2.1. SIP7 “Enhancing the Sustainability Performance of Wine Producers in Cyprus”
Cyprus is an island country located in the eastern Mediterranean, which has a typical Mediterranean climate with long, hot, dry summers and mild, wet winters. The Cypriot agricultural sector is relatively small, accounting for merely 2% of the Gross Domestic Product, yet highly diversified, with a large number of different crops, such as rainfed cereals, fodder crops, vegetables, potatoes, citrus, vines, olives, nuts, and fruit trees [
22]. Ancillary production includes dairy products, such as halloumi cheese, and grape products, such as local wines [
23]. It is worth mentioning that, due to its small size, the Cypriot agricultural sector is not able to compete with countries that typically produce large volumes at low cost; therefore, Cyprus is primarily focused on the production of high-quality products [
22], such as wines made from indigenous grape varieties [
24].
Cyprus has a long history and culture as a wine-producing country since ancient times [
25]. In fact, it is considered one of the first countries in which viticulture and wine production was practised [
26]. As one of the oldest wine-making countries, Cyprus has more than ten indigenous grape cultivars, such as Xynisteri, Mavro and Maratheftiko, which are well adapted to the semi-arid climatic conditions of the island, as compared to introduced cultivars, such as Chardonnay [
27,
28]. As noted by Georgiou et al. [
25], the foundation for the sector’s sustainability and expansion is laid by Cyprus’ long history in viticulture, its distinctive local varieties, and the newly reorganised and formed vineyards and (local) wineries, with a promising future for the sector’s sustainability and business growth. Actually, following the accession of Cyprus to the EU in 2004, the Cypriot wine sector received significant investment and funding that boosted the local wine industry [
25]. In this respect, the recent study of Zoumides et al. [
24] in Cyprus concluded that mountain family wineries are economically viable businesses that share a common goal of improving the quality of the wine produced.
Notwithstanding the above, the Cypriot wine sector (especially the small wine grape producers and wineries) still faces several problems that jeopardise its sustainability. The most important ones can be summarised as follows: the small and fragmented farms, the ageing of farmers, the high input and production costs (e.g., pesticides, labour), the relatively low selling prices of grapes and wines, the low adoption rate of new technologies and innovations, the lack of an integrated common marketing and branding strategy, the sharp increase in wine imports (competition with cheaper wines), and the parallel dramatic decrease in exports [
22,
24,
25]. Therefore, farmers and wineries need to find ways to increase their efficiency, reduce costs, and get better or premium prices to match their efforts for high-quality products. In this vein, Georgiou et al. [
25] argue that innovation becomes a strategic tool for wineries to improve their competitiveness and sustainability.
According to the last agricultural census [
29], there are ca. 8600 vineyard holdings, with 6600 ha of Utilised Agricultural Area (UAA), in Cyprus; only about 15.5% of this area is irrigated. The average vineyard holding size is ca. 0.8 ha and is among the smallest in the EU [
30]. Most vineyards are found in the mountainous and semi-mountainous communities of the district of Lemesos, representing, according to Cystat, about 40% and 44% of the total number of vineyard holdings and UAA, respectively [
29]. Within the Lemesos district, a mountainous community known for its long history and tradition of wine-making, is Omodos (altitude > 800 m), where about 222 ha of UAA (the largest area among all the communities in Cyprus) is almost entirely dedicated to the cultivation of non-irrigated wine grapes [
29]. In addition, there are currently more than 60 wine-making enterprises in Cyprus, with a production value of more than EUR 30 M [
31]. Most of them are small to medium-sized regional wineries situated in the districts of Lemesos and Pafos.
2.1.1. Main Objective and Study Area for SIP7
The goal of the pilot in Cyprus was to improve the sustainability performance of wine grape producers and wineries, by combining SFTs and digital labelling solutions. For this purpose, the relatively newly established “Oenou Yi” winery (
https://oenouyiwine.com/, accessed on 12 March 2024), located in the community of Omodos, was used as a case study. The winery owns and manages around 100 ha of vineyards, while also buying wine grapes from other farmers under contracts.
