Kaye Jemmeson l Palladium - Aug 05 2022
How Farmers in the UK Can Get Paid for Restoring Their Land to Nature

As much of the UK and Europe experiences a deadly heatwave, it’s clear that climate change must be addressed. But until the technology for removing carbon from the atmosphere is available, our next best solution is nature; preserving and restoring natural ecosystems so that they can continue to act as one of our best carbon sinks, keeping emissions from leaking into our atmosphere.

Much of the land in the UK that is ripe for ecosystem restoration is owned by farmers and land managers, with acreage ranging from one-person smallholdings to vast estates that cover thousands of acres. However, most of that land is already being used for a variety of purposes, from crop production to cattle grazing. The reality is that if landowners are going to be expected to change the way they use their land, they need an incentive beyond tackling the climate crisis – they need to make a living.

This is where the sale of “ecosystem services” comes into play.

Natural ecosystems can provide a wide range of goods and services, from carbon sequestration and clean air to food and timber production. Whilst some of these are well known income streams to society, others are only more recently being harnessed, for example ‘carbon credits’ from newly created woodland sold by landowners to third party organisations who are working towards their net zero goals.

These third-party organisations, including high-street banks, property developers, and utilities firms, pay the farmers or landowners to provide these services, generally through the creation or enhancement of natural habitats, which in turn enables the organisation to offset their carbon consumption or allows new developments to meet planning requirements.

Revere, a collaboration between Palladium and National Parks UK, bridges the gap between landowners and investors, finding ways to make their land profitable while also creating space for nature and reversing the impact on climate change, including through ecosystem services.

Revere is currently developing projects with landowners operating within the UK’s National Parks, including a peatland restoration project on an estate in the Cairngorms National Park in Scotland and a habitat restoration project with farmers in the North York Moors National Park.

Because the ecosystems market is new and subject to changes dictated by evolving government legislation, landowners often have limited clear information about what they can do with their land, how much money they can make from the sale of ecosystem services, and how it will affect their future. There are multiple choices to consider, each with their own pros and cons.

“Ideally, land managers would be rewarded for the environmental benefits their land creates."

According to Ashley Gillan, Project Developer for nature-based solutions at Palladium, this poses a challenge. “For a farmer or land manager to restore their land to nature and switch to providing different ecosystem services, say through the retirement of agricultural land, the lack of clarity around rules of the new ecosystem service markets can often make things seem too complicated or too risky,” she explains.

“Ideally, land managers would be rewarded for the environmental benefits their land creates. If that land delivers benefits in multiple ways, they should get paid for them,” notes Gillan. “This is the challenge and we’re working to find solutions.”

For land managers and farmers, ecosystem services can serve as an alternative means of income for their land, such as low productivity farmland being re-natured into a species-rich grassland habitat and a new source of income generated from biodiversity payments.

Turning over unproductive land for nature restoration could seem like the best choice for some landowners but as the market is still new and with multiple options to consider, many are reluctant to make the change.

“The question is, what payments or combination of payments generated by ecosystem services can be received on a parcel of land to form enough of an income to compete with the existing traditional land management,” Gillan adds.

“The challenge is that the majority of ecosystem service schemes currently focus on only one service, for example carbon sequestration and storage, and habitats that most suit this ecosystem service are encouraged to be created and managed for that service and that service only, rather than diversifying.”

What complicates matters is the regulation within the markets.

Current ‘additionality rules’ mean that a land manager may be getting payments for only one benefit (for example, payments for the carbon sequestered by new woodland) but not for the benefits seen to biodiversity, reduced flood risk, and water quality.

To make the most of the land being used for ecosystem services, a landowner can consider what is called ‘stacking’. The most common type of stacking is horizontal. For example, a landowner plants trees across their property, receiving nutrient credits for creating a forest buffer along a stream and carbon credits for the trees planted in the other areas of the property.

More difficult is vertical stacking, where a landowner receives multiple payments for a single habitat or restoration project in overlapping areas.

“Currently, ecosystem service markets favour distinct habitats with horizontally stacked environmental payments, with relatively minimal human input into the land in comparison to previous use,” Gillan says. “This could lead to a landscape with blocky separate habitats or a predominance of one habitat locking up that land-use for a long period of time and limiting the wider co-benefits that could be provided, as well as the ability for land managers to keep the land as a working landscape.”

An alternative approach to land use change is to create more of a mixed landscape, which can deliver both environmental benefits as well as retaining agricultural practices. One of Revere’s projects is currently looking at financing options for a mixed estate where a working landscape is retained with low intensity livestock and fruit trees, while also selling carbon credits from woodland, biodiversity uplift credits, and nitrate avoidance credits.

The hope is that in creating a mosaic landscape with a mixed model of environmental and societal benefits, landowners can retain farming practices and income while providing critical ecosystem services within a relatively new market that continues to evolve at a rapid pace.

To learn more, visit Revere.