output. So it could be important to visualise that such new measures produce other ecosystem services and to really visualise that there is a production of something new knowledge of these ecosystem services that are being provided.
And there's also a strong role of social norms in farmer behaviour, so it could be helpful to communicate about the increasing number of farmers that are opting already for more sustainable practises, for example.
But also incentives are not just shaped by public incentive schemes! The behaviour of consumers and of retailers also matters a lot. So I think we, as consumers, need to also realise that we are all part of the problem and we are part of the solution and we cannot expect that food that is environmentally friendly is as cheap as food that is produced unsustainably. We need to also think about putting quality over quantity and rethink our own behaviour. For example, a major leverage point for reducing harmful impacts on climate and biodiversity is to reduce meat consumption and such changes or less meat, more organic products, for example, also have major benefits for our health by the way! So that can be an added example or added incentive for us as consumers! And also retailers actually have a major impact - they can put a lot of pressure, price pressure, on farmers that works against sustainable practises. On the other hand, that can play a very positive role. For example, in the Netherlands, there is an example of a major retail chain that introduced standards for chicken production and influenced the market in a major positive way by doing that.
Q. Thank you, Stefanie. I have so many follow up questions!
For more, head to part two of this interview series or the project-sponsored podcast.
Conversation edited for clarity and format. Interview by Alexandra Georges-Picot.
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