2.1.2. Proposed Technological Solutions for SIP7
To achieve the goal of this study and help address some of the challenges faced by the Cypriot wine sector, such as reducing production costs and achieving higher selling prices, we propose a mix of two technological solutions: namely, a combination of SFTs and digital labelling solutions. Specifically, we first established a wine grapes production support mechanism, combining a human component (i.e., researchers and agronomists) and a smart farming solution, which was applied in the vineyards of the winery. Next, a wine digital labelling solution (e-label) was developed, using data from both the smart farming solution and the winery’s management system.
In the context of this study, a digital or electronic label, or simply e-label, is defined as “a dedicated webpage compiling structured information on a precise product, for a specific market. The e-label is made available to consumers through a unique QR code printed on the back physical label of the product. By scanning the QR code with a smartphone, consumers are directly led to the e-label of the product they have scanned” (
https://www.u-label.com/ulabel/faqs#group-faq-803, accessed on 12 March 2024).
The smart farming solution used in this pilot is gaiasense™, which is described in detail by Adamides et al. [
32]. The solution utilises a set of information sources that include IoT-enabled telemetric stations, earth observation services, a farmer’s digital calendar, and field observations. In the framework of this pilot, two autonomous telemetric stations were installed in two separate vineyards of the winery in Omodos, representing different microclimatic zones and grape varieties. The aim was to collect detailed data (e.g., temperature, relative humidity, precipitation, wind speed and direction, atmospheric pressure, soil moisture, leaf temperature, humidity, and wetness) for at least two growing periods (2022 and 2023). The data collected from the sources described above were stored and analysed in the cloud computing infrastructure of the technology provider to develop and validate the pest optimization models. The plant protection models developed and adapted in the context of the pilot concerned two main diseases of grapes, namely Downy Mildew and Powdery Mildew. In the end, advice for the application of pesticides was generated by the system and mediated to the winery’s agronomist via SMS. A web-based application with selected agri-environmental parameters was also developed to support the provision of the advice.
With regard to the second proposed technological solution, a QR code-based wine traceability application, which acts also as a digital label and promotes product quality and sustainability information to the end-users (consumers), was developed in two stages. First, the research team prepared a comprehensive list of information that could be included in the e-label and shared with consumers. This was done after reviewing the relevant studies and in consultation with experts from the PLOUTOS project. The final list was validated by the winery’s staff (owner, sales manager, oenologist, sommelier, and agronomist) and included the following information: vineyards’ location and soil type, grape varieties, alcohol content, ingredients, nutritional value (calories), duration of ageing in barrel, bottling date, storage temperature, serving temperature, gastronomic matches, wine distinctions, description of the smart farming technology used and the potential benefits for the environment, and real-time microclimate agri-environmental parameters (e.g., temperature, humidity, and rainfall) obtained from the telemetric stations. Two short videos were also created to enhance the consumer’s experience. One video presents the sustainable practices applied by the winery, and the other presents the pilot wines through an interactive discussion between the oenologist of the winery and the sommelier.
The second stage involved the development of digital labels (webpages) and QR codes for two local wines (a white and a red) made from indigenous grape varieties. All the aforementioned information and videos were integrated into the e-label in a user-friendly interface. Afterwards, the QR codes were placed on the back physical (printed) label of the wine bottles. The perceived quality of the two wines was assessed by experts in two phases: before and after placing the QR codes on the bottles, i.e., with and without the e-labels. This process is described in the next sub-section.
Two hypotheses were established: (a) the smart farming solution, ceteris paribus, will help the winery to minimise pesticide application, reduce production costs, and improve working conditions for agronomists and staff working in the fields; and (b) the digital labelling solution, ceteris paribus, will contribute to an increased wine quality, as perceived by the experts/consumers.
The following paragraphs are focused on describing the process employed to measure the impact of innovations on the sustainability performance of the studied winery.
