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  • Harriet Bell

Introducing "Payment by Results"

The Dartmoor ELMs Tests & Trial has four key research objectives:

  1. Develop a blueprint for Land Management Plans with a specific focus on the commons

  2. Develop and trial a 'payment by results' approach that could operate on commons as well as 'home' farms

  3. Explore the role that National Park Authorities could play in shaping, facilitating and delivering ELMs

  4. Explore how private finance and other forms of environmental net gain could be incorporated into ELMs at a local level

This paper is to introduce payments by results as we start to consider how to incorporate it into the Dartmoor Test and Trial.


Results Based Agri-environmental Payment Schemes (RBAPS)

or “Payment by results”


Introduction to “Payment by Results”


The phrase payments by results (PBR) is fairly self-explanatory, essentially it describes a system whereby farmers are financially rewarded not on a base or area basis and not for delivering prescribed management options but for achieving or making progress towards defined environmental results in the way they manage their land. Payments by results approaches don’t require prescriptions how those results are to be achieved, although they offer guidance. They empower farmers and land managers to determine what actions they take to deliver the desired outcomes and they’re then rewarded for the work undertaken.


Results based payments are considered to work particularly well for extensive farming, recognizing the environmental benefits of the system.

To date improving biodiversity, particularly targeting rare or threatened species or habitats has generally been the focus of payment by results trials. They can be used to spatially target enhancement or specific features, alternatively they may be used to economically incentivize the continuation of current management practice rather than either the abandonment of active farming or conversion to another form of land use, such as forestry.


Many of the existing payments by results projects have focused on species and habitats that are also found on Dartmoor, such as wading birds, ground nesting birds, the Marsh Fritillary butterfly, semi-natural grasslands and hay meadows.


Summary of the Pros and Cons


Pro:

  • Considered to be an approach which recognises farmer’s land management skills and builds on their experience to develop solutions and best practice management approaches, rather than have management prescribed at a national level.

  • The hope is also that payment results based around achievement will provide motivation to do more and deliver better outcomes.

  • Often relies on farmer self-assessment

  • Ongoing evaluation of whether or not the scheme itself is working well.

  • Clear performance monitoring criteria and scheme objectives.

  • The use of hybrid payment by results schemes to provide farmers with greater income stability.

Con:

  • On moorland securing change may take many years so moving towards an outcome may have to be sufficient to enable rewards to be paid. This might require more sophisticated targets and some that are based on activity rather than outcome. This then has the potential to be a more prescriptive approach.

  • High risk for farmers if mitigation is not made for the potential impact of factors outside of farmer control e.g. wild fire, visitor impact, drought etc.

  • The challenge of identifying appropriate and robust targets.

  • Potential loss of payment for poor performance under a pure payments by results scheme.

  • How does the scheme ensure distribution of payment (or penalty) between commoners is fair?


How do you determine which results to pay for?


Arguably one could use this approach to address a range of desired land management outputs. The RBAPS General Guidance Handbook (RBAPS GH01) proposes PBR is best used in addition to more basic land management prescriptions, covered by generic management schemes, to provide further support for areas which have a qualifying biodiversity interest, either species or habitat. Essentially PBR should be seen as additional funding to incentivize delivery of higher level, more targeted objectives.

The RBPAS GH01 key advice for selecting a biodiversity target is that:

“Targeting and focusing on a single species (or group of species), regardless of how rare they may be, carries an inherent risk of having negative consequences for the wider biodiversity and trade-offs with other ecosystem services. Therefore, biodiversity targets need to be set in the context of overall biodiversity and ecosystem services considerations in the target area to minimise or limit any potential adverse impacts on them.

When species are the biodiversity target, the ecological integrity of the supporting habitat needs to be considered along with the other requirements for the target species (e.g. vegetation structure). A habitat-based approach is the most effective to deliver a range of benefits and minimise trade-off between ecosystem services…

Spatial targeting should not be limited by site map boundaries as there can be sites of equal quality outside the designated area for the species or habitat. In this example any land where the species occurs on and is delivering the result should be eligible in order to provide suitable habitat for species across an adequate area.”

