Project

Enhancing Soil health through Values-based business models

Lead Institute MA Institute of Market Analysis

Involved Institutes BW Institute of Farm Economics MA Institute of Market Analysis

SoilValues Enhancing Soil health through Values-based business models

Soil is a key asset that is essential for agriculture and food production and that requires continuous investments from land managers to keep soils in a good condition, that is, preventing land degradation and increasing soil fertility, but also to be able to cope with climate change and increase farm resilience. In addition, soils are also important for society as a whole, generating key ecosystem services such as clean water, carbon sequestration and biodiversity. While awareness is increasing, soils and their roles are still relatively invisible to business boardrooms and the general public, resulting in an underinvestment in soil health, as land managers often lack the resources to adopt practices supporting soil health.

Background and Objective

The EU Soil Mission

Healthy soils are the foundation for achieving the United Nations' Sustainable Development Goals in agriculture and the food sector. Soil is closely linked to many of the UN Sustainable Development Goals. These include water and nutrient cycles, biodiversity, and food production capabilities.

Currently, more than 70 percent of soils in the EU are considered unhealthy due to unsustainable land management. With the Soil Mission, the EU has set itself the goal of improving the condition of European soils by 2030. The goals include increasing soil humus content, preventing erosion, and improving soil structure. To this end, numerous flagship projects are to be created to advance soil health through practical and interdisciplinary research.

Investing in soil health

Business models are ways in which individuals and organisations create and capture value. Land managers (agriculture, forestry) combine man-made resources with natural resources (ecosystems) to produce marketable products like food, feed, fiber and wood, but at the same time produce ecosystem services that are generally not marketed or compensated, such as clean water, clean air, biodiversity, aesthetic landscapes, etc. Healthy soils in particular contribute to many ecosystem services. However, land managers generally have little incentive to invest in healthy soils, as they cannot sufficiently capture the value generated by these ecosystem services. This is why, globally, communities are investigating the feasibility of setting up financial mechanisms to overcome this problem. Most of the scientific literature focuses on payments for ecosystem services either through government subsidies (e.g., agri-environmental schemes) or private incentives, mainly in the form of price premiums. Other mechanisms such as equity investment or compensation for risk or cost reductions as well as hybrid incentive schemes combining public and private incentives are relatively under-investigated.

SoilValues aims to fill this research gap by exploring how to enhance the conditions for developing successful soil health business models.

Soil health business models are models in which land managers make production decisions that result in higher levels of soil-based ecosystem services and in which they are paid for the non-marketed SES they generate. In other words, land managers’ supply of soil-based ecosystem services has been met with a demand for these services. Supply and demand form the core of any business model. In order for such business models to function, three important conditions need to be fulfilled: (1) the outcomes of soil-based ecosystem services need to be measured, thus requiring knowledge, indicators and models, (2) the data and information generated by these indicators and models need to be exchanged to facilitate monitoring, reporting and verification , and (3) all these activities should be governed by an appropriate institutional framework consisting of the necessary legislation, standards and incentive schemes. In addition, digital technologies may greatly enhance all these components. For soil health business models to be successful, all these components need to be present, so the assessment and improvement of soil health business models requires an integrated, systems-based approach, taking into account multiple levels (farm, value chain, territory).

Approach

To achieve these specific objectives, SoilValues will carry out activities organised in five interdependent work packages plus a project management WP (WP6) in three phases: an exploration phase, a test phase and a scaling up phase.

WP1 will create an assessment framework incorporating all relevant components at multiple levels, based on various inputs: existing cases worldwide, insights from a community of practitioners (WP3) and insights from action research carried out in six EU-wide testing grounds (WP2) in Belgium, Denmark, Germany, the Netherlands, Poland and Portugal. These testing grounds will be used to analyse new and emergent initiatives and their supportive environment (institutions, knowledge and data exchange), but also to improve them and create new, innovative models. Insights from WP1 and WP2 will be upscaled through the community of practitioners (WP3) who act as ambassadors for soil health business models. WP4 will design an interactive toolbox of incentives and policy recommendations based on a thorough analysis of incentive mechanisms globally as well as on the incentives investigated in the testing grounds. WP5 will increase awareness of the importance of soil health and the opportunities among a wide set of stakeholders and will showcase good practices and communicate project results using a variety of communication approaches geared towards different communities, including the general public.