2.1.3. Performance Measurement Framework for SIP7
The performance measurement framework for SIP7 involved three steps. First, an initial set of KPIs was created based on previous studies (e.g., [
33,
34,
35,
36]) and established sustainability tools or frameworks (e.g., [
37,
38,
39,
40,
41]). The KPIs were chosen according to their relevance to this study, viz., being suitable for capturing the performance of the SOIs and measuring their impact on the sustainability performance of wine value chains. The KPIs were then classified by sustainability pillar (economic, environmental, and social) and attribute (pollution, profitability, product quality, and labour).
Second, from the KPIs identified in the literature, four were selected for the needs of this study according to the following criteria: (1) relevance to the context of the study, as previously described; (2) end-user value; (3) data availability; and (4) data measurability [
33]. The selected KPIs are as follows: The “pesticide use” indicator measures the quantity of pesticides used (solid and liquid) per unit of land (i.e., 1 ha of vineyard) to monitor the two main grape diseases (Downy Mildew and Powdery Mildew). The “production cost” indicator measures the total cost of producing wine grapes per ha. The “perceived quality” indicator refers to the judgement of consumers about the overall quality of a wine. Finally, the “working time” indicator measures the total human labour required to produce wine grapes per ha. In essence, the “pesticide use”, “production cost”, and “working time” indicators were chosen to assess the impact of smart farming technology on the sustainability performance of the wine value chain, while “perceived quality” was used to assess the impact of digital labelling.
During the second step, baseline and target values were set for all KPIs. In particular, the baseline values of the KPIs “pesticides use”, “production cost”, and “working time” were determined by the research team and the agronomists of the winery based on historical data (viz., average values of the previous five years as recorded in the winery’s management system). The baseline values of the KPI “perceived quality” were calculated for two local wines (a white and a red) made from popular indigenous grape varieties. In the absence of any historical data, the baseline values of this KPI were determined using a short, specially designed questionnaire, which was sent to 20 wine experts (oenologists, sommeliers, wine writers, and viticulturists) with an intimate knowledge of the local wines. Ten (10) experts for the white wine and 11 for the red wine completed the questionnaire (in late 2021). The questions/variables used to calculate the perceived quality indicator were adapted from Jover et al. [
36] and are described in
Table 1, while their baseline values are shown in
Table 2. The target values of the KPIs were defined jointly by the research team, the agronomists of the winery, and the experts of the smart farming technology provider, based on previous experience and with the aim of being as realistic as possible.
The questionnaire used to calculate perceived quality consisted of two parts. In Part A, the respondents were asked to assign a weight to each question using a Likert scale ranging from 1 (=not important for the quality of a wine) to 5 (=very important for the quality of a wine). In Part B, respondents were asked to provide a score for each question using a rating scale from 1 to 10, where 1 represented the lowest value and 10 the highest value. The perceived quality indicator for each respondent was calculated as the weighted average of the scores provided in Part B and the weights assigned in Part A of the questionnaire. Thus, the final indicator is a numeric score ranging from 1 (low perceived wine quality) to 10 (high perceived wine quality).
All the selected KPIs, together with the sustainability pillars and attributes they represent, measurement units, baseline values, targets, and source of the data used for their calculation, are shown in
Table 3.
The last (third) step of the measurement framework was concerned with the collection of data and the calculation of the KPIs. Specifically, for the KPIs “pesticides use”, “production cost”, and “working time”, data were collected in two phases, viz., at the end of the growing periods of 2022 and 2023. The final values of the KPI “perceived quality” for the two wines were calculated in mid-2023 —after placing the QR codes on the back physical label of the wines— using the same process described above. The questionnaire was completed by 18 and 16 experts for the white and the red wine, respectively.
