The pros and cons of land management contracts

Talking to farmers recently, it is clear that quite a few of them see merit in the idea of land management contracts put forward by the CLA. This 'would be a legal agreement between the farmer and the government for provision of goods and services that the market doesn't pay for but provide valuable benefits to society.' Examples include safeguarding and increasing carbon storage; mitigating or reducing flood risk; creating better connectivity of habitats and species; maintaining the distinctiveness of historic landscapes and heritage; managing soil structures to maintain productive capacity of land for future generations.'

The motivations of the CLA are clear. President Ross Murray states, 'The best retort to accusations that the acreage payment merely rewards the wealthy is to promote a compelling and revolutionary new system based on contract where the farmer or manager is rewarded for public service'.

Policy instruments that are envisaged are:

• Multi-channel advice to increase adoption of new technology and practices
• Business skills development and encouraging collaboration
• Capital grants, loans and tax incentives for investment in infrastructure, equipment and buildings, farmer led research and collaboration
• Support for new entrants and succession and retirement planning support [this is an under developed area of policy]
• Promoting UK food in domestic and international markets
• Resilience funds and compensation for unforeseen events [some might think that was the role of insurance]

There would not be a standard contract. 'Farmers will choose what sort of land management activities are right for them and their rural business ... The importance of specific outcomes will vary across the country ... The land management contract will be locally adaptive'.

This is reasonable enough, but it does raise the question of the transaction costs of negotiating contracts with individual farm businesses with variable payments reflecting the public benefits delivered. The CLA calls for 'simplicity of administration' and 'keeping bureaucracy to a minimum'.

However, public money is involved and accountability is necessary. It is admitted that 'new and existing evidence from mapping' is involved which invariably involves a checking process. Proposed outcomes need to be realistic and there needs to be some means of checking that they have been achieved.

This is an ingenious idea and a good one in principle, but how would it work out in practice?