Combining elements of result-based and value-chain contracts in the Őrség region

In the Contracts2.0 project, the Őrség National Park Directorate (ŐNPD) and the Environmental Social Science Research Group (ESSRG) are working on developing novel contractual solutions to incentivize sustainable small-scale agricultural practices in the Őrség-Vendvidék region, Western Hungary. Together with local farmers, food producers and other stakeholders, they established a contract innovation lab and started to investigate how result-based schemes and value-chain approaches could be integrated to initiate a sustainable transformation in the whole local agri-food value chain.

The most intensive part of the participatory design process started last autumn. A series of club events were organized between November 2020 and February 2021 to learn from best practice examples (incl. bottom-up innovative value chain, consumer-producer collaboration schemes, etc.) and identify the various directions the new contractual model could take. In parallel, experts were convened in separate workshops to discuss some of the basic elements of the innovative contract ideas (such as the conservation goals of a regional result-based scheme, or the opportunities and barriers of farmers’ collaboration). In March 2021, we organized a ‘dream contract’ workshop with contract innovation lab members, where both the result-based and the value-chain aspects were discussed in detail. The workshops clarified that the result-based scheme would focus on the structural and species diversity of grasslands, while the value-chain element would assist farmers benefit from the higher value-added of good quality products (mainly dairy products and products made of wild species collected from hedgerows or wood pastures, such as mushrooms or berries).

We are still in an early phase of the design process, but it is already clear that farmers have a strong preference towards a more collaborative and integrated agri-environmental support system. In addition to seeing the advantages of a result-based scheme, they also raised some critical questions, ranging from how to manage the risks of not achieving the results, to how clear and measurable indicators can be developed, or how transaction costs of the contract should and could be divided between the different actors.  Another dilemma we are facing is whether the result-based scheme should focus solely on highly valuable areas already in good ecological condition, or it should also include ecologically degraded areas where restoration activities are necessary to improve the ecological status of the grassland. We welcome any advice or existing best practices on how result-based schemes can be applied to ecologically degraded fields.

For more information, please also check the Contracts2.0 project website.

Text and Photos: Eszter Kelemen, Essrg

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