In the UK, there are more opportunities than ever for land managers and farmers to make an income off their land while restoring the natural environment.

By dedicating a portion of their land that isn’t necessarily suitable for food production to nature restoration projects like tree planting instead, landowners can generate and sell “ecosystem services.” These services are often traded as credits, and lead to important environmental outcomes such as carbon removal, biodiversity enhancements and improved nutrient cycling for water quality.

In a new research report from Revere, a partnership between Palladium and UK National Parks, the team explores how ecosystem service payments can be “stacked” in way that makes them profitable for land owners, while maintaining their environmental integrity.

Understanding Stacking

To boost the economic attractiveness of nature projects, many land managers are exploring how to access multiple payments for different ecosystem services generated from the same piece of land. The additional financial returns from projects with multiple, or stacked revenue streams, could be key to encouraging more land managers to setting up nature restoration projects in the UK.

However, stacked payments do present risks to the integrity of the UK's nascent ecosystem services market.

This is because most payments are driven by the need for companies to compensate for environmental liabilities linked to damage or pollution they have caused elsewhere. For instance, imagine a bank buying carbon credits from a tree planting project to offset their own emissions, or a water utility company paying for improved water quality services.

So, if farmers are paid by several companies for creating a new habitat, there is a risk that overall the market could allow more environmental degradation to take place in the UK.

This risk is why many regulators are wary of permitting stacking, and many land managers are still waiting for guidance from UK Government bodies on a clear way forward.

Balancing Environmental Uplift and Damage

“Stacking payments for ecosystem services from nature projects is complex and needs to be done in the right way,” explains Palladium’s Tom Gegg, Project Development Lead for Nature Projects in the UK.

“We think it’s key that all businesses and landowners participating in the new market take the same approach to environmental accounting. If we do this, we can clearly track how much positive environment impact has been delivered by the landowners and ensure this impact outweighs the negative impact caused by the companies buying the credits or services in the market.”

The research, he says, offers a roadmap for achieving this balance, contributing to the broader goal of scaling up high integrity, economically viable nature restoration projects in the UK.

This research provides insights that could inform future standards such as DEFRA’s Nature Markets Framework, which is exploring how to operationalise the stacking of ecosystem service payments while maintaining market integrity.

“Our work has recently been published in the Journal of Nature-Based Solutions,” shares Gegg, contributing to the ongoing dialogue on stacking ecosystem service payments and growing nature markets in a responsible way.

Learn more about Revere or contact info@thepalladiumgroup.com for more information.