Data and Methods

The SoilValues project aims to contribute to sustainable management of soils throughout the EU in order to improve the quality of the soils in support of the EU Green Deal ambitions. Particular focus is on financial impulses and incentives for land managers for improved soil management, thereby linking (1) farm management (e.g., soil and crop management and carbon storage) and landscape management, and circularity of resources, (2) long term ecosystem services and other externalities and (3) involvement of other stakeholders (ranging from governments to NGOs.

In order to be able to reach its objectives, SoilValues will use a multi-actor approach, in which practice actors will be engaged in testing grounds and in the communities of practice. The SoilValues consortium include a wide set of practitioners, including farmer organisations, NGOs, policy makers, value chain actors, advisors, financial institutions and research organisations.

Our Research Questions

To enhance the conditions for developing successful soil health business models, SoilValues has the following specific objectives:

To provide a comprehensive assessment framework addressing all factors influencing the development of business models for investing in soil health
To establish 6 testing grounds across Europe to test and improve emerging and designing new soil health business models
To establish 12 communities of practice of land managers, value chain actors, investors and public authorities for soil health business models
To design a comprehensive toolbox of incentives and policy recommendations to facilitate soil health business models
To raise awareness and exchange knowledge for soil health business models

Preliminary Results

The EU research project SoilValues was launched in early 2023 to initiate and scientifically support the development of successful business models for soil health in the EU until the end of 2026. It is investigating how the practical, economic, and political conditions for the development of such business models can be improved.

The Thünen Institutes for Market Analysis and Business Administration, together with Landring GmbH, have established a testing ground and a community of practice in the Schleswig-Flensburg region. Together with practical partners from agriculture, the biogas industry, value chain stakeholders, politics and administration, and many other areas, the development of a cooperative, regional circular economy to promote soil health in the region is being implemented and analyzed.

The goal is a regional circular economy

The region is characterized by grassland farming, intensive corn cultivation, and dairy and biogas production. In some areas, the groundwater is heavily polluted with nitrate due to agriculture. The primary goal here is to maintain or improve the health of soil and plants. The use of agricultural compost and the buildup of humus play a crucial role in reducing the current dependence of intensive farming on synthetic fertilizers and opening up new, socially acceptable value creation options for those involved.

Residues from biogas plants are transformed into agricultural compost

The core of the circular economy is formed by cattle and dairy farms, whether conventionally or organically managed, biogas plants, and a so-called digestate processing station. The farmers participating in the project deliver the solids from cattle manure, fodder and crop residues, as well as manure and other organic residues to the partner biogas plants for energy production. The liquid phase of the cattle manure can be used directly on the farms in crop production and grassland farming. Initially, the materials delivered by the farms are used in the biogas plant to produce biogas. The biogas plant's feedstock thus consists largely of the solid phase of dairy manure, plant residues, and only a smaller proportion of silage maize compared to conventionally managed biogas plants. The digestate produced after biogas production in the biogas plant is then processed into agricultural compost and subsequently returned to the participating farmers. This not only enables farmers to have a sustainable supply of nutrients to their fields, but also closes the nutrient cycle.

New Perspectives for the Local Economy

Overall, this circular economy creates opportunities for farms to use existing resources more effectively. Synthetic fertilizers, which are often expensive and based on non-renewable resources, can be largely replaced by the use of liquid manure and compost, according to predictions. Crop waste and feed residues become valuable raw materials for biogas production. The reduced corn demand for biogas production allows the area under corn cultivation to be reduced and made available for other varieties.

The biogas plants participating in the project gain important future prospects for their existence after the expiration of the EEG regulations. The existing network of biogas plants and the corresponding infrastructure of pipelines and feed-in points can also be expanded in the future to create further value in the field of renewable energies. E-methanol, produced by combining surplus electricity from renewable sources with CO2 from agricultural or biogenic residues, is conceivable.

Overall, the circular economy established in the region can serve as a prototype for potential further mergers. Furthermore, it strengthens cooperation between farmers, communities, and citizens and contributes to the sustainable development of rural areas. The project thus sets a visible example for innovative, resource-efficient agricultural practices and demonstrates how regional cycles can be designed and utilized.

Further information on the current status of work in the Schleswig-Flensburg region is available for download here: https://www.thuenen.de/media/institute/ma/Downloads/Infos_zum_SoilValues_Projekt_in_der_Region_Schleswig.pdf