In selecting a target for a payments by results approach the recommendations from the available reports are:

  • That good data is available to inform what the desired state or condition of the target should be set at for the project. This might be a historic reference point, ongoing monitoring data or its current status.

  • That a good Result Indicator is available, that might be something direct, like the number of breeding pairs of birds or it might be a proxy or indirect indicator, such as the right landscape feature being visibly present which supports the target species.

  • The indicator must be something that is responsive to changes in management, it can’t be something that land managers and farmers have little to no ability to influence. Some consideration should also be given to the timescale of response.

  • That there is sufficient knowledge of the result indicator to identify clear monitoring protocols which inform thresholds for scoring it e.g. good, average, bad, in order to measure the result.

  • A results indicator should be easy for all parties involved to understand. A learning from the Yorkshire PBR trial is to “limit the use of subjective assessments, such as percentage of cover, and to recognise the greater variability in scoring that may result if they are adopted (e.g. by using fewer payment tiers, accepting that this may reduce the incentive effect)”.

  • A good indicator should be necessary, the scheme is intended to be simple so indicators should be restricted to what is required. Ideally it is also scientifically meaningful.

  • A results indicator can be a negative. It doesn’t have to be restricted to the environmental outcomes you want, it can be a measure of erosion or invasive species, things which threaten the habitat or species the scheme is trying to support.

  • All the relevant results indicators can then be pulled into one scorecard in order to assess the landscape against the desired result.

Question for Dartmoor ELMs Tests and Trials:


Q1 - Is the RBAPS recommendation of only using PBR to focus on rare and threatened species and habitats an approach that should be replicated in the Dartmoor ELMs Tests and Trials or should the opportunity be used to experiment with a different approach? For example, the review paper the Devon Biodiversity Record Center (DBRC) produced on Nature for the Dartmoor National Park Management Plan suggests that rather than focus on priority species and their, sometimes niche, requirements there could be merit in working to keep common species common as potentially a better indicator of the general health of Dartmoor’s biodiversity.


Q2 - Similarly not all habitat which may be valuable has necessarily been classified, so there may be benefit in focusing in on Dartmoor’s Key Wildlife Areas, which cover a broader biodiversity baseline, rather than designated sites or rare habitats. This approach might also enable a PBR trial which can work across both commons and home farms, where niche habitats and species may be less likely to inhabit both environments.

Q3 - There are multiple demands on the Dartmoor landscape, is it possible to have a PBR approach that delivers on more than one desired outcome at a time? E.g. several different scoring systems operating together to assess how a landscape performs across a variety of indicators.


What is the process for delivering payment by results?



The baseline requirements for a PBR approach, according to GH01 are that you have available the expertise to:

  • Identify potential biodiversity (or other) targets which could benefit from results-based payment schemes;

  • Develop results indicators and thresholds;

  • Provide best practice management guidelines for the selected biodiversity (or other) targets;

  • Design suitable monitoring and evaluation for the measures; and

  • Feed into the review, adaptation and evolution of the scheme.

GH01 emphasizes that planning the monitoring and evaluation should be done at the start of the scheme in order that monitoring can be implemented as soon as possible in the process.


Once the desired species or habitat has been identified and an appropriate scoring system determined most of the schemes to date have heavily utilized the skills of farm advisors to work through the process with farmers and land managers. The RBAPS GH01 recommends these advisors come from a pool of trusted local specialists who can combine both ecological and agricultural knowledge and are willing to participate in an ongoing learning process with the land management community.

The advisors themselves should undergo both initial and ongoing training, the purpose of which GH01 outlines is to:

  • Introduce advisors to the measure’s aims and objectives.

  • Train advisors in the use of result indicators and instill confidence in assessing the results indicators across a range of quality for the biodiversity target(s).

  • Provide comprehensive training on the management requirements for the biodiversity target(s).

The advisors or project support team should prepare for the project by producing supporting materials, written and pictorial, which explain the objectives, the scoring mechanisms, how scoring links to payment and management actions which could be taken to deliver the best outcomes. Ideally participants should be taken on site visits which demonstrate what the optimum outcome should be like.


