Rewarding Farm‐level Environmental Outcomes – an Indicator Based Approach

Summary Many agricultural, agri‐environmental and organic support payments are paid at a flat‐rate per hectare that does not reflect actual environmental outcomes on farms. We propose an indicator‐based approach using a combination of result and action (proxy) based indicators to assess overall environmental outcomes at farm‐level as a basis for future farm support payments. The proposed indicators were based on defined policy goals and related performance statements attributable to farming. 556 indicators from sustainability assessment tools were reduced to 20 indicators through expert consultation. A final list of 14 indicators resulted from an assessment of indicator quality relating to relevance, legal soundness, data availability, transaction costs and communicability. Most of the indicators require administrative data (IACS) avoiding repeat data collection, but others need detailed calculations (budgets), a certification/regulatory base for validation. Direct sampling was excluded on transaction cost grounds. Four performance thresholds are proposed, with entry values for each. Payment rates for each indicator and threshold, as well as weightings and bonuses for multiple indicators, will be based on regional policy priorities, conditions and dominant production types. The concept was reviewed with farmers and administrators, but some further development and pilot testing will be required prior to implementation.