2.1.4. SIP7 Data Collection and Utilisation
The SIP7 study’s data integration phase harnessed environmental, agronomic, and consumer perception data to assess the enhancements in sustainability performance in Cyprus’s wine production. Environmental data from IoT sensors in the Oenou Yi winery’s vineyards underpinned the pest optimisation models, reducing reliance on pesticides and advancing sustainable grape cultivation. Concurrently, the introduction of digital labels, validated through expert questionnaires, offered insights into shifts in wine quality perception linked to our sustainability interventions. This approach not only streamlined pest management but also connected sustainable practices with enhanced consumer perceptions, illustrating the effectiveness of our integrated technological solutions.
2.2. SIP10 “Sustainable Grapevine Sector: Payments for Ecosystem Services in Italy”
Italy is one of the largest wine producers and consumers in the world, with a long tradition and culture of viticulture and oenology [
42]. According to the International Organisation of Vine and Wine (OIV) Statistical Database, Italy had a vineyard area of about 690,000 hectares and a wine production of about 47.5 million hectolitres in 2019, ranking first in the world in both indicators [
43]. The Italian wine sector is characterised by a high diversity of grape varieties, wine styles, production systems, and geographical indications, reflecting the rich natural and cultural heritage of the country [
42]. The wine sector is also an important driver of the rural economy, providing income and employment opportunities for many farmers and wineries, especially in marginal and less-favoured areas [
42,
44]. Moreover, the wine sector contributes to the provision of various ecosystem services, such as biodiversity conservation, soil protection, carbon sequestration, and landscape aesthetics [
45].
However, the wine sector also faces several challenges and pressures that threaten its sustainability, such as climate change, water scarcity, pest and disease outbreaks, market competition, changing consumer preferences, and demand for social and environmental standards [
42,
45,
46]. To cope with these challenges and to enhance their sustainability performance, wine actors need to adopt innovative solutions that can improve their efficiency, quality, resilience, and competitiveness, while reducing their environmental and social impacts. In this context, SOIs and SFTs play a key role, as they can offer new opportunities and benefits for the wine sector, such as precision agriculture, digitalization, traceability, certification, and the circular economy [
2,
47].
One of the examples of SOI and SFT adoption in the Italian wine sector is SIP10, which stands for “Sustainable Grapevine Sector: Payments for Ecosystem Services Provision” and focuses on the implementation of a decision support system (DSS) called vite.net®, which allows grape growers to calculate the carbon credits (CCs) generated by adopting sustainable vineyard management practices, such as reducing the use of pesticides and fertilisers, and to valorise them on the voluntary market. SIP10 also introduces a parametric insurance mechanism that protects farmers from weather conditions that are favourable for grape disease development.
2.2.1. Main Objective and Study Area for SIP10
Viticulture provides multiple ecosystem services (benefits humans gain from the environment and from properly functioning ecosystems) to the whole community. Remuneration for the provided ecosystem services can complement the economic income of the farmers. For instance, sustainable vineyard management makes possible a relevant reduction in greenhouse gas (GHG) emissions, contributing to fighting global warming. CCs saved by farmers through proper vineyard management can be remunerated, as there is an increasing voluntary (or over-the-counter) market, in which CCs can be sold to industries and individuals willing to voluntarily compensate for their emissions or provide an additional contribution to mitigating climate change. The challenges for accessing this new, interesting, and growing market are as follows: (i) to define an appropriate protocol for CC calculation in the agricultural sector; compliant with the ISO14064 standard; (ii) to build up a system for calculating emission reductions achieved in sustainable farm management; (iii) having the emission reductions certified by a third party certification body; (iv) to make the Verified Emission Reduction (VER) available to buyers through specialised exchange platforms. Moreover, a parametric insurance mechanism was also introduced for the failing of sustainable vineyard management through the DSS (specifically for the control of pests and diseases).
SIP10 activities were carried out in the North of Italy, in the municipality of Ziano Piacentino in the Piacenza Province. The activities involved Università Cattolica del Sacro Cuore, Horta srl, and 15 farmers belonging to the association “Sette Colli di Ziano”.
