Improving the ecological and economic performance of agri-environment schemes: Payment by modelled results versus payment for actions

Researchers and policy designers have become increasingly interested in re-designing agrienvironmental policy to improve both economic efficiency and ecological effectiveness. One idea within this debate has been payments for results (outcomes) rather than payment for actions. Payment for result policies have been argued to have some important advantages, but two key disadvantages are the higher risks faced by land owners, leading to low participation rates; and the potentially high costs of monitoring outcomes. Bartkowski et al (2021) propose an alternative policy design of payment for modelled results, which claims to avoid these two problems. Our paper provides the first empirical test of the economic and ecological consequences of applying such a payment for modelled results policy to farmland biodiversity in England. We compare payment for modelled results findings with approximately equivalent payment for actions schemes designed to deliver increases in the same biodiversity indicators. Key insights from the work are that payment for modelled results delivers superior ecological outcomes for the same budgetary cost as payment for actions, whilst economic surpluses to farmers are also higher.