5.1 INCREASING FARM PROFITABILITY AND SUSTAINABILITY
Conclusion 1: Producers and land managers operate according to the “ safety-first ” principle and are often risk-averse. In order to be successful, practices and programs must sufficiently and sustainably offset these risks in concrete ways.
Across production scales, but especially, for small-scale producers and managers to whom margins are thin and market conditions often volatile, the provisioning of ecological services cannot come at the expense of economic profitability. Working lands producers are inherently risk-averse, meaning they operate according to what James Scott (1973) cal ls the “safety - first principle,” whereby the livelihood subsistence must first be guaranteed — whether directly, through on-farm production/consumption or indirectly, through income- generating activities — before risk-taking activities, such as changing practices or implementing new technologies, can be justified. This logic can be seen at play in the contemporary research on ecosystem services provisioning programs, which incentivize innovative practices that, while potentially ecologically beneficial in the long term, are nevertheless not economically risk-neutral. According to Piñeiro et al. (2020), “Regardless of the incentive type, adoption rates are higher when programmes offer short -term economic benefits [rather] than those solely aimed at providing a po sitive ecological outcome.” In thinking about programs to incentivize ecosystem service provisioning, this fundamental risk-averse disposition must be taken into consideration, a reality that holds especially true in the context of rising climatic and economic uncertainty. Effective programs with innovative practices may fail to get producer buy-in if they do not offer incentives that sufficiently offset the economic risks inherent in changing working lands practices. At the same time, once practices have been implemented, these programs must also provide continuing incentives that are reliable and oversight that is reasonable in order to expect new practices to translate into returns to the environment. Programs that are not funded adequately or consistently or are subject to arduous oversight may still create initial buy-in but fall short of making sustainable differences in ecosystem service provisioning in the long term.
Recommendation 1.1 Balance long-term ecological considerations with short-term economic returns by avoiding tradeoffs and diversifying direct and indirect incentives.
For Cooperative Extension: Connect working lands producers and managers with a variety of potential incentive programs and facilitate participation in these programs through education, technical assistance, and labor-/cost-sharing efforts. For Agricultural Experiment Stations: Investigate the ecological and economic trade-offs in a particular region to better understand how incentive structures may affect different producers differently in this context. With many ecosystem services, the ecological benefits derived from changing working lands practices are often part of longer-term processes that are temporally at odds with the seasonal economic cycles experienced by producers. To bridge this gap, policies and programs should be developed that allow working lands producers to avoid trade-offs between short-term economic profitability and ecosystem service provisioning and long-term ecological benefits. Put another way, these programs incorporate risk aversion into the programmatic scope and aim to alleviate risk directly before incentivizing potentially risky changes in decision making and in practice. To do this, it may be constructive to combine and offer compounded incentive programs in tandem. While direct and indirect incentives both are important in the context of improving ecosystem services, from the perspective of maintaining working lands profitability and the sustainability of management practices, direct incentives can be more effective. Programs that offer indirect incentives, such as technical education or assistance, are valuable in providing training, shifting values, and sharing knowledge but may have less to offer farmers concerned with economic profitability. By combining them in innovative ways, however, the benefits of both might be leveraged.
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