2.2.2. Proposed Technological Solutions for SIP10
To address the challenges faced by the Italian grapevine sector, particularly in terms of economic sustainability, SIP10 introduces an innovative blend of SFTs, coupled with a novel approach for the calculation and monetization of CCs. This strategy is designed to enhance the environmental and economic performance of vineyards through two key technological interventions: the enhancement of the vite.net® DSS for sustainable vineyard management, and the establishment of a parametric insurance mechanism to mitigate financial risks from climate variability.
The vite.net® DSS lies at the heart of SIP10, now enhanced to facilitate the sustainable management of vineyards. This advanced system integrates a variety of data sources, including IoT weather stations, direct field observations, and recordings of operations performed in the field. In this pilot, critical environmental data such as temperature, humidity, and rain amount are meticulously collected and analysed. These data, together with information inputted from the user, feed mathematical models and algorithms present in the DSS, which provide decision support to the crop manager for optimising vineyard practices, thus reducing their carbon footprint and promoting carbon sequestration within the soil and plant biomass.
The DSS is instrumental in offering tailored recommendations for sustainable vineyard practices, while also calculating the potential generation of CCs from these practices. These calculations adhere to recognised standards, ensuring the credibility and marketability of the CCs on voluntary exchange platforms.
A pioneering component of SIP10 is the implementation of a parametric insurance mechanism. This innovative insurance model offers grape growers financial protection against unpredictable weather conditions that can lead to grape diseases, thereby securing their income from such climatic risks. This insurance policy relies on the DSS’s models’ outputs for the identification and quantification of the occurred damage, and it provides a comprehensive risk management tool for farmers.
At the core of SIP10’s strategy is a sophisticated digital framework for the accurate calculation, certification, and trading of VERs. These VERs are computed in alignment with the ISO14064 standard, facilitating their availability for trade on dedicated platforms. This mechanism empowers grape growers to unlock an additional revenue stream by selling the CCs accrued through adherence to sustainable management practices.
The impact of SIP10 is gauged through two hypotheses: (a) the enhancements made to the vite.net® DSS, alongside the parametric insurance mechanism, will drive a shift towards more sustainable vineyard management practices, thereby reducing carbon emissions and bolstering the economic sustainability of grape growers; (b) the capability to quantify, certify, and monetise CCs will furnish farmers with an auxiliary income source, enhancing the economic resilience of the grapevine sector.
The success of SIP10 was evaluated using metrics that reflect a reduction in carbon emissions, the volume of CCs generated and successfully marketed, and the overall enhancement in the economic sustainability of the vineyards involved. This evaluation leveraged data from at least two consecutive growing periods, to deliver a thorough assessment of the pilot’s effectiveness and its impact on sustainability performance.
2.2.3. Performance Measurement Framework for SIP10
The performance measurement framework for SIP10 adopts a structured methodology, encompassing three distinct phases to evaluate the impact of innovative technologies on the sustainability of grapevine cultivation and CC generation.
An initial set of KPIs was formulated, leveraging insights from existing sustainability frameworks and methodologies pertinent to the grapevine sector and the novel implementation of a carbon credit system within SIP10. These KPIs were selected to accurately gauge the efficacy of SFTs and the carbon credit mechanism, ensuring they reflect the initiative’s sustainability objectives. Subsequently, the KPIs were systematically categorised under the three pillars of sustainability—economic, environmental, and social—with a further delineation based on specific attributes like emission reduction, cost efficiency, and social benefits.
From the comprehensive list of potential KPIs, a curated selection was made to align with SIP10’s unique context, emphasising relevance, end-user value, the availability of data, and ease of measurement. The chosen KPIs include:
Carbon Credit Generation: Quantifying the volume of CCs produced by implementing sustainable practices in vineyards.
Reduction in Carbon Emissions: Measuring the reduction in GHG emissions because of adopting sustainable vineyard management practices.
Economic Benefit from CCs: Evaluating potential financial returns derived from the sale of CCs.