At the start of the scheme advisors meet with farmers and land managers one on one to review their land and identify appropriate actions which form the basis of a field scale management plan which includes advice for each land parcel entered into the scheme and any complementary actions. Plans should be simple, concise, farm specific and easy to comprehend, GH01 recommend they include:

  • Farm map showing field boundaries and labeling into which measure they are entered.

  • Details of fields entered to each sub-measure with brief management advice for each field.

  • Score log for the overall score and the level of achievement for each result indicator to be added each year so changes are easily seen.

  • Additional farm map(s) identifying the location of complementary actions, if required.

Where PBR schemes have run on common land, such as the Hen Harrier Project in Galway, one plan is developed for the whole common. Not all common rights holders need to participate but they do all need to be informed of the plan and it is the responsibility of those commoners actively participating to ensure the plan is acceptable to all rights holders. The plan must not negatively impact on non-participating rights holders use of the common. The relationship management required to achieve this is not considered the responsibility of the project, in this example from Galway, but the responsibility of those commoners participating.


As well as focusing on providing a supportive environment for the Hen Harrier, it’s relevant to note that this particular PBR trial also delivered a grazed fuel break system for managing the risk of fires on the common. Supporting the creation of rides between less vulnerable areas like lakes, roads and watercourses.


For some schemes the advisor and farmer/land manager meet annually to review progress, in very high priority areas they may meet more frequently, alternatively as schemes become more established they may meet every other year or every few years.

Ongoing learning should also be provided to all participants throughout the duration of the scheme, this may be classroom based, site based or peer to peer.


Assessment of the scheme and scoring in projects to date has usually been done annually by the farm advisor returning to assess the site against the scorecard.


If the site has moved up a threshold based on the scorecard criteria payment increases, if it has declined payment would decrease, potentially participation could become non-viable if the score becomes too low. In the Burren participants start receiving a payment for achieving a score of 6 out of 10, with the average score being between7/8. The poorest scoring land, 5 and below, receive funds for a limited number of years, if the land doesn’t reach a good level on the scorecard at the end of that time frame participation in the scheme is terminated.


One of the perceived advantages of the PBR approach is that with appropriate training and support farmers should be able to self-assess their sites, in fact GH01 encourages this approach on the basis that “the enhanced understanding of farmers will ultimately support the delivery of the biodiversity target(s)”.


There are three key learnings from the Yorkshire RBAPS trial which can help improve the assessment process:


1. Assessments should be standardised so that they can be easily repeated. The Yorkshire trial found that when it came to site surveys it was best to have a mapped transect which could be replicated at different times of year and by different people. They found that specifying times of year also added to the repeatability of the approach e.g. “before the hay was cut and once the majority of plant species are in flower - this is usually between late June and late July”. Standardised monitoring can also be enhanced by the use of technology, such as GPS positioned fixed point photography, satellite imagery and phone apps for recording data.


2. Where a farmer assessment approach was being encouraged with an, as needed, external independent verification it is particularly important to have defined assessment windows, ensuring the external verification takes place as close to the self-assessment survey date as possible.


3. The Yorkshire trial found that once engaged farmers were keen to provide further information from their observations over the seasons. The wading bird trial found farmers wanted to contribute insights “weather conditions, temperature, whether waders failed or were successful with rearing broods etc.” So a text box was included in the self-assessment form, making the form more useful to both the individual farmers, who can record their learning about how to manage different weather conditions, for example, but also to the project overall as the information provided can be used in project monitoring and updating advice given to participants.


As well as ongoing monitoring of the participants the RBPAS guidance is that it is inherently important to have a range of experts and stakeholders involved in ongoing monitoring of the efficacy of the scheme itself. This group should include, “farming groups, relevant NGO’s, experts on measure specific habitats and species, social scientists (evaluating attitudinal responses), agricultural economists (socio-economic evaluation, assessment of cost effectiveness) statisticians and farm advisors (to evaluate practical use of the scoring assessments). Implementing monitoring will require personnel with expertise in the selected monitoring taxa, monitoring techniques and other monitoring parameters.”

The RBAPS Guidance GH01 states that key aspects of the monitoring include:

  • Validation of the robustness of the selected results indicators as indicators of quality for the biodiversity targets.

