Incentivising the transition to soil-health, regenerative farming practices

Agriculture has a reciprocal relationship with climate change: it is one of the major contributors while also bearing the brunt of its consequences. Intensive farming practices have degraded soil quality, increasingly undermining food production and the supply of essential ecosystem services. This issue is particularly evident in Europe, where over 60% of soils are considered unhealthy. It is therefore imperative to transform farming systems to preserve and regenerate soil health. While farmers are at the forefront of this transition, they currently lack the necessary support and incentives to enact this change and adopt soil-health business models. Within the Horizon Europe project SoilValues, KOIS seeks to analyse how farmers can be better incentivised to improve soil quality and adopt viable soil-health business models. In this discussion paper we explore how to overcome the barriers to transitioning to soil-health practices through the lens of regenerative agriculture, a concept that increasingly resonates with a wide range of stakeholders and is inclusive of a diverse farmer community. Due to its accessibility and its focus on soil health outcomes, regenerative agriculture informs our data collection and analysis. In this discussion paper we assessed existing incentives available in Europe and in SoilValues’ six testing ground countries: Belgium, Denmark, Germany, the Netherlands, Poland, and Portugal. We reviewed the offering of various stakeholders including policy makers, corporates, financial and project intermediaries. Our research employed mixed methods, incorporating secondary and primary data. Secondary data was gathered through literature review and desk research, while primary data was collected via 54 semi-structured interviews with stakeholders offering one or more incentives to farmers. To assess the effectiveness of these incentives, we developed an assessment framework based on adoption, soil health contribution and economic impact for the farmers. While we found that that no single incentive can drive this transition, the research findings inform our recommendations on how to effectively incentivise the transition to regenerative agriculture. Focusing on the initial one-to-three-year period, which holds the highest risk and uncertainty and thus the greatest potential for impact and additionality, our recommendations revolve around design approaches, the types of support provided, and strategies for scaling. 1. Focusing on farmers’ needs, recognising the specificities of the local context, and combining practice and outcome-based targets to design incentives that benefit both farmers and the soil. 2. Mixing financing, de-risking, and technical support to equip farmers with all the necessary resources to navigate the challenges of the initial stages of the transition. 3. Aggregating farmers and enabling multi-stake-holder collaboration for scale. Finally, drawing on KOIS’ expertise and track record, we link our recommendations with blended finance – a strategic approach that uses public and philanthropic capital to catalyse additional private resources towards desired impact targets. In this light, we showcase examples of best practices from markets outside the European Union that implement our recommendations. Overall, with this discussion paper we aim to illustrate that addressing soil health requires complex, yet not complicated, solutions that can yield significant financial and impact returns.