Policy and Practice NotesNote No. 39 September 2012Why is there growing interest in PES?Policy makers are interested because:— Concerns over climate change and greenhousegas emissions.— Increasing pressures on natural resources and biodiversity.— The need to ensure high water quality and good ecologicalstatus as required by the Water Framework Directive.— The need to balance food security with environmentalconservation in the face of improved (albeit volatile)commodity prices for producers.— Cuts to conservation budgets, including those fundedfrom the CAP.Businesses are interested because:— They can derive economic benefit from looking atoperations in the context of the wider ecosystem.— There are opportunities from helping other businessesto take an ecosystems approach.What’s happening now with PES?The Natural Environment White Paper commits theGovernment to an ecosystems approach including theproper valuation of natural capital and the expansionof markets via PES approaches.Already the Government is:— Developing an evidence base that includes researchinto PES barriers and opportunities.— Developing a PES action plan and best practice guide.— Facilitating a programme of on-the-ground pilots to testthe PES approach— Supporting the Ecosystems Markets Task Force that isengaging businesses in the benefits of an ecosystemsapproach, including PES.What can we learn from research?Relu and other programmes within LWEC have been atthe forefront of ecosystems research and can offer keyinsights into payment for ecosystems services.PES must bring added benefits:— Paying providers for ecosystem services should not be asubstitute for meeting basic regulatory requirements butdeliver additional benefits. Work in south west England bythe Westcountry Rivers Trust and South West Water hasdemonstrated how additional benefits can be delivered byinvesting with local farmers for better farm infrastructureand less intensive management practices.Regulation and incentives are both important:— Cost-effective regulation is needed to underpin PESschemes to ensure additional benefits and value for money.— Well-designed schemes that use innovative and creativeapproaches to incentivise land managers are also importantfor securing ecosystem benefits. Lessons can be learnt fromsuccesses in other countries.— Such innovation can expose deficiencies in existing legalprovisions. Long term resource protection requires robust,durable and flexible legal tools. Restrictive covenants areused in the UK but can lack flexibility and enforceability ifland ownership changes, compared to conservationeasements that protect land from development or certainkinds of use in perpetuity, used in the USA.— Future PES schemes including public agri-environmentschemes need options to further encourage land managerswho maintain high conservation standards, as well ascompensating intensive producers for changing to lessdamaging practices, or assisting undercapitalised farms toinvest in improved infrastructure.
Policy and Practice NotesNote No. 39 September 2012Flexible delivery and stakeholder engagementpay dividends:— Land management tailored to localities is key to maximisingecosystem benefits.— PES schemes should vary payments to match the localopportunity cost of resource protection. This can be donethrough mechanisms such as reverse auctions where landmanagers bid to provide a particular service.— Working at landscape scale across ownership boundariesis essential for delivering certain ecosystem servicese.g. water provision, biodiversity conservation and carbonand climate regulation.— Engaging local stakeholders early on can pay dividendsand create the right conditions for PES schemes to develop.Investment in building up relationships and the nurturingof trust and acceptance amongst stakeholders are vital.— Techniques such as participative mapping and modelling oflandscape scale ecosystems enable better understandingof different ecosystems services under a variety of scenarios,enabling trade-offs to be negotiated, and priorities agreed.— PES schemes at local level benefit from the role of anindependent, trusted, broker such as a local conservationtrust or social enterprise. Brokers have detailed knowledgeof local conditions and can help bring together potentialbuyers and sellers.— Farm advisers who are locally accepted and trusted arevital. They need to build ecosystem service delivery intoadvice that benefits the farm as a business and achievesits owner’s objectives.Practical options are emerging:— The most promising PES opportunities are around waterand carbon management. The science is relatively welldeveloped; there are buyers and sellers interested inreducing their costs and environmental impact, plusregulatory frameworks and new codes of practice, suchas the Woodland Carbon Code, underpinning the safedevelopment of markets. The amount of carbon dioxidepredicted to be removed from the atmosphere bywoodland planting projects registered under the codehas already passed one million tonnes.— Peatland offers opportunities for bundling together anumber of different ecosystem services that providemultiple benefits, for example biodiversity benefits inaddition to carbon sequestration and clean water. Thiscould bring in additional investment for peatlandrestoration and help meet targets under climate legislationand the Habitats Directive.— Agri-environment schemes under the CAP offer potentialfor matching public and private investment but needgreater flexibility to respond to local conditions whilsttargeting ecosystem services effectively.What else is needed for PES to work?PES will not provide all the answers, but can be asignificant policy tool for better natural resourceconservation. Careful evaluation is required of therisks involved as well as the benefits.Research has a key role to play. There should be:— A bridge between the plethora of research on valuationbeing undertaken by academics, and decision-makersseeking to establish local ecosystem markets.— Research and development into practical, low cost toolsthat can be used by a range of stakeholders to makedecisions about value and priorities.— Continuing research into how different land managementpractices influence the production of different ecosystemservices in different places. The mechanisms that establishcause and effect are not yet sufficiently clear for somehabitats and/or ecosystem services.— More research into the behaviours of potential buyers andsellers of ecosystem services to assist with the developmentof markets and understand what people value and why.— Continuing research into incentivising landmanager’s behaviour e.g. enabling collaboration acrossproperty boundaries for the management of certainecosystem services.— More links between research and businesse.g. academic interns.— More involvement of businesses in designing ecosystemsresearch relevant to their needs.— Better understanding of the potentially damaging trade-offsbetween ecosystem services that may be caused by PES.
Rural Economy and Land Use ProgrammeEnhancing the environment through payment for ecosystem servicesWhat are the messagesfor policymakers?The Government should:— Maintain its commitment to safeguarding ecosystemsand the services they provide, including investment inenvironmental public goods, whilst investigating theopportunities for additional private investment alongsidepublic funds. There is a role for business in PES schemesprovided that basic regulation is clear and enforceable.— Establish a clear regulatory framework for PES, buildingon the Defra Best Practice Guidance. This would setprinciples that all PES schemes should adhere to in returnfor some kind of accreditation, e.g. added value andcoordination of local schemes with national strategicpriorities. There are several existing bodies that couldimplement this framework but overall responsibility lieswith Defra.— Work with relevant government departments to producea combined code for land based carbon, drawing on theWoodland Carbon Code, and the emerging PeatlandCarbon Code.— Accelerate delivery of its PES Action Plan capitalisingon the creation of Nature Improvement Areas and LocalNature Partnerships, plus the availability of National Parksand Areas of Outstanding Natural Beauty to test and scaleup the design and delivery of PES schemes.— Make a commitment to disseminate the learning fromthe PES pilots and feed it into policy and practice, andinvest in a programme of formal monitoring andevaluation of PES schemes, both private and public.— Consider different models of agri-environment deliveryand work with farming organisations and otherstakeholders to improve targeting and flexibility.— Maintain its investment in knowledge exchange toprovide access to a range of information aboutecosystems, including PES.The Research Councils should:— Step up investment in inter-disciplinary research intoPES, involving social scientists as well as ecologists andeconomists, and key stakeholders such as businesses.— Pay greater attention to social and economic outcomesof PES approaches as well as environmental ones – forexample what can PES do for rural economies?— Invest in communicating key messages about PES towider audiences many of whom find the languagearound PES alienating or incomprehensible.Businesses need:— More information in non-academic language about theconcept of ecosystems services and its drivers for business.— Clear guidance and information to show how theapproach works in practice, perhaps with pilot projects.— Key business players promoting ecosystems thinkingwithin the business community. These could comefrom the water, agriculture or food retail industries,from the consultancy and advisory sectors, or fromtrade organisations.
Policy and Practice NotesNote No. 39 September 2012Further informationThis Policy and Practice Notewas written by Frances Rowe,with comments and assistancefrom Relu and LWEC researchers.Particular thanks to Ian Bateman,Mark Reed, Laurence Smithand LWEC Land Use FellowJeremy Phillipson. The Notedraws on Relu research andother LWEC activities.Series editor: Anne LiddonUseful resources:LWEC is a multi-agency partnershipthat is concerned with responses toenvironmental change.www.lwec.org.ukRelu is an interdisciplinary researchprogramme supporting projectsunder the theme of adapting ruralliving to environmental change.www.relu.ac.ukRelevant projects:– Sustainable uplands, learning tomanage future change– Innovative market-basedmechanisms and networks forlong term protection of waterresources– Modelling the impacts of theEuropean Water FrameworkDirective: implementing theecosystem services approach– Integrated management offloodplains– Science in the field: understandingthe changing role of expertise inthe rural economyVNN is an interdisciplinarynetwork for valuing ecosystemservices, biodiversity and naturalresource use.www.valuing-nature.netRelevant projects:– Valuing peatlands: assessing andvaluing peatland ecosystemservices for sustainablemanagement– Agricultural management: valuingthe impacts of ecosystem serviceinteractions for policyeffectiveness– From values to decisions: bridgingthe gap between supply anddemand for valuation evidenceThe NEA (National EcosystemAssessment) follow-on phasewill further develop andcommunicate the evidence baseof the UK NEA and make it relevantto decision and policy makersat different spatial scales acrossthe UK.http://uknea.unepwcmc.org/default.aspxBESS is a research programmeinvestigating the role of biodiversityin ecosystem processes.www.nerc.ac.uk/research/programmes/bessRelevant projects:– Urban BESS – Fragments,functions and flows – the scalingof biodiversity and ecosystemservices in urban ecosystems– CBESS – A hierarchical approachto the examination of therelationship between biodiversityand ecosystem service flowsacross coastal margins– Wessex BESS – Biodiversity andthe provision of multipleecosystem services in current andfuture lowland multifunctionallandscapes– DURESS – Diversity in uplandrivers for ecosystem servicesustainability– Delivering multiple ecosystemservice benefits in real landscapesThe Insect Pollinator Initiativeis researching the threats to insectpollinators.www.insectpollinatorsinitiative.netThe Ecosystems KnowledgeNetwork is an on-line informationresource about ecosystem services.http://ekn.defra.gov.ukBusiness in the Communitywww.bitc.org.ukEcosystems Markets Task Forcehttp://www.defra.gov.uk/ecosystem-markets/about/