  • Evaluation of what degree the scheme aims and objectives are being met, primarily by establishing the level of change, if any, in the biodiversity targets under the scheme.

  • Assessment of changes in attitudes and socio-economic impacts of measure.

  • Financial monitoring and budgetary control.

Ongoing monitoring of the scheme enables perpetual improvement over time. As a new process some of the PBR trials were originally only supported for a couple of years, in the Burren participation is set at 5 years but the scheme has run for longer. In designing the scheme consideration should be given to the length of time it’s likely to take to deliver on the objectives but arguably, as long as funding is available, to make a significant and lasting difference in the landscape longer running schemes would be preferable.


Question for Dartmoor ELMs Tests and Trials:


Q1 - How do people feel about the Hen Harrier Programme’s approach to PBR on common land? E.g. that not all rights holders have to participate, that it’s up to those participating to manage relations with those who aren’t and that people can opt to receive payments directly or into shared bank account.


Q2 - How do people feel about the Burren’s scoring payment thresholds?


Q3 - What are people’s views on self-assessment?


Q4 - What length of scheme would people find most appropriate?

How is the payment determined?


The basis of a results based payment system is the achievement of a defined environmental result. In a pure results based system payment reflects the level of achievement. Payments are set to correlate with the scorecard assessment, the higher the scorecard assessment the higher the payment and vice versa. Payments should support both maintenance of biodiversity and the agricultural practices required to deliver it and thus should create a structure which rewards both past and present management.


A pure payments by results approach does not include any additional funding for capital costs, complementary actions or specific management actions. However, it is also possible to create hybrid payment scheme which combines both PBR and some prescribed management options in which case you get both a payment for the level of achievement but also a fixed payment for agreed management options, such as hedge creation, for example. The Burren Programme divides its annual farmer payments roughly equally between payments for actions and payments for outputs, the work is co-funded between the farmers and the project.


Another hybrid option is PBR with additional capital investments or investment in complementary actions. These are usually one off payments, expected to deliver a significant benefit and the GH01 guidance suggests they’re best used when the threat to habitat or species is particularly significant or the baseline biodiversity so low that intervention is required to bring the landscape up to the minimum level required to attract any payment.

When considering a hybrid scheme the GH01 guidance recommends a cost benefit analysis should be undertaken on the additional option considered and payment restricted to either costs incurred, where there is no commercial use to the farm such as peat re-wetting, or co-funding where the farm business may also benefit, for example if a pasture pump is installed to encourage grazing in a specific site.


Hybrid schemes, where management options are included along with PBR payments, have also staggered payments for the creation of new habitat, for example paying 60% of the cost in the year of establishing a new woodland and 40% three years later when it can be evidenced that the trees were well established.


However, it is important to ensure that those who have delivered the best environmental value from the outset are most rewarded and that the majority of available funds aren’t consumed by the poorest performers.


Payments by results, where the results cannot be known in advance, raises concern about the challenge of budget planning due to the potential variability of outcomes. Some schemes have capped total payments per ha at a maximum in order to manage their budgets.


The Hen Harrier Programme had a per ha cap and on farms with commons rights the priority was to see results on the common. The programme was set up so that 75% of the maximum allowance was targeted at action on the common unless the common was already performing highly e.g. scoring 8/10. Payments for the home farm went directly to the individual whilst, for payments for common land participants could select whether they were paid individually or collectively via a group bank account.


However evidence from the Yorkshire trial would suggest per ha caps may not be necessary:


“[F]or most measures, such as habitat condition, it should be possible to accurately anticipate expenditure based on baseline condition assessments and assumed average rates of habitat quality improvement. Annual measures, such as the arable measures tested here, are potentially more prone to fluctuation but their performance has been broadly consistent across the pilot (even in a challenging growing season affected by drought) which suggests that average performance levels would emerge which could be used for budget planning purposes.”

The value of the payments themselves may be determined by a range of scenarios:

  • income foregone;

  • additional costs (also known as costs incurred);

  • opportunity costs, where the most significant threat is a change in management, from extensive to intensive farming or from farming to forestry, for example;

  • full cost of management where the most significant threat is land abandonment; and

  • transaction costs i.e. “If the scoring assessments are the responsibility of the farmer and/or their farm advisor then this will reduce public transactions costs but transfer these costs to the participant and increase their private transaction costs… In the Burren Programme, assessment is undertaken annually and the farmer pays for the services of their advisor - costings for this are included in the measure calculations.”