Adoption of Sustainable Practices: Monitoring the uptake of sustainable practices as recommended by the enhanced vite.net® DSS.
Baseline values for these KPIs were determined using historical data, expert consultations, and preliminary assessments at the outset of the project. Where historical data were lacking, estimates were made through expert judgement and initial evaluations. Target values were collaboratively set with the involvement of agronomists, project coordinators, and technology experts, aiming for goals that are both ambitious and attainable.
Data gathering for the selected KPIs was carried out over two growth cycles (2021 and 2022), facilitating an in-depth analysis of the technological interventions’ sustainability impacts. For KPIs concerning carbon credit generation and emission reductions, data procurement was primarily executed through the DSS, with independent audits ensuring accuracy. Economic impacts and the degree of adoption of sustainable practices were evaluated through direct engagements, including surveys and interviews with participating farmers.
The process of calculating each KPI involved the comprehensive aggregation and analysis of the collected data against the baseline figures, facilitating a critical evaluation of progress towards achieving the predefined targets. This evaluative mechanism was pivotal in assessing the smart farming solutions’ success in SIP10, particularly their contribution towards advancing the grapevine sector’s sustainability.
This framework mirrors the approach detailed for SIP7, and the performance measurement for SIP10 was designed around a suite of KPIs derived from the SOIs framework. These KPIs were specifically chosen to rigorously assess the sustainability outcomes of the pilot activities across various domains. Within the environmental domain, KPIs such as “Pesticide Use”, which tracks the volume of active substances utilised per vineyard area, and GHG, calculated per ton of product, were pivotal in measuring the ecological impact of the initiatives. Economically, the focus was placed on KPIs like “Intrinsic Product Quality” and “Revenues from Carbon Credit Sales”, which gauge the qualitative impact on products and the financial benefits derived from engaging in carbon trading. Social sustainability was evaluated through indicators such as “Sustainability Certifications and Labels”, which reflect the adoption and recognition of sustainable practices facilitated by the DSS.
The process of defining baseline and target values for these selected KPIs was the result of a collaborative effort involving the research team, participating farmers, and agronomists. This cooperative approach ensured that the KPIs were grounded in historical data and aligned with realistic expectations and trends, providing a solid foundation for the comprehensive assessment of SIP10’s sustainability impacts. The identification and detailed description of these KPIs for SIP10 can be found in
Table 4, encapsulating the multi-faceted approach to monitoring and enhancing the sustainability of the pilot activities.
2.2.4. SIP10 Data Collection and Utilisation
For SIP10, an intricate data collection process was employed, harnessing the capabilities of the vite.net® DSS. Vineyard managers, encompassing farmers and consultants, played a pivotal role in this process by inputting comprehensive details about their vineyards into the DSS at the onset of the cropping season. This initial data entry covered essential field characteristics such as location, soil texture, crop variety, and planting details. Additionally, each field was associated with a weather station, enabling the registration of key weather variables crucial for accurate monitoring and decision-making throughout the season. As the cropping season progressed, farmers were responsible for logging all vineyard management activities in the DSS, including soil and plant management strategies and measures taken for pest and disease control.
To establish a robust baseline for evaluating the impact of sustainable vineyard management on carbon emission reductions, data were also collected from vineyards in neighbouring farms not participating in SIP10 and those not utilising any form of technological support. This comparative approach facilitated a clearer assessment of the technological interventions’ efficacy in enhancing sustainable practices and their environmental benefits.
Within SIP10, the comprehensive dataset compiled by farmers via the DSS was instrumental in calculating both carbon emissions and carbon sequestration rates, expressed in CO2 equivalent. This analysis was crucial in quantifying the environmental impact of the sustainable management practices adopted in the vineyards. By leveraging this data, the study aimed to provide a nuanced understanding of how technological support, specifically using the DSS, contributes to mitigating climate change impacts by reducing carbon emissions and enhancing carbon sequestration in vineyard ecosystems.