Ecosystem services market proposed to help farmers and the environment

from Business Green

A new market-based model for driving the adoption of greener farming practices could help to direct millions of pounds towards more environmentally friendly agricultural methods and interventions, according to sweeping new proposals from think tank Green Alliance and charity the National Trust.

The proposals lay out how a new series of Natural Infrastructure Schemes could see farmers working together to sell ecosystem services, such as flood protection, to multi-buyer groups of public and private players who would benefit from the resulting services.


The groups argue the proposals - which form part of an on-going debate about how the UK should organise agricultural subsidies post-Brexit - could in effect create a new market for sustainable land management, delivering multiple environmental benefits compared to the current approach of distributing subsidies based largely on land ownership.

In the report, which is launched today, the organisations argue farmers are in a unique position to restore and protect the natural environment, but there is currently no commercial incentive for the provision of natural services from farmland.

The proposals could help produce savings for organisations currently facing high costs from poor water quality and flooding, the two non-profits said.

Patrick Begg, rural enterprises director at National Trust, said farmers should be paid fairly for producing food in a way that supports the long term health of farmland. "The Natural Infrastructure scheme is about creating a market for services from farming that today go unrewarded - reducing flood risks, improving water quality and creating homes for wildlife, while at the same time opening up new revenue opportunities for farmers," he said in a statement.

Angela Francis, senior economist at Green Alliance, said natural filtration and flood risk management are already cheaper than hard engineering projects in many places, but there are no financial incetives to encourage land owners to invest in such measures. "Once you have a good that can be supplied for a price that a buyer wants to pay, you have a market," she said in a statement. "Natural Infrastructure Schemes put these factors together and provide an opportunity for us to start restoring nature now."

A key example of how the proposals could work focuses on the provision of water-related services, such as flood management. Green Alliance estimates river flooding and water contamination costs a range of players, including water companies and local authorities, just under £2.4bn a year. But natural filtration and flood risk management could offer a lower cost way of managing exposure to flood and water quality problems, savings millions of pounds each year.

The report also argues such schemes would benefit upland farmers struggling to make ends meet. Chris Clark, who farms at Nethergill Farm in the Yorkshire Dales, said diversifying how farmers make money from their land makes good business sense. "Setting up marketing groups for our green services would offer a great deal for farmers and for our customers," he said in a statement. "The appetite exists for doing things differently, if we can make it pay."

The report sets out several policy actions which could help accelerate the creation of viable markets for ecosystem services, including through development funding to cover the initial costs of setting up institutional arrangements for the scheme, setting out at an early stage what licences would be required, and working to create a legal framework for delivery.

It also advised the government to consider the potential role of ecosystem services as it rolls out its replacement of the EU's Common Agricultural Policy (CAP).

"The old CAP subsidy-and-grant approach is inadequate to deal with the pressures on land and the realities of farm economics," said Sue Armstrong-Brown, policy director at Green Alliance, in a statement. "The potential market for environmentally-beneficial farming could be worth millions - far more than the £400m available to farmers through government agri-environment schemes. We need to make farming part of the way the environment is returned to health, and that means making good environmental management pay."

Green Alliance and the National Trust now plan to pilot a series of Natural Infrastructure Schemes in the UK in collaboration with businesses and landowners.