Paying farmers to reduce nitrates in groundwater

Challenges 

In the early 1980s, concerns about rising nitrates concentration in the aquifer caused by agricultural intensification in the catchment posed a serious risk to the Vittel spring. Legislation on the quality of natural mineral waters in France is very strict: to be labelled as natural mineral water, no treatment should be applied except to eliminate natural unstable elements such as iron and manganese. As a result, the company was facing an existential threat to its business and needed to take action. 

Financing: Nestlé Waters pays for ecosystem services through its intermediary, Agrivair. Within the programme, a package of incentives was developed in collaboration with farmers, with the following terms:  

• Long-term security through 18- or 30-year contracts.  
• Abolition of debt linked to land acquisition, whilst land acquired by Vittel can be used in usufruct by farmers for up to 30 years;  
• Up to 150,000 euros per farm upfront grant to cover the cost of all new farm equipment and modernisation, followed by a payment of about 200 euros per hectare each year over five years;  
• Free labour to apply compost in farmers’ fields;  
• Free technical assistance, including annual individual farm plans and introduction to new social and professional networks.  

The farmers incurred no direct financial cost but bore substantial transaction costs, such as the cost of learning new practices and participating in the identification and testing of practices and in the incentive system and negotiations. They benefitted from secured long-term arrangements and from the cancellation of short-term and long-term debt. The costs to Vittel-Nestlé Waters in the first seven years of the programme amounted to EUR 1.14 million for farm acquisition; EUR 3.81 million for farm equipment; and EUR 11.3 million for farm financial compensation (this does not include the costs linked to establishing and operating Agrivair). In total, t the company spent an estimated more than EUR 24.5 million during the 1990s alone. 

Actions and impacts 

In 1989, Vittel started to study the relationship between farming practices and nitrate rates in the aquifer. The goal was to identify and test practices to reduce or maintain the rate of nitrates at the desired level, as well as to identify incentives for farmers to change their practices. The research programme, called Agriculture- Environnement-Vittel (AGREV), was a partnership with the French National Agronomic Institute (Institut National de la Recherche Agronomique – INRA). Vittel began a payment for ecosystem services (PES) programme for farmers with the goal of maintaining groundwater quality at acceptable levels (nitrate levels below 4.5 milligrams per litre). Key measures included incentives for farmers to reduce fertiliser use, to cut animal waste and manure application in the catchment area, and to give up maize cultivation for animal feed (land used for maize production shows nitrates rates of up to 200 milligrams per litre in the root zone). As the changes required heavy investment and the adoption of land and labour-intensive production systems, it took 10 years of engagement with farmers before the PES process turned into a successful partnership.  

In 1992, Nestlé Waters created Agrivair, an intermediary responsible for negotiating and implementing the programme. This proved to be a pivotal point in programme implementation. Agrivair is located just outside the town of Vittel, close to farmers and farmers’ associations. The director of Agrivair was well known to the farmers and stakeholders in the area. This contributed to ensuring continuity between design and implementation of the project and was critical to fostering communication among parties. By 2004, all 26 farms in the area had adopted the new farming system: 1,700 hectares had been switched from maize cultivation to alternative crops, and 92 percent of the sub-basin was protected. The programme led smaller farmers to retire and sell their land to Agrivair. The number of farms in the sub-basin declined from 37 to 26, whilst average farm size increased to 150 hectares, given that extensive production methods require additional land. As of 2006, all farmers had signed 30- year contracts that give them the usufruct of the land, provided they comply with the new farming system.  

Over time, new challenges have required the programme to evolve and include non-farm municipal lands such as city parks, golf courses, a horse racing track, and the city’s thermal park. This allowed the company to maintain groundwater quality in the catchment amidst increasing urbanisation in the area. Nestlé Waters also expanded the approach to a total of 10,000 hectares by including the contiguous Contrex and Hépar catchments. These areas are rich in forest, and Agrivair introduced a forest management programme which aims to maintain a balance of trees to maximise nitrate uptake. The scheme was also replicated in the Perrier spring in Vergèze in southern France.  

Today, the programme allows for the conservation of more than 90 percent of the land in the Vittel, Contrex, and Hepar catchments and has become an important factor influencing the economy of the region, thanks to Nestlé paying considerable mineral water taxes and having created more than 1,000 jobs in an area with 12,000 inhabitants. However, this has also raised concerns regarding water resources overexploitation. As the company extracts substantial volumes (with 740,000 cubic metres sold in 2017 alone), the groundwater table has been falling by up to 36 centimetres annually. The municipality is concerned and had to build a pipeline to source water from 15 kilometres east of the area to ensure adequate municipal water supply. Nestlé has agreed to cover the expenses for any related additional water costs for the population. This has generated a substantial debate among the company, the municipality, NGOs, and the public. 

FAO. (2013). The Vittel Case: A public-private partnership in the mineral water industry. 

Perrot-Maître, D. (2006). The Vittel payments for ecosystem services: a ‘perfect’ PES case? International Institute for Environment and Development, London, UK. 

Deltares. (2013). Payments for Ecosystem Services (PES) Design Characteristics. 

Supp, B. (2019, February). Vexed in Vittel: French Town Becomes a Focal Point in War over Water. Spiegel Online. Retrieved from.