Rural Hub
Back

Guidance on ‘stacking’ ecosystem services payments

3 mins

Landowners looking to combine a range of revenue streams by delivering different ecosystem services on the same parcel of land are to be given greater clarity about what will and won’t be possible.

It is widely recognised that land managers are likely to need to ‘stack’ or layer payments for delivering a range of different services – such as carbon capture, biodiversity improvements, natural food mitigation, and nutrient neutrality – to help some nature-based projects work financially.

There are also strong arguments that allowing farmers and landowners access to multiple revenue streams may act as an incentive for them to design high-quality schemes which meet multiple objectives, improving the overall environmental outcome.

However, stacking payments is one of those concepts that sounds simple in theory, but may be rather more difficult in practice. The complexity and current lack of clear government guidance does makes it vital that landowners seek professional advice in this emerging market. One of the current challenges is establishing how private sector investment should sit alongside some of the new schemes being rolled out by the government, funded by public money.

Guidance on stacking principles

To address this issue, Defra has announced that it is in the process of developing a new policy framework for ecosystem market development which will signpost people to guidance on the principles of stacking payments and the eligibility rules for individual schemes and markets.

A draft framework is expected to be published this summer, in advance of a planned update to the Green Finance Strategy in late 2022.

EWCO and stacking payments

Meanwhile, Defra has confirmed that land managers may be able to receive payments under the England Woodland Creation Offer (EWCO) in addition to payment for ecosystem services from other sources, subject to conditions.

For example, projects funded with EWCO payments may be eligible for registration under the UK Woodland Carbon Code, subject to the scheme meeting the WCC’s additionality tests.

There may also be cases where it is possible to stack EWCO funding with Biodiversity Net Gain (BNG) payments where landowners elect to establish woodlands in situations where they are not required to do so. However, where a developer is required to replace woodland on a like-for-like basis the project would be ineligible for EWCO payments because it would be subject to an existing legal requirement to create the woodland.

Recipients of EWCO ‘additional contributions’ payments – where landowners can be paid a top-up to improve water quality, public access or to encourage nature recovery – will also not be eligible to draw in funding from another source for providing the same service. For example, a farmer who is a recipient of the additional contributions payment for water quality could not sell water quality benefits to a third party, such as a water company.

Defra does have plans to introduce a new policy which will permit EWCO recipients to pay back their additional contributions payments if they have an opportunity to sell them more lucratively elsewhere, but guidance on this process will not be available until later this year.

This new EWCO guidance is helpful, while the forthcoming policy framework will hopefully offer more clarity which will be essential for the development of future projects. However, it is likely to remain a complex area where the input of environmental land management specialists will continue to be important.

If you would like to know more about ecosystem services and payment stacking contact Duncan Glen or for specific EWCO queries contact Matthew Bennison.

Duncan Glen
Director, Environmental Land Management
Morpeth
+44 7899067314
Send a message to Duncan Glen
3 mins

Related Articles

05.08.2022

Bracken: A new look at an old adversary

There can be few native plants that have caused as many management headaches to landowners – particularly, but not exclusively, in the uplands of the UK – as bracken. It is an extraordinarily successful species reputed to be present on every continent on Earth apart from Antarctica, but it is the species’ ability to colonise […]
04.07.2022

Why hope is growing that elm trees can make a comeback

Strutt & Parker was delighted to sponsor the Future of the Elm Tree conference on restoring elm to the landscape, held at Kew Gardens on 28 June 2022. The best conferences inspire you – they make you want to learn more and do more – and this was one of those. Opening the conference, organised by the Institute of […]
09.06.2022

Take part in CLA and Strutt & Parker ‘Future of Farming’ survey

A new survey designed to gather insight into how quickly farmers and landowners are responding to the changing world they find themselves operating in, has been launched by Strutt & Parker and the CLA.  The rural sector is facing a huge amount of change in terms of agricultural policy and the wider challenges posed by […]
09.05.2022

7 things to know about the updated Peatland Code

The UK’s Peatland Code has been revised to allow for the quicker delivery of projects and to ensure that the scheme integrates more closely with existing management practices and environment schemes. The Peatland Code is the quality assurance framework for peatland creation projects in the UK, which allows the generation of independently verified carbon units […]

Talk to us

Want to talk to us about our rural specialisms? Send us a message and we will make sure it gets to the right person.

Please write your name
Please write a message

Sign up

Sign up to be notified when we launch new publications so you’re always ahead of the research.

Please write your name
Please write a correct email address
Send me updates about
Please tick a box