  • whether the scheme is “banded” as is in the Burren, where payments per ha vary depending on farm size (i.e smaller farms receive a higher per ha payment rate to support smaller holdings).

Ultimately available budget may of course be the determining factor but if the budget is set to low then obviously there is little motivation for farmers and land managers to participate in the scheme.


WTO rules have not impinged on trials which have aimed to meet the green box conditions:

  • not price supporting, no or minimal effects on production;

  • government funded;

  • clearly defined environmental programme;

  • payment based on extra costs or loss of income.


Question for Dartmoor ELMs Tests and Trials:


Q1 - Seemingly there has yet to be a trial which paid farmers based on natural capital values. Would it be a useful contribution to create and evaluate at least one trial where payments would be determined using the natural capital accounting approach?


Q2 - Does the use of income foregone send the wrong message about the social and environmental value of a PBR approach (in contrast to natural capital, for example, which is inherently based on this work having social and environmental value)?


Q3 - What do people think of the way the Hen Harrier Programme prioritized spending on the common above spending on the home farm?


Q4 - Would farmers rather have budget to select and pay an advisor of their own choosing or prefer these costs and responsibility for providing an advisor remained with the project delivery body? [Please note that the Dartmoor ELMs Test and Trial Advisory Team have now reached a position on advice which is also available on this website in the blog archive.]


Q5 - How do people feel about the Burren approach of banding payments so that smaller holdings have a higher per ha payment available to them than larger holdings?

“Is this the right approach to take?” GH01 decision diagram



PBR Options which may be worth exploring on Dartmoor


Below is a list of options, by no means exhaustive, which could be appropriate for a Dartmoor payments by results trial.


Building on existing work:

  • Look at the Marsh Fritillary Butterfly as a PBR outcome both exploring whether the existing model, developed in Ireland, can easily translate to a Dartmoor setting and also as a way of progressing the existing Marsh Fritillary Dartmoor farmer cluster group’s work.

  • Build on the Dartmoor Moorland Bird Project's work and see if this can be adapted into a PBR approach, which would be resource efficient as much of the engagement material has already been developed.

  • Explore whether a PBR approach would be an effective second phase for the Dartmoor Headwater Natural Flood Management Project, particularly seeing if it was possible to identify any potential difference in cost of delivery between two different approaches.

  • Link in to the Dartmoor Curlew Recovery Project as an example of how PBR might be used to complement capital payment in delivering species reintroduction. Farmers not directly participating in the project but with responsibility for land around the project could be engaged in a PBR trial.

New approaches:

  • The DBRC has highlighted the need to “keep common species common” in their report for the Dartmoor National Park Management Plan. A trial around common species may be a good opportunity for exploring how PBR can enhance biodiversity generally.

  • A more specific suggestion looking at common species would be the dung beetle as a species which should be common across a range of Dartmoor habitats, making it a good indicator for both farms and commons. It’s also a species which benefits from a variety of grazing animals being present and is directly impacted by herd health management which works well for Dartmoor farm systems and bridges the farm/environment PBR divide. Whilst dung beetles should be common its presence does link to rare species, such as the Greater Horseshoe Bat for which it is a key food source. Both Natural England and Oxford University have recently undertaken research projects on dung beetles so there should be good data available to inform a trial. Dung beetles are also relatively easy to find and identify without extensive training.

  • Explore the use of PBR as a way of financially supporting natural regeneration.

  • Create a PBR model which encourages the presence of habitat mosaics across different landscapes.

  • Explore how ELMs would work if the whole scheme was based on a payments by results approach across all six of Defra’s public goods.

  • Examine the financial merits of a PBR approach which is based on using natural capital value to reward farmers and land managers.

  • Look at reinstatement of vegetation on exposed peat and re-wetting peat.

  • Focus on the role a PBR approach could have in taking archaeological sites off the “at risk” register.

  • Explore our a PBR approach could better support farmers in managing the increasing visitor pressure on Dartmoor.

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