CONSOLE survey results: Latvian landowners want to be rewarded for specific results, but not particularly willing to cooperate

In the spring, we invited members and other stakeholders to participate in surveys on contracting solutions. We would like to thank everyone who took the time to answer a series of questions. We have compiled data from both Latvia and other countries and are sharing the results.

 

During this phase of the project, types of contracts were developed that would motivate landowners to achieve environmental goals. In order for the contracts to be practical, it was necessary to find out the opinions of landowners and other stakeholders. One survey was designed for landowners, the other for their cooperation partners (state institutions, municipalities, organizations related to this field). The content of the surveys was the same in all countries, so the data is comparable.

 

In Latvia, 101 landowners and more than 30 cooperation partners were surveyed, but in total, 3,017 landowners and 513 cooperation partners were surveyed in the project.

 

The surveys assessed attitudes towards the following types of contracts in general:

• Performance-based contract – under a performance-based contract, the landowner receives payment only when certain environmental or climate objectives are achieved. The landowner is free to decide on management measures, for example, how to promote water protection, landscape improvement, biodiversity or carbon sequestration. The contract defines precise indicators and a reporting system for assessing results. When entering into the contract, the landowner is provided with access to advice or training and is provided with the opportunity to participate in monitoring.
• Collectively implemented agreement – a landowner joins a group of land managers (farmers or foresters) who jointly apply for compensation to implement environmental or climate measures. To receive payment, a minimum number of group members (e.g. 5) from a specific region must be reached. The group members decide on the implementation of the measures and the area. Within the group, land managers and consultants share knowledge and support the achievement of environmental goals.
• Agreement with food chain actors – The landowner, as a producer of agricultural products, is part of the food chain (producer, processor, retailer, distributor). The landowner enters into a contract under which he undertakes to achieve environmental or climate objectives related to the production of agricultural products. Agricultural products are often given a special label. The product can be sold on the market at a relatively higher price than a similar product paid by the processor or retailer.
• Land use agreement with environmental requirements – The land user enters into a land use agreement with a state or local government institution, under which he undertakes to pay special attention to environmental improvement or protection requirements that exceed the requirements set out in regulatory enactments for the production of l/s, using land leased from the state or local government. The land user pays the land owner a lower rental fee than for similar land under ordinary land use agreements to compensate for the additional effort. The agreement specifies environmentally friendly management practices on the leased land in order to maintain or improve the achievement of environmental objectives.

 

What influences landowners' willingness to engage in environmental activities?

The survey assessed various factors that would influence the willingness to conclude such agreements. Latvian landowners assessed the possibility that compensation depends on the achieved results most positively, i.e. – the better the results, the higher the compensation. The next most positively assessed factor is the possibility to choose the activities themselves that are carried out to achieve environmental results, i.e. – the landowners themselves want to dictate the rules. These factors are followed with quite similar results by receiving compensation every year, a purchase guarantee (a guarantee that the products produced will be purchased if the terms of the agreement are met), the possibility to participate in paid training and reduced land rent.

 

On the other hand, receiving compensation collectively (an option that is provided for when cooperating in achieving environmental goals - compensation is paid to the group that distributes it themselves), supervision "from above", a collective agreement, periodic payments and the "buyer pays" principle, which means that the costs incurred in achieving environmental goals are included in the final price of the products produced, were assessed as unmotivating.

Comparing the overall results of Latvia and the countries participating in the project, it can be seen that overall the results are more optimistic than in Latvia, i.e. there are fewer factors assessed as demotivating. However, in the overall results, the same motivating factors as in Latvia take first place.

 

In other countries, the possibility of collective payment is also assessed quite negatively, however, there are not as many objections to cooperation as in Latvia, which could be explained by better developed traditions of cooperation.

 

What types of contracts are we willing to use?

When evaluating four types of contracts, it is clear that both in Latvia and in all countries, respondents recognize that there is a greater chance of engaging in the implementation of a results-based contract.

A results-based contract, both in Latvia and in general, seems easy to understand, implementable and economically beneficial to respondents.

