Helping farmers to adapt

For farmers, climate change is a double burden!

Existing regulatory and economic measures to help farmers move towards more sustainable forms of water management have not all enjoyed the same success. The research community is therefore working to discover more effective levers, expanding its activities in the field of behavioural economics and modelling in order to devise coherent, adaptive and effective systems to facilitate and accelerate the transition to come. "For farmers, climate change is a double burden", explains Sophie Thoyer, deputy director of INRAE’s EcoSocio Division. "As the frequency and intensity of droughts increase a little more each year, not only does water grow scarcer, plants also need more watering, most often during the summer months." It is essential to change to a new agricultural model that uses less water and has its basis in agroecology (see article 3), while developing an efficient and controlled secondary system of irrigation that will help to conserve this resource in terms of both quantity and quality (see article 4).

Transformation must be led and enabled by government. Access to water is considered to be a basic right in France ¹, requiring any change to be initiated at national level and governed by parliamentary law.  The French water regulations also sit within a wider legislative framework of European directives (see inset Working together to accelerate transition in article 3).

_{1. Article L 120-1 of the French Environmental Code: ‘Water is part of the common heritage of the nation’.}

A French legal framework that provides direction for farmers

National water policy in France is intended to conserve and guarantee the "good status of water". Since 1992, responsibility for water management has been devolved to local bodies, which use PTGEs, SDAGEs and SAGEs ² (see article 2) as the main mechanisms for decisions on water use, be it agricultural, industrial, personal, or tourism and leisure related. Environmental use is also a designated category.

National legislation in France is implemented through regulatory instruments such as the prefectorial decrees that impose restrictions on water use. For each catchment, an OUGC (a single organisation for shared management) works with the water network manager to determine the abstraction volumes to be allocated to each user. If the volume abstracted by a user exceeds 1,000 m³/pa, the latter must declare this and must install meters on hydraulic pumps in rivers and boreholes to be read by the water company. Charges can thus be directly linked to usage.

Although there is widespread compliance, French water regulations are extensive, complex and sometimes contradictory. "We sometimes get caught up in the complexities of the legal documents They go back 150 years and some diverge greatly from more recent legislation", says Pascal Chisne, who runs the water management division of the Compagnie d’Aménagement des Côteaux de Gascogne (CACG).

_{2. PTGE: local project for the quantitative management of water; SDAGE: strategic river basin plan for the provision and management of water; SAGE: local water provision and management plan.}

Financial incentives that can sometimes miss the mark

There are a number of so-called "financial incentives" that are in fact mandatory. These are intended to raise awareness of the precarity of water’s status as a resource, in the hope of persuading users to be more economical in their usage and to prevent pollutants from entering the system. Farmers, for example, must pay "abstraction" and "pollution" fees to the water companies, who then use them to fund projects to protect the aquatic environment. In practice, though, these taxes provide little incentive for farmers to reduce their water usage because the sums involved are relatively small. An alternative, according to Daniel Lepercq, the CACG’s project officer, would be the introduction of "water charges set by the managers of OUCGs" which, he believes, "could become a useful lever for change. Water pricing is currently not structured to achieve this goal, with most farmers still paying fixed fees. As a result, major users have nothing extra to pay. What is more, this method of calculation makes little or no contribution to infrastructure running costs". To address these two areas of concern, some water managers, including the CACG, have set up a tariff system that comprises both a fixed element, either based on surface area or in the form of a volume allowance, and a variable element based on actual usage. This method of charging, which offers more incentives and is more effective, is beginning to be used more widely.

The most common optional funding incentives take the form of AECMs, the CAP’s agri-environmental climate measures. Their impact remains nonetheless limited, as the focus is on the actions to be taken rather than on outcomes.  Such grants are awarded to farmers who contribute to the protection or enhancement of water and biodiversity beyond the statutory minimum, for example, by converting part of their land to grassland or woodland. As a 2013 study ³ has shown, the conversion of agricultural land to woodland leads to a reduction in nitrate concentrations in water and, hence, to reduced costs for pollutant removal.

