Farmers’ spatial targeting, landscape elements, and the cost-effectiveness of result-based versus measure-based payments: Insights from an ecological-economic model

Agri-environment schemes (AES) are typically measure-based, meaning that farmers are rewarded based on the implementation of specified conservation measures. However, result-based schemes have emerged as a promising alternative, whereby farmers are rewarded based on the achievement of specified conservation goals such as the occurrence of a particular species on their land. An advantage of result-based AES, which has received insufficient attention in the literature, is that they incentivise the spatial targeting of farmers to areas with most suitable habitat conditions. In our analysis, we focus on the presence of pre-existing landscape elements such as hedges, trees and water bodies, as an important habitat condition that positively impacts many species and therefore increases the likelihood of their occurrence. Farmers are likely to consider this aspect in their decision-making process and conduct spatial targeting when participating in result-based schemes. In contrast, the presence of landscape elements and the resulting likelihood of species occurrence does not play a role in farmers’ participation in measure-based schemes. This paper develops a generic ecological-economic model to gain an understanding of the extent to which different ecological and economic parameters affect the comparative cost-effectiveness of result-based and measure-based AES against this newly analysed aspect of landscape elements as an example of spatial targeting. In terms of policy recommendations, the paper provides general insights into the extent to which the analysed parameters affect the comparative cost-effectiveness of the two schemes.