 

Latvians are more critical than other countries about the possibility of cooperating with other landowners, however, representatives of other countries are also quite reserved. This type of agreement, although it seems quite understandable, does not seem easy to implement to respondents, which is explained by distrust in partners and uncertainty about what happens when partners do not fulfill the agreed actions. There is a possibility that one of the partners does not fulfill the requirements, as a result of which everyone involved loses.

 

The possibility of engaging in the implementation of a food chain agreement in Latvia is also assessed somewhat more reservedly than elsewhere. The main reasons for this are the uncertainty about whether there will be buyers for the products that are prepared to pay more for them. Compared to Latvia, foreign respondents find it more understandable and feasible than Latvians, although not very economically advantageous. In Latvia, there are concerns that customers are not prepared to pay more for an environmentally friendly product.

 

In turn, a land use agreement seems even potentially more attractive to Latvian landowners than elsewhere. Both in Latvia and elsewhere, it is considered beneficial and easy to implement.

 

Summary from the landowner survey

Landowners are motivated to participate in the activities by the following aspects:

• the better the goals achieved, the greater the reward received;
• One is free to choose the ways to achieve the objectives of the contract.

Landowners are not motivated by:

• Cooperation with other farmers;
• Receiving special product labeling.

Most respondents are interested or ready to enter into performance-based contracts in the future (achieve environmental goals – receive payment) – 52 % interested, 24% – neutral.

Land use agreement with environmental requirements – 44 % respondents interested.

Agreements with food chain participants received neutral opinions (33 %).

Opinions are divided on collectively implemented agreements, but interest is lower (25 %).

Preferred contract term: 5-10 years.

 

What do partners think?

When comparing the opinions of Latvian landowners and their cooperation partners, the results are not drastically different – cooperation partners also evaluate results-based and land use contracts most positively. Also, various elements of contracts are evaluated in a similar way, with some nuances.

When ranking contract types by potential popularity, the results-based contract was most often rated first, while the land use contract was most often rated first and second together.

There is also less trust among cooperation partners in collectively implemented agreements. However, unlike landowners, cooperation partners are more positive about the possibilities of food chain agreements. The overall results of the countries differ only slightly.

 

Interestingly, when evaluating various aspects of the agreements, the cooperation partners relatively positively assess the possibility of obtaining a special label attached to the product, but more negatively – the principle that the buyer pays for environmental benefits. Perhaps the cooperation partners expect that special labels would allow them to sell more products, but not at sufficiently high prices.

 

Summary from the survey of cooperation partners:

Landowner cooperation partners support the following motivation mechanisms:

• the better the goals achieved, the greater the reward;
• landowners are free to choose the ways to achieve the objectives of the agreement;
• receiving a special product label;
• reduce land rent.

Does not support:

• cooperation with other farmers;
• "Buyer pays" principle.

A results-based contract (achieves environmental objectives – receives payment) seems appropriate and feasible.

A land use agreement with environmental requirements also seems feasible.

Contracts with food chain participants are unlikely to work because buyers will not pay more for products.

Collectively implemented agreements – no faith in the possibility of landowner cooperation.

 

In the surveys, respondents were given the opportunity to comment on their answers. Summarizing them, it can be concluded that It would be important for land owners to receive an advance payment before achieving environmental results, so that it would be easier to invest in appropriate land management and achieve the set goals. Respondents reminded that unforeseen circumstances must be taken into account that can affect results and thus demotivate landowners to continue managing their land in an environmentally friendly manner.

 

Since each type of contract has different successful elements, respondents recommend combining different types of contracts, such as a results-based contract and a cooperation contract, which would ensure greater popularity of the contracts. The project envisages including cooperation between landowners and consultants in the contracts, thus ensuring an individual approach to each case. In order for the use of contracts to achieve the goals, it is necessary to clearly indicate the initial values of the indicators to be achieved, but in order to motivate landowners to cooperate, additional compensation for cooperation should be provided.

 

TOTALLY

+ Progressive Rewards: Landowners are motivated by rewards (The higher the goals achieved, the higher the rewards)

+ Freedom: owners want to determine their own ways of achieving goals (goals are set, but achieved as you wish)

+ Land lease: lease land at a lower price if goals are achieved – possible to implement, but not very interesting

– Society: There is no belief that buyers will pay more for "green" products.

– We can't cooperate: neither landowners nor cooperation partners believe that cooperation between several landowners would be successful