Payments are also made for ecosystem services (PESs) provided by private or public partners, rewarding actions by farmers to improve water quality. Every PES recipient’s profile is different. In France, the first such project was launched by the Société des Eaux Minérales de Vittel working with INRAE ⁴. In order to preserve the quality of the world-famous spring water, the company made payments, through its subsidiary Agrivair, to some 40 farmers who agreed to cut down on their arable inputs (nitrogen fertilisers and pesticides) and to reduce the size of their dairy herds by transferring to a non-intensive farming system. Regular monitoring has shown a significant reduction in water pollution.

_{3. Hascic and Wu, 2006. Pollution de l’eau par les agriculteurs. www.sciencedirect.com/science/article/pii/S0301479713002351}

_{4. Part of the "Agriculture, Environment, Vittel" project which ran from 1987 to 2004. See Deffontaines et al, 1993.}

What’s in a label?

Consumers become consumer-actors.

At the retail end of the chain, there is scope to strengthen label-based systems. "Consumer requirements are becoming more stringent where the quality of food products is concerned", explains Nina Graveline, an economist at INRAE. When consumers decide to buy products with an AB ⁵ or HVE ⁶ label they reward the efforts of producers who have made the commitment to farm in a more environmentally friendly way. Such decisions give them an active role in the development of the sector, turning them into consom’acteurs, consumer-actors. The OENOMED project, led by INRAE, has been devised to co-construct a wine label with the participation of both winegrowers and managers of environmentally sensitive areas. This label would recognise winegrowers’ efforts to conserve water, biodiversity, soils and the country’s architectural and cultural heritage, along with their contribution to the traditions of winegrowing and quality enhancement. "Wine is a good candidate for this, as it has strong connections with place and can create added value through tourism", comments Nina Graveline. But the picture is not so promising in all food sectors: "Taking cereals down the ‘labels’ route has proved harder going because of the sector’s patterns of demand. We must ask whether consumers will really accept higher prices for basic foodstuffs such as bread or pasta" she remarks. Ultimately, none of these classic economic instruments is powerful enough on its own to support transformation. The INRAE economist describes them as "carrot and stick measures borrowed from economic theory", but, as she points out, "farmers are not just economic decision-makers". There are other factors at play that can leave farmers indifferent or sometimes even hostile to this sort of classic economic lever, as Sophie Thoyer tells us: "Farmers, like everybody else, don’t only make decisions based on cost-benefit projections. The process is more complicated. Other parameters are in the mix such as a farmer’s interest in the environment, or membership of particular social networks". To improve the effectiveness of public policies intended to aid transition, INRAE’s behavioural economists have therefore taken a closer look at other factors that can influence the decisions taken by farmers.

Farmers are not just economic decision-makers.

_{5. The Agriculture Biologique (AB) quality label is a French organic label created in 1985. Its founding principle was the prohibition of the use of synthetic chemical products.}

_{6 The High Environmental Value label (HVE), is the highest of the 3 environmental certification tiers for farms. It applies to 4 areas: phytosanitary strategy, conservation of biodiversity, management of inputs, and water-quantity control.}

Help from behavioural economics

The Institute’s researchers are testing out a "nudge" tool, based on the theories of Nobel prizewinning economist Richard Thaler, of the sort commonly used in marketing. Such tools steer individuals towards new practices, through simple suggestions. INRAE, working with the CACG, tested whether they could encourage the installation of "smart" water meters could be encouraged by appealing to social norms. Each week, farmers received an SMS that provided them with information on their own metered water consumption alongside that of their neighbours. This method did indeed bring down the consumption rates of those using the most water, but the researchers also observed a rise in usage among farmers who generally used less water.

"As a rule, nudges are limited in their effects, but political decision makers can benefit by combining a nudge with an economic tool. Our researchers are continuing to work on these nudges. If we are to make a success of agricultural transformation, we have to rethink our strategies in light of what behavioural economics tells us, and develop innovative levers", concludes Sophie Thoyer.

