Staff Writer l Palladium - Feb 23 2022
Palladium’s “Revere” Launches New Project to Test Ways to Blend Private Finance with the UK’s Environmental Land Management Schemes

How can governments and the private sector incentivise farmers in the UK to use their land in a more sustainable way? This question is at the heart of the latest project announced today by Revere, a partnership between Palladium and UK National Parks that makes it possible to restore natural habitats with private capital.

Funded by the UK Department for Environment, Food and Rural Affairs (Defra), the project will inform the development of the emerging Environmental Land Management Schemes funding mechanism. Made up of three schemes – The Sustainable Farming Incentive, Local Nature Recovery, and Landscape Recovery – they are designed to be accessible for farmers and include fair compensation for nature-focused land management, which according to Defra should encourage farmers across the UK to participate.

Both public and private finance are needed to tackle the current global funding gap for nature-based solutions. Across the UK, an estimated GBP 5.6 billion a year is required to deliver the UK’s nature restoration targets. In England alone, an additional GBP 2.7 billion is required per year.

While Defra recently announced GBP 900 million in annual subsidy payments for England by 2024, taking that number down to GBP 1.8 billion a year, there’s still a long way to go, which is where private finance comes in. Indeed, the 2021 Spending Review also announced a new government target to leverage at least GBP 500 million a year for nature’s recovery by 2027 and more than GBP 1 billion a year by 2030.

The problem is determining how exactly to blend public and private finance in a way that’s good for UK farmers and incentivises nature restoration at scale, while also avoiding paying twice for the same results. “Figuring out how public and private funding can be combined in a way that maximises benefits for people and nature is one of the most important pieces of the puzzle to solve,” explains Tom Gegg, Palladium’s Nature-Based Solutions Technical Lead.

The other piece of the puzzle is addressing landowners’ and farmers’ concerns that receiving one type of finance will block access to the other. Historically, this worry has made them reluctant to get involved with nature restoration activities. This is as true for landowners as it is for tenant farmers, who have the added complexity of already being tied into contracts that determine the scope of how they can manage the 30 percent of UK land for which they are responsible.

Building on Palladium’s extensive experience in developing models for nature restoration in the tropics, where blended finance approaches are more mature, the project will assess the feasibility and merits of different mechanisms to blend public and private finance in the UK. Each model will consider the role of key stakeholders – including different types of land managers, Defra, investors, and buyers of ecosystem services.

"The problem is determining how to blend public and private finance in a way that’s good for UK farmers and incentivises nature restoration."

Revere will consider options for blending finance at different stages of the landscape recovery value chain, including the up-front investment in nature restoration and maintenance payments throughout project implementation.

“If we get it right, the UK will have a world leading natural capital market,” adds Gegg. “And the urgency and scale of the climate and biodiversity crises mean that its undisputable that both public and private funding have a critical role to play in safeguarding our futures.”

Land manager feedback will also be an important part of the project. To gather land manager input, Revere is partnering with the Yorkshire Dales National Park Authority, who have nationally recognised agri-environment scheme expertise. The project will be informed by farmers’ first-hand experience of engaging with various funding schemes.

“It’s absolutely vital that farmers themselves are directly involved in creating solutions if we are going to unlock the opportunities for both nature recovery and more resilient farm businesses,” adds Gary Smith, Yorkshire Dales National Park Authority’s Director of Conservation and Community.

In addition, Revere will evaluate existing agricultural tenancy agreements and consider options for long-term land manager agreements, which will need to safeguard investments in land use change, distribute revenues between tenants and landowners, and deliver associated environmental outcomes.

This work will consider options for balancing payments from private funding sources and Defra’s Sustainable Farming Incentive, Local Nature Recovery, and Landscape Recovery schemes, which will have a phased implementation starting in late 2022.

For the UK government, incentivising sustainable land use won’t be possible without combining both public and private finance. At the same time, supporting a shift towards productive and sustainable farming and food production with positive environmental, climate, and animal welfare outcomes, won’t happen without the full buy-in of English farmers.

Maintaining the status quo is no longer an option, and Revere’s research will help optimise Defra’s three schemes, ensuring they reach their ambitious goals between now and 2030.


For more information, contact info@thepalladiumgroup.com or visit Revere.