Interfaces with EU’s Rural Development Program

In 1992 the EU passed its Agri-Environment Regulation 2078/92. It made it possible to financially compensate farmers for the provision of environmental services. Since then, previously existing Dutch voluntary agri-environmental measures have been incorporated into EU regulations and frameworks. This went along with a significant expansion of agri-environmental policy budgets and eligible rural areas, especially when the EU prohibited allocating the national RDP budget to the purchase of agricultural land with the intention to transfer its management to professional na- ture organizations. On the initiative of the then National Counsel for Rural Areas, a national lobby succeeded in convincing the EU of its detrimental effect on more farm-based rural development. It decided that Dutch RDP budgets could be solely allocated to agri-environmental management by farmers or other private land own- ers. For the period 2007-2013 this covered a budget of 145 million euro, about one third of the overall national RDP budget, a relatively high percentage compared to most other EU member states (Copus, 2009). It confirms the financial significance of European co-funding for national agri-environmental policy and gives an idea of the relevance of the following controversies that emerged at the interfaces between RDP regulations and Dutch agri-environmental policy frameworks.

4.4.1. Individual contract partners

RDP accountability regulations assume contracts with individual beneficiaries. For different reasons, this is increasingly perceived as a barrier in the Netherlands. First, there is a growing awareness of the need for territory-based coordination to im- prove the effectiveness of agri-environmental measures. Secondly, the transaction costs of frameworks with individual beneficiaries are relatively high, another impor- tant reason to experiment with more collective delivery systems. yet, RDP regula- tions do not allow for contract relationships with agri-environmental cooperatives. As a ‘backstage solution’ farmers may authorize their environmental cooperative to withdraw a certain percentage of their financial compensation for administrative and other services as territorial targeting and coordination. It only partly meets the national demand for extra experimental space for self-governance approaches.

4.4.2 Rigidity of contract periods

Another issue concerns the length of contract periods of agri-environmental mea- sures. For multiple reasons, the Netherlands is experimenting with longer contract periods (Plurel, 2008). First, it is expected that longer contract periods will contrib- ute positively to farmers’ trust in the continuity of public financial support and, as such, enlarge their willingness to participate in agri-environmental schemes. Sec- ondly, it is foreseen that providing longer contract periods will improve the effective- ness of agri-environmental measures, since it acknowledges that the restoration of nature values requires long time periods. Thirdly, longer contract periods may create extra opportunities for multifunctional rural business models that succeed in valoriz- ing their nature and landscape management internally, through their involvement in other rural markets (Broekhuizen et al, 2008; see also Chapters 3 and 5). Within wider sets of new farm-based rural development activities, agri-environmental services might become important components in the creation of attractive rural meeting places. The idea to incorporate agri-environmental services in a wider mul- tifunctional rural business model has been actively explored in the national ‘Farming for nature’ project. yet, initial plans to opt for contract periods of thirty years were adapted, due to incompatibility with EU state-support proof requirements (Lubbers, 2009). This shows how the length of contract-periods may become part of institu- tional voids in multi-level governance settings.

4.4.3 Alternative remuneration systems

RDP regulation 1698/2005 states that ‘where appropriate beneficiaries may be se- lected on the basis of calls for tender, applying criteria of economic and environmen- tal efficiency’ and provides as such opportunities for more market-conforming price settings and more efficient nature and landscape management within the limits of EU state-proof requirements. In 2005 the National Ministry of Agriculture, Nature and Fishery started a pilot project with a tender system. Although it has never been officially evaluated, it has been informally communicated that overall pilot results have been positive for the creation of new nature and landscape elements such as hedgerows, ponds, footpaths, ecological management of ditch-sides, water-reten- tion, etc. Not surprisingly, it turns out to be more complicated to work with tender systems in the case of already existing landscape elements due to ‘single provider’ problems. The Ministry has decided to stop its tender experiment, although some stakeholders feel that it deserves further exploration. The pilot is illustrative of na- tional institutional interest in alternative remuneration systems that overcome the shortcomings of the ‘income foregone principle’ as the basis for agri-environmental payments. This principle is thought to be too general and insufficiently stimulating. Again, this search for alternative remuneration systems involves ‘backstage’ solu- tions. The on-going expansion of regional and local experiments with alternative remuneration issues in the Netherlands brought rather lengthy European state-sup- port approval procedures and high administrative costs for involved policy bodies. It made their initiators experience these procedures frequently as discouraging and frustrating (Zwaan and Goverde, 2008). This policy-practice inconvenience induced the development of a ‘National Catalogue for Green and Blue Services’ with the

objective to facilitate ‘the provision of supra-legal public achievements aimed at the realization of public demands concerning nature, landscape, water management and recreational use’ (LNV and IPO, 2007). Since its official EU approval in 2007, this Catalogue has enlarged national opportunities to implement ‘cost recovering com- pensations’ in accordance with EU state-aid proof conditions. The Catalogue pro- vides a toolbox for tailor made solutions, according to local specificities and wishes. One of its incompatibilities with prevailing RDP regulations concerns the inclusion of extra opportunities to bundle agri-environmental measures in clusters to improve their internal coherence. Such bundling is thought to be of especial importance for meadow bird, field margin and hedgerow management. So far the Catalogue instru- ments continue to be excluded from RDP co-financing. Analytically, it stresses how institutional voids in multi-level agri-environmental governance may center in the specific Dutch setting especially on the creation of experimental space for more ter- ritory based and performance-oriented self-governance initiatives.