This post is by Guy Thompson, Group Director of Environmental Futures at Wessex Water, Managing Director of EnTrade, an online marketplace in accredited environmental services and a founding Director of Natural England.
The government’s commitment to restore the environment within a generation will depend on transformative change in land management. Over the last six months, the government has been consulting on the design of the Environmental Land Management (ELM) scheme, the principal lever by which it will deliver this transformation. Given the impact of Covid-19 since the consultation opened, this is an important moment to assess whether the government’s design assumptions are commensurate with the scale of its policy ambition.
The ELM scheme is an important piece of the post-Brexit architecture and an exciting opportunity for a step change in the way we manage our land for people and nature. However, to live up to this prospect, the policy will need to address four key design principles currently missing:
- Complement regulation: the ELM scheme needs to be expressly designed to complement a transparent system of environmental regulation to bring the agricultural industry into full compliance with the polluter pays principle over time.
- Facilitate transition: the current design will result in a scheme that is too static. Although there is an ambition for land managers to progress to higher levels, the tiers are largely described in terms of activities rather than outcomes. The scheme should recognise different starting points and provide strong incentives to progress to higher tiers.
- Drive integrated local delivery: it is critical the ELM scheme does not perpetuate siloed delivery, which is inefficient and is currently the biggest single barrier to integrated local delivery of national environmental targets. A key principle should be that the scheme will drive the integration of food production with action on climate change and delivery of environmental goods and services.
- Incentivise private investment: Positive changes to land use and management required will deliver both public and private benefits (for example, access to biodiversity credits to allow compliance with biodiversity net gain requirements). In the same way that public funds should pay for public goods, private benefits should be paid for by private funds. The ELM scheme should be explicitly designed to facilitate private investment in environmental outcomes alongside public funding for public goods.
A system of incentives
Picking up the fourth of these gaps specifically, there is huge potential to involve the private sector and NGOs in the funding and delivery of environmental public goods. For example, schemes to deliver private investment in water quality deliver both private benefits, through reduced water treatment costs for companies and enhanced incomes for farmers, and public benefits, in the form of cleaner rivers. Similarly, the facilitation fund of the countryside stewardship scheme has highlighted the important added value of NGOs and independent farm advisers as delivery partners in landscape-scale projects.
The defining characteristic of public goods is that their supply cannot be secured through markets. The ELM scheme consultation echoes this, saying that “the market does not adequately reward delivery of environmental public goods”. This statement risks becoming a self-fulfilling prophecy. In fact, well-designed markets in environmental services have emerged over the last 20 years, both in the UK and internationally. There are well established markets in energy efficiency, renewable energy and air quality – as well as more nascent private payment for ecosystem services schemes, as gave birth to EnTrade.
I have argued before that the goals of the 25 year environment plan will not be achieved by public and philanthropic funding alone. The economic impact of Covid-19 will exacerbate this situation. With the passage of the Environment Bill, there is an opportunity to build on biodiversity net gain by establishing other markets in environmental services delivered by nature based solutions, such as flood reduction, carbon sequestration and health, to access private funding for nature recovery. The Woodland Carbon Code, supported by the Woodland Carbon Guarantee, is an important example which is already enabling landowners to access private funding for carbon offsets. The design of the ELM scheme must not only anticipate – but actively facilitate – the development of such environmental services markets. There needs to be a straightforward mechanism by which landowners can access funding available through both markets and the ELM scheme.
Most importantly, to maximise the value of public funding, the ELM scheme must demonstrate it will fund outcomes over and above those delivered through markets to avoid the risk that it crowds out private funding.
A transition to integrated local delivery
We have a window of opportunity before the scheme’s national launch in 2024 to understand how to incorporate these design principles – particularly to the uppers tiers – and avoid the risk that it defaults to a pale imitation of an agri environment scheme. As the Broadway Initiative has recently argued, this would benefit from a nationwide series of demonstration projects to understand how to accelerate private investment in nature based solutions, building on the good work of Green Alliance in its Natural Infrastructure Scheme concept. With a more radical vision for the scheme, the government can re-set the role of ELMS to be a progressive piece of the post-Brexit architecture for nature recovery.
[Photo source: Christine Matthews / Farmland near Kelling Heath, Norfolk]