Contract types

The hub illustrates four main contract types:

  1. Result-based contract solutions (RB)
  2. Collective contract solutions (CO)
  3. Land tenure contract solutions (LT)
  4. Value-chain contracts (VC)

Beside the main four contract types, many different combination are possible, that we term “hybrid types.” Some combinations are particularly common and thus interesting, for example, hybrid forms between result-based and collective. However, the most suitable mix can only be evaluated depending on local needs.

In addition, this could yield hybrids with traditional practice-based individual contract characteristics.

Model contracts

We term “Model contracts” the combinations of features that can be considered a prototype (model) for each contract type based on the most frequent combinations of design features observed in practice. In theory, every kind of contract mix is possible, but we report the most frequently occurring combinations of features that can represent the models for these contractual solutions. We illustrate these most frequent qualifying features for the contract types and their hybrids in the figures below (further explained in Annex in the end).

Contract types features

Result-based contracts connect payments to environmental effects or the amount of AECPGs provided (environmental outcomes and benefits). In result-oriented agreements, the payment may depend on a simplified measurement based on models or a point system linking a set of practices to expected outcomes. In the latter, the difference between result-based and action-based is more blurred.

In a broad sense, collective contracts are where groups of farmers/foresters/landowners and other actors with a high degree of cooperation establish a formal entity and apply for an AECS agri-environmental scheme collectively. The payment for the activities undertaken to meet environmental objectives and enhance AECPGs is then made to the group in some cases and then shared with individual farmers. But different forms are possible; for instance, payments for the individual farmers can also adhere to a collective.

Tenure-related environmental prescriptions under CONSOLE refer to those land leases or land contracts that include an environmental dimension (e.g., the land tenure contract comes along with rent associated with environmental prescriptions)

Public goods are produced through targeted prescriptions included in contracts for producing agricultural/forestry goods. It implies that consumers have clear information about the product’s connection with the public good and, therefore, (usually) accept to pay (more) for that added value.