Ecosystem services

[onesiedale]

Govt. Now announcing a new grant scheme encouraging financial services and investors onto the land. Can't quite see how land managers benefit other that taking the carbon credit penny. . . maybe . Or am I missing something?

[Withdrawn] [Withdrawn] How to apply for a Natural Environment Investment Readiness Fund grant

www.gov.uk

 

[holwellcourtfarm]

Hmmmmm. I had a 2 hour web meeting with one of our accountants partners this afternoon helping each other understand the current state of play in ELMS, biodiversity offsetting (for the planning system) and carbon trading.

It can all be summed up, it seems, as "it's a developing area", "policy is in place but detail is lacking" and "it has great potential but could go either way".

The demand is there for industry to put the money in. Its the verification and payment processes that are seriously immature at present.

 

[Muddyroads]

I was sent this by our parish clerk earlier in the week.
One of the things I don’t understand is that if agriculture is as bad for the environment as they say, how come we have carbon credits to sell in the first place?

 

[holwellcourtfarm]

I was sent this by our parish clerk earlier in the week.
One of the things I don’t understand is that if agriculture is as bad for the environment as they say, how come we have carbon credits to sell in the first place?

I wouldn't sell carbon credits at todays prices (and the contract terms will become clearer as the market matures too). Around £30 / T CO2e at present I hear but expected to near £100 in a few years.

Biodiversity offset units could pay even better. Carter Jonas are predicting values around 3 x current land value plus an annual management fee....

 

[Muddyroads]

I wouldn't sell carbon credits at todays prices (and the contract terms will become clearer as the market matures too). Around £30 / T CO2e at present I hear but expected to near £100 in a few years.

Biodiversity offset units could pay even better. Carter Jonas are predicting values around 3 x current land value plus an annual management fee....

That raises lots of questions in my mind. What sort of time scale do you think that might be?

 

[holwellcourtfarm]

That raises lots of questions in my mind. What sort of time scale do you think that might be?

30 years. I'll try to link their video tomorrow.

The market for biodiversity offsets is predicted to be bigger than BPS!

The market for Carbon offsets could easily be 10x BPS.

 

[jack6480]

I was sent this by our parish clerk earlier in the week.
One of the things I don’t understand is that if agriculture is as bad for the environment as they say, how come we have carbon credits to sell in the first place?

I don’t think we do

 

[Muddyroads]

I don’t think we do

So who does?

 

[jack6480]

So who does?

Land owners who don’t farm

 

[Muddyroads]

Land owners who don’t farm

I was thinking similar.

 

[Muddyroads]

30 years. I'll try to link their video tomorrow.

The market for biodiversity offsets is predicted to be bigger than BPS!

The market for Carbon offsets could easily be 10x BPS.

I’m surprised it’s so far down the line giving all the “carbon neutral” targets we keep hearing. It will certainly be too late for me.

 

[holwellcourtfarm]

I’m surprised it’s so far down the line giving all the “carbon neutral” targets we keep hearing. It will certainly be too late for me.

Sorry, I misunderstood. Its the agreements proposed that last 30 years minimum.

As for when biodiversity offsets will start trading, it's written into the new Environment Bill so should become law this year. Give it a year or 2 for a "transition period" while the brokers work out the details. It should be bedding in around 2025 i'd think.

 

[onesiedale]

Sorry, I misunderstood. Its the agreements proposed that last 30 years minimum.

As for when biodiversity offsets will start trading, it's written into the new Environment Bill so should become law this year. Give it a year or 2 for a "transition period" while the brokers work out the details. It should be bedding in around 2025 i'd think.

So who gets to put the value on biodiversity offsets? And how are they assessed? Or is that what this grant is all about - working out a true formulation?
Should we be putting a working group together, @Karliboy , making a project of it and using it to fund a biodiversity consulting group? As I see it, a working livestock farm would tick as many boxes as an RSPB rewilding scheme. And you can bet there'll be a few schemes applied for..

 

[Muddyroads]

No good for us with 10 years left in the tenancy then. Presumably good for the landlord though?
Very curious as to what biodiversity offsets are. Sounds a bit like complication for the sake of it.

 

[N.Yorks.]

Ecosystem services (ES) are more than just carbon capture.........

Other ES's are:

-food and fibre production (farming/forestry)
-water supplies
-raw material eg. clay, aggregates, lime
-medicinal compounds
-genetic pool

-clean air
-productive soil
-climate regulation
-pollination
-pest and disease regulation

-interaction between species to maintain the balance of life
-biodiversity to maintain life system resilience

All of the above comes from the land (surface of the planet), different locations will naturally supply different mixes of these services. So a farm in the Yorkshire Dales will influence the environment differently to an arable one in Wiltshire for example.

We've lumped all the above into two words - Natural Capital. Natural Capital will be different depending on location.

BIG problem is that there isn't a defined market for most of these services we humans get as we've always taken them for granted and haven't attributed them a financial value. Our economies have developed around money and we usually only value something that costs money......... so these natural services that we get from the environment become degraded as the pursuit for capital gain continues to the detriment of the things we take for granted. We now find ourselves realising it is cheaper to not pollute water supplies rather than try and clean them just before we consume them, it's cheaper not to create air pollution than it is to treat thousands of patients in the NHS for repiratory disease. It's cheaper to reduce carbon emissions than it will be to build massive flood defences so we don't lose land mass from rising sea levels, or lose our capacity to grow food due to unstable climate. Obviously if we wipe ourselves out the whole system eventually rebalances again and human wealth acquisition doesn't drive the system that support life on the earth.

SO the big question for our government is how much will they pay farmers and land managers to produce these goods that aren't food, or encourage food production that is compatable with maintaining the lands' ability to give us things we've previously taken for granted???