On the hunt for new levers

Other levers are being explored, for example the use of auctions (or calls for projects), run by both public authorities and the private sector, as a method to pay farmers for providing ecosystem services. They are attractive to farmers because they allow them more control over the kind of interventions they make and payment levels can be adjusted to suit individual circumstances. Meanwhile, the funding provider can select the project with the greatest environmental impact. A possible down-side of such auctions, though, is that they are competitive, pitting applicants against each other and moving away from the cooperative principles that underpin SAGE partnerships and PTGEs.

Focus on results

Result-oriented funding routes rather than rewarding designated actions.

Establishing result-oriented funding routes (such as AECMs and PESs) rather than rewarding designated actions would encourage greater efficiencies, but this means that indicators need to be developed to evaluate results. This has been the approach adopted in the "Flowering Meadows" AECM to improve water quality by encouraging good management of meadows. Funding is conditional on results, using the presence of particular plants as indicators of the good agri-environmental status of the meadow.

Stakeholders in the water sector are gradually beginning to put levers in place at local level with the help of collaboration, training and communication. Nevertheless, given the multiplicity of tools available, political decision makers, managers and farmers still need to establish which are most appropriate for their own local needs. "Actors in water management, whoever they are, need objective data to plan with confidence. Modelling can be a useful tool for this. It takes the psychological and cognitive factors involved in decision-making into account, along with specific local drivers identified through experimental economics. The creation of modelled scenarios makes it possible to test possible levers and discover whether they will achieve behaviour change. Modelling certainly has a role to play in accelerating and kick-starting this transformation", explains Stéphane Couture, a specialist in water-supply modelling at INRAE.

Modelling certainly has a role to play in accelerating and kick-starting this transformation.

• Eric Sauquet, deputy head of AQUA division, Nadia Carluer, RiverLy Research Unit, INRAE Lyon-Grenoble-Auvergne-Rhône-Alpes Research Centre
• Vazken Andreassian, HYCAR Research Unit, INRAE Ile-de-France-Jouy-en-Josas-Antony Research Centre
• Sami Bouarfa, deputy head of AQUA division, Nils Ferrand, Delphine Leenhardt, Sébastien Loubier, Patrice Garin, G-EAU Joint Research Unit, INRAE Occitanie-Montpellier Research Centre
• Olivier Thérond, LAE-Colmar Joint Research Unit, INRAE Grand Est-Colmar Research Centre
• Guillaume Martin, Lionel Alletto, AGIR Joint Research Unit, INRAE Occitanie-Toulouse Research Centre
• Nathalie Ollat, EGFV Joint Research Unit, INRAE Nouvelle-Aquitaine-Bordeaux Research Centre
• Jean-Marc Touzard, Nina Graveline, INNOVATION Joint Research Unit, INRAE Occitanie-Montpellier Research Centre
• Jérôme Molenat, LISAH Joint Research Unit, INRAE Occitanie-Montpellier Research Centre
• Patrick Bertuzzi, retired, former head of AgroClim Service Unit, INRAE Provence-Alpes-Côte d'Azur Research Centre
• Alban Thomas, deputy scentific director of Environment, Paris-Saclay Applied Economics, INRAE Versailles-Grignon Research Centre, Observatoire des programmes communautaires de développement rural, INRAE Occitanie-Toulouse Research Centre
• Sophie Thoyer, deputy head of ECOSOCIO division, CEE-M Joint Research Unit, INRAE Occitanie-Montpellier Research Centre
• Stéphane Couture, MIAT Research Unit, INRAE Occitanie-Toulouse Research Centre
• Stéphane Ambec, Toulouse School of Economics, INRAE Occitanie-Toulouse Research Centre
• Christophe Soulard, head of ACT division
• Philippe Hinsinger, head of AGROECOSYSTEM division
• Mohamed Naaim, head of AQUA division
• Laurent Dirat, farmer in Gramont, Tarn-et-Garonne
• Pascal Chisne, head of the Water Management department at Compagnie d’aménagement des Coteaux de Gascogne (CACG)
• Daniel Lepercq, special adviser at Compagnie d’aménagement des Coteaux de Gascogne (CACG)