Presentation given to South Pennine Ecosystem Service Pilot steering group about potential for a place-based Payment for Ecosystem Service scheme in the South Pennines, as part of a project funded by Natural England and DEFRA, January 2013 (by Mark Reed)

1. Creating a place-based PES
scheme in the South Pennines

2. Plan
 Why place-based PES?
 Opportunities
 Barriers
 Scheme options
 Questions
 UK Peatland Carbon Code

3. Why place-based PES?
 Additional funding to help meet existing local
goals e.g. conservation & water quality
 Saving money and creating value for local
brands/investors
 Getting nature working together for everyone
 Place-based schemes are more likely to avoid trade-
offs than focusing on one service alone e.g. food
production or conservation

4. Why place-based PES?
 PES is the future:
 Common Agriculture Policy reform
 DEFRA Natural Environment White Paper
 PES Action Plan imminent
 Promoted to make NIAs/LNPs financially sustainable
 Ministerial support for PES priorities identified by EMTF
 It is already happening:
 Peatland Plus
 Westcountry Rivers Trust/SWW – Upstream Thinking
 New SWW scheme layering carbon/biodiversity with water
 Westcountry Angling Passport
 Pumlumon Project

5. Opportunities

6. Opportunities
 A number of ecosystem services can be co-
produced in space/time with similar
management
 Revegetating bare peat & grip blocking in blanket
bogs not exposed to significant historic grazing &
burning, with Sphagnum re-introduction & reductions
in (or prevention of) grazing/burning where necessary
 Grip blocking dry heath on deep peats with changes
in grazing/burning where necessary
 Afforestation of upland valleys and flood plains

7. Opportunities
 Market research (BRE 2009 & ongoing): CSR
demand for UK-based projects with multiple
benefits
 Focus on biodiversity
 Interest also in water quality
 Few likely trade-offs and
these can be managed
 Secure land tenure,
interested land owners

8. Opportunities
 Grip blocking/revegetation on blanket bog:
 Climate regulation (reduced C loss + C sequestration)
 Biodiversity (incl. birds of conservation significance)
 Reduced water colour (and heavy metals)
 Improved recreational access over dissected sites
 Improved aesthetics in previously bare sites
 Grip blocking dry heath/deep peat:
 Climate regulation
 Improved water quality
 Improved recreational access

9. Opportunities
 Carbon sequestration potential of restoration:
>100t CO2 equivalents/year/km2 for Peak District
 6000 t CO2 per year for South Pennines Pilot Area
assuming all 60 km2 blanket bog degraded & restored
 1.5% Yorkshire Water’s annual carbon footprint
 Equivalent to £2000 per km2 per year (£20 per tonne
– less than the shadow price of carbon at £26)
 ELS & HLS: £800 and £2300 per km2 for moorland
 CSR: probably paid by hectare or project (not tonnes)

10. Opportunities
 Carbon+: join pilot phase Peatland Carbon Code
 Give potential local investors greater confidence
 Work with intermediaries to find new investors

11. Opportunities
 Biodiversity offsetting:
 Up to £25,000 per km2 per year
 Unlikely to be much demand for blanket bog credits
 More demand for woodland creation on flood plains?
 Water quality payments
 Combined payments from UU
& agri-environment schemes
were £3800 per km2 per year
for SCaMP

12. Opportunities
 Tree planting in upland valleys for carbon and
biodiversity (and recreation?)
 Tree planting in flood plains to reduce flood risk
plus carbon storage and biodiversity benefits
 Potential to build on well
established market for
woodland carbon with
multiple benefits via
Woodland Carbon Code

13. Opportunities
 Buyers
 Water Utilities (i.e. Yorkshire Water & United Utilities)
 Corporates interested in climate regulation
 Corporates/developers purchasing
conservation/biodiversity credits to offset impacts
generated elsewhere
 (Government via agri-environment
schemes)
 Members of the public paying for
ecosystem service projects via
Visitor Payback schemes?