Consumers/humans don't currently pay for a lot of the Ecosystem Services - there isn't a market for clean air for example....... It's going to need a bit of a shift in thinking about valuations and markets. Hence the OP's post and link.

 

[onesiedale]

SO the big question for our government is how much will they pay farmers and land managers to produce these goods that aren't food, or encourage food production that is compatable with maintaining the lands' ability to give us things we've previously taken for granted???

Consumers/humans don't currently pay for a lot of the Ecosystem Services - there isn't a market for clean air for example....... It's going to need a bit of a shift in thinking about valuations and markets.

However, looking at the grant available, DEFRA is looking to land managers to work with the financial institutions to establish that value.
This is why I do wonder if there is a case for livestock farmers to drive the consultancy, rather than the likes of PWC, KPMG or Mckinseys.
If we're serious about it then carbon credits should be priceless! - or at least unaffordable

 

[N.Yorks.]

However, looking at the grant available, DEFRA is looking to land managers to work with the financial institutions to establish that value.
This is why I do wonder if there is a case for livestock farmers to drive the consultancy, rather than the likes of PWC, KPMG or Mckinseys.
If we're serious about it then carbon credits should be priceless! - or at least unaffordable

Yes. I was thinking something very similar. The way I see it it's not just livestock farmers though, it's all land owners/managers.

Was thinking that farmers hold the land bank through which many of these services flow and should have a mechanism through which they can complete transactions with organisations/individuals who have to or want to purchase them. Once the mechanism is in place then the demand needs to be driven by regulation and/or engagement with business and the food supply chain.

 

[holwellcourtfarm]

We are talking about a few different things here. As @N.Yorks. nicely summed up above, they all fall into the catch-all of "Ecosystem services" but that then splits down into the broad ELMS "public goods":

• clean air
• clean and plentiful water
• thriving plants and wildlife
• reduction in and protection from environmental hazards
• mitigation of and adaptation to climate change
• enhanced beauty, heritage and engagement with the environment

and any other specific ES benefits that wider industry needs and is willing to pay for such as (but not limited to):

• Carbon sequestration credits
• Biodiversity offsets

As I currently understand it the 6 DEFRA public goods are intended to be delivered individually or jointly by land managers on a "pick and mix" basis, as suits the farm, in return for ELMS money from the public purse. This, as we all know, will be a government run scheme with clear rules.

The industry funded ES benefits, however, will be a commercial contract between the land manager delivering them and the company requiring them, possibly via a brokerage service.

For carbon offsetting I see no good reason why ELMS soil health improvements, for example, receiving public DEFRA money in return, should not also deliver carbon sequestration for which credits are sold to industry at the same time. The rules around verification of compliance will be different for the 2 purposes but that could be accomodated if all parties are willing. For carbon offsetting there will be a requirement that the carbon stays locked up for a set period, probably at least 30 years and maybe even 100 years, so these could be very long contracts.

Biodiversity offsets are a rather different beast. They will require delivery of NEW biodiversity on a site, under contract, for a period of not less than 30 years. There are arguments raging at present between the developers, the DCLG (running the planning system) and the ecology profession about how these should be quantified and specified.

The DCLG and developer view appears to be that the "service" will simply be delivered as "units of biodiversity offset", probably measured in Ha. The Ecology profession argue that the intention is to address the damage done to ecology by development and so the offsets provided must replace (and exceed, as written into the plan hence "biodiversity net gain") the actual type of biodiversity lost on the specific development site. This is MUCH more complicated to deliver and manage.

As an example:

ABC Developments wants to build 300 houses and ancillaiary facilities on a 10Ha improved meadow at the edge of town. The regulations will require them to survey the existing biodiversity on site and deliver the equivalent to that lost by the development +10% somewhere nearby to offset the loss.

DCLG propose that they should just contract with someone to create 33Ha of improved meadow in the local area from land currently in a less biodiverse use (eg: conversion from intensive arable). If they can't find anyone willing to do this then DCLG propose to accept a sum of money in lieu which DCLG will hold in a fund. DCLG will then use that fund to deliver the necessary number of biodiversity offset units anywhere in the region where they can find land managers willing to do it for the sums on offer.

Ecologists say it's much more complex. That improved meadow may have been a key wildlife transit corridor between 2 existing habitats of greater importance. It may have had a ditch network of great eclological importance in it which will be piped for the development. It may have had key rare species of plant in a few places. They say that the actual features lost must be delivered in the offsetting.

Of course, the development may also need to buy carbon credits to offset the embedded carbon in the new houses and infrastructure as well, in addition.

 

[Kiwi Pete]

However, looking at the grant available, DEFRA is looking to land managers to work with the financial institutions to establish that value.
This is why I do wonder if there is a case for livestock farmers to drive the consultancy, rather than the likes of PWC, KPMG or Mckinseys.
If we're serious about it then carbon credits should be priceless! - or at least unaffordable

Yes!

 

[onesiedale]

Ecosystem services" but that then splits down into the broad ELMS "public goods":

• clean air
• clean and plentiful water
• thriving plants and wildlife
• reduction in and protection from environmental hazards
• mitigation of and adaptation to climate change
• enhanced beauty, heritage and engagement with the environment

Now you've said it like that, it's a no brainer to incorporate all this stuff into ELMS. However, the driver behind the grant funding is to get a £££value attached so that corporate investment would pay for it.
Is this the get out of jail free card for the cash strapped governments of the world? It really does make sense now.
This is mining of the future and how to turn carbon into worthless cash so that the cash can be spent on cheap resources also mined out of the ground to keep the economy growing.

To quote an infamous antipodean philosopher - "control is the biggest business on the earth"

I'm even more convinced that it should be land managers valuing this stuff rather than institutions.