Rural Development Policy and the Provision of Public Goods: Challenges for Evaluation
Bill SleeKen Thomson
122nd EAAE Seminar
"Evidence-based Agricultural and
Rural Policy Making“,Ancona,
17-18 Feb. 2011
The structure of our presentation The overarching challenges
The policy context
Public goods - what they are
Ecosystem services as an organising concept
Payments for ecosystem services
Some specific challenges posed for evaluation and policy
Some interim conclusions
The core challenges: To support the provision of public goods at a socially desirable
level
To facilitate entrepreneurial activity in rural Europe, thereby addressing the Lisbon Agenda
To avoid ‘crowding out’, whereby public expenditure inhibits private sector economic activity
To better evaluate the contribution of public-good-related policy to sustainable rural development and wellbeing
Rural Development Programmes: three types of measures for ‘public goods’ Area-based payments incentivising land management practices benefiting soils,
water quality, habitats/species, carbon management and/or landscape maintenance ( e.g. measures for agri-environment, natural handicaps, Natura 2000)
Support for capital investments to assist: introduction of environmentally sustainable technologies and infrastructure (e.g.
measures for farm modernisation, infrastructure development, and adding value to agricultural products)
creation of new business opportunities, services and other activities in rural areas (e.g. measures for farm diversification, basic rural services, conservation and upgrading of rural heritage and investment in tourism);
Investments in advice and training for as well as capacity building for land managers and rural communities (e.g. measures for advice and training, Leader)
European Network for Rural Development (2010)
“Public Benefits” vs. “Public Goods” “public benefits”: the values (economic or other?) of goods or services
(marketed or non-marketed) potentially available to all citizens
“goods”: products or services which are valued , i.e. not “non-bads” avoided, e.g. pollution
“private goods”: excludable and rivalrous, i.e. marketable
“public goods”: non-excludable and non-rival (hence non-marketable)
“mixed goods”: “common goods”: non-excludable but rivalrous, e.g. berry-picking, sea fishing
“club goods”: excludable but non-rivalrous, e.g. entry-fee parks
the “public”(s): local residents, visitors, national/EU citizens, world population?
Public Goods from European Land Use biodiversity (wildlife) e.g. in fringe habitats in areas of non-provisioning
land and field boundaries or within low-intensity land use systems
visual landscapes of fields, woodlands, rural buildings
cultural values associated with farming etc. in particular places
food security?
rural employment??
Only “goods” if additional value beyond legal minimum (or GAEC)?
Higher values (per hectare) in more populated regions and/or more accessible areas?
The Ecosystem Approach and Services Ecosystem Approach (EA)
‘a strategy for the integrated management of land, water and living resources that promotes conservation and sustainable use in an equitable way’ (Convention on Biological Diversity )
Millennium and National Ecosystem Assessments (MA, NEAs)
Ecosystem Service Categories Provisioning: e.g. food, water, wood, biofuel
Regulating: floods, climate, disease, erosion, C sequestration
Cultural: aesthetic, spiritual, educational, recreational
Supporting: soil/habitat formation, nutrient/water cycling
Payments for Ecosystem Services (ESSs) Beneficiaries (e.g. consumers, citizens, residents, visitors)
purchase ESSs from suppliers (e.g. farmers, landowners), often via buyers/intermediaries (e.g. governments, water companies, clubs, agencies)
ESSs a mixture of private goods (e.g. food, fibre), mixed goods and public goods
Some supplied as unrewarded by-/co-products, i.e. positive externalities
Suppliers balance (trade-off) production incentives between and within ESS categories (e.g. food vs. C seq. vs. biodiversity)
The CAP, RDPs and PESs Non-private ESSs may be purchased by govts. (as discriminating
monopsonists?) on behalf of local, regional/national and/or global consumers
ESSs sometimes multiple, e.g. non-intensive farming, landscape and wildlife: e.g. RDP agri-environmental measures
CAP payment rates based on “additional costs and income foregone” (plus up to 20% transaction costs), i.e. not on social values of environmental benefits
Rates (should/must) vary according to farm product returns
Recent proposals to widen this basis, e.g. to include fixed costs, and/or diversification options foregone
Green Box (non-trade-distorting) constraints?
Comments on Commission proposals No (or minimal) changes to:
Structure: two Pillars, three/four-Axes
GAEC: baselines and application
but
Pillar 1 made optionally “multi-purpose” (and “tiered”?), for (i.a.): “Basic” income support
Widespread agri-environmental payments (why not Pillar 2?)
Area payments for “constrained” regions (why not Pillar 2?)
Pillar 2 to include risk management toolkit (why not Pillar 1?) Little or no specific mention of Health Check “new challenges” of water
management and climate change
EU Rural Development Policy post-2013 size of overall EU budget?
CAP’s share of overall EU budget?
Pillar 2’s share of CAP budget (in EU, and in MSs)?
Pillar 2 “Axes” or equivalents: reduced (e.g. “losing” LFAs and/or Axis 3) or expanded (e.g. to include risk mngt. tools)
relationship of current Axes 1 and 2 to a reformed Pillar 1, i.e. how the “green” and “specific natural constraints” components of direct payments fit with “additional” Pillar 2 schemes
The Evaluation Challenge for Environmental Public Goods (EPGs)
Unit values of EPGs vary by: “unit” – hectare, litre, animal/plant, “view”?
base (regulated) level(s)
location, e.g. peri-urban vs. remote
consumers
general or self-selected, e.g. incoming residents
users and “non-users”
Amounts of EPGs vary by: Region, e.g. peri-urban (limited) vs. remote (widespread)
Challenge 1: Accurate estimation of values (i)
Disaggregating the land use component from landscape structure
Estimating the incremental value of publicly funded schemes
Challenge 1 : Accurate estimation of values (ii)
Use and non-use componentsValuing the
visitor/user experience
Valuing the non-use component of value
Methods have improved but no real belief in the scientific community that aggregate values can be estimated accurately
Challenge 1: Accurate estimation of values (iii)
The issue is not just what it is but where it is
Peri-urban forestry very heavily used, even where not especially attractive
… and values depend on availability/quality of substitute sites
Challenge 1 : Accurate estimation of values (iv)
‘Culture’ is not easy to value in terms of public good values
…..But certainly has value which is embodied in land management practices and products
Challenge 2: Delivering landscape-scale effects
Isolated habitats cannot deliver full biodiversity
Habitat connectivity is needed to maximise biodiversity benefits
Voluntary schemes with individual landowners may not deliver optimal levels of biodiversity
Prioritise joint applications
Challenge 3: Secondary marketisation (i)
Agritourism can internalise externalities
Car parking can generate fees for access to high-quality environments
But: can govt. payments for public goods crowd out private entrepreneurship?
Challenge 3: Secondary marketisation (ii)
Considerable scope for creation of new ancillary markets:
In leisure enterprises: Recreation
Tourism
Social care?
In local and regional food: ‘eat the view’
Challenge 3: Secondary marketisation (iii)
Property rights differ: the case of Girolles (the golden chanterelle)
in Nordic countries: a free good
in Italian community forests: a club good
in France: a private good
Challenge 4: Getting Governance Right
How farmers are engaged to undertake environmental practices may be critical to their effective delivery
This may also apply to the demand side, in eliciting local community values
CMEF 2007-2013 and beyond (i) “continuity and adaptation” of 2000-2006 guidance; “few additional data collection
requirements”; “clear and robust”; common and quantified indicators
“Ongoing” as well as ex ante, mid-term and ex post evaluation
A hierarchy of objectives and (“SMART”) indicators, viz.: Inputs, i.e. reported expenditures (not transaction costs, e.g. admin time) per
Measure, i.e. Axis 1 = 16, Axis 2 = 13, Axis 3 = 8, Axis 4 = 5; total <= 42 Outputs (1 to 5 per RDP measure), e.g. no. of training sessions or farms Results (Axis 1 = 5, Axis 2 = 1 (managed area), Axis 3 = 6), e.g. investment Impact (7, i.e. growth, jobs, productivity, biodiversity, high nature value areas,
water, climate change) Baseline (measurements)
Objective: horizontal = 3, Axis 1 = 13, Axis 2 = 12, Axis 3 = 9, Leader = 1 Context-related: horizontal = 5, Axis 1 = 10, Axis 2 = 13, Axis 3 = 7
Additional: specific to national priorities or areas/sites
CMEF 2007-2013 and beyond: (ii) Simplify a complex and high-cost CMEF system
Add M&E for: RDP delivery, e.g. Axis 2 landscape , Axis 3 community
Evaluation feedback, e.g. consequent RDP and RDP admin revisions
Better understand the economic impact of the green infrastructure role of attractive rural areas
Review the ‘rules of the game’ (opportunity foregone as a reward principle) which currently militate against positive rural development
Recognise that post 2013 both Pillar 1 and Pillar 2 contain public good elements that will require evaluation - separately?
Conclusions: General Environmental public goods (EPGs) vary widely by type
(ecological or economic), location, value, etc.
Some EPGs are by/co-products of commercial land use, e.g. food or wood production, or excludable sport e.g. hunting – but unlikely that quantity and quality will be optimal
Reformed CAP (and future agricultural markets, and technology) may alter base levels of EPG “production”, and relative private/public values
Conclusions: Environmental Public Goods (EPGs), Rural Development Policy and Evaluation
Future RD policy should attempt/continue to:
Identify and target EPGs (possibly “packaged”, e.g. by land use) A role for the “strategy” phase?
At what spatial/regional level(s)?
Consider trade-offs of EPGs, e.g. climate-related and other EPGs, e.g. landscape quality vs. C sequestration
Recognise and measure wider-economy values of EPGs (to incoming residents, businesses, visitors, tourists)
Where possible, encourage “commoditisation” of EPGs via (non-central govt.) Payments for Ecosystem Services schemes
Thank you for your attention!
Useful readings and further links: ENRD (2010): “Conceptual Framework On Public Goods”.
http://enrd.ec.europa.eu
European Evaluation Network for Rural Development (2010): “Working paper on Approaches for assessing the impacts of the Rural Development Programmes in the context of multiple intervening factors”. http://enrd.ec.europa.eu/evaluation
European Evaluation Network for Rural Development (2010): Working Paper on “Capturing impacts of Leader and of measures to improve Quality of Life in rural areas“. http://enrd.ec.europa.eu/evaluation