14. Barriers

15. Trade-offs
 Grouse moors
 Not viable in long-term without burning/grazing
 But grazing/burning not needed on active blanket bog
 Focus only on grip blocking for dry heath on deep
peat, where low level grazing/burning is sustainable?

16. Trade-offs
 Hill farming
 1,204 farm businesses supporting >300,000 sheep
 LFA farms lose >£5000 p.a. without agric. payments
 Might private PES offset CAP budget contraction?

17. Trade-offs
 If burning/grazing ceased for
dry heath on deep peats:
 Increase likelihood of wildfire
 Reduce visibility for walkers &
compromise “sense of place”
 Eventual conversion to forest
would impact designated species
 Need to maintain sustainable
levels of grazing/burning on
these already degraded sites

18. Barriers
 Complex and fragmented land ownership
 The need to work across property boundaries to
deliver some ecosystem services
 Transaction costs associated with the above
 Perceived incompatibility of PES scheme and
land owner objectives
 Overcome by focusing on areas that still function as
blanket bog and allowing low level grazing/burning for
dry heath on deep peat?

19. Scheme options

20. Bundled scheme 1
 Buyer: water utilities
 Approach: peatland restoration (and tree
planting on flood plains)
 Ecosystem services marketed:
 Water quality
 Biodiversity
 Climate regulation
 (Flood risk management)

21. Bundled scheme 2
 Buyer: corporations
 Approach: peatland restoration (and
afforestation of upland valleys & flood plains)
 Ecosystem services marketed:
 Climate regulation
 Biodiversity
 Water quality
 (Flood risk management)

22. Bundled scheme 3
 Buyer: developers and corporations
 Approach: woodland creation on flood plains
(and peatland restoration)
 Ecosystem services marketed
 Biodiversity
 Flood risk management
 Climate regulation
 (Water quality)

23. Layered scheme 1
 Approach: peatland restoration
 Buyer & service 1: water utility for water quality
 Buyer & service 2: government for multiple
services (via agri-environment scheme)

24. Layered scheme 2
 Approach: peatland restoration
 Buyer & service 1: corporations for climate
regulation/biodiversity
 Buyer & service 2: government for multiple
services (via agri-environment scheme)

25. Layered scheme 3
 Approach: peatland restoration & afforestation of
upland valleys and flood plains
 Buyer & service 1: corporations for climate regulation
 Buyer & service 2: corporations/developers for
biodiversity credits
 Buyer & service 3: water utilities for water quality
 Buyer & service 4: visitors for access/aesthetics
 Buyer & service 5: downstream residents for flood risk
management
 Buyer & service 6: government for multiple services
(via agri-environment scheme)

26. Questions
 We need your feedback:
 Your views on the viability of establishing a place-
based PES scheme for the South Pennines Pilot Area
 Help to refine costs:
 Peatland restoration costs (questions from Clifton)
 Afforestation costs for upland valleys and flood plains?

27. Group work (1)
 Operationalising a place-based PES scheme for
peatland restoration
 Do you think a place-based PES scheme would work
in the South Pennines?
 What are the main opportunities a scheme could exploit?
 What services should get priority?
 Do you favour any of the proposed bundled/layered scheme
options? Why?
 What do you see as the main problems in getting
such a scheme to work? How to overcome?
 How would it fit with existing payments to land owners?
 Overcoming barriers to land owner participation?
 Next steps?

28. Group work (2)
 Costs…

29. UK Peatland Carbon Code
 Develop a UK Peatland
Carbon Code to:
 Open, consistent, credible and
verifiable basis for good
practice peatland restoration
 Register to account for projects
& avoid double counting
 Standards to ensure projects
are of high environmental
quality & genuinely additional
 Technical guidance to calculate
emissions savings

30. UK Peatland Carbon Code
 Option to include peatland
restoration in official carbon
accounting to become “carbon
neutral”
 Greenhouse Gas Accounting
Guidelines
 Not possible to trade this carbon
 Government could count it
towards Kyoto targets if we opt
in to Wetland Rewetting &
Drainage under Article 3.4 Kyoto
Protocol

31. UK Peatland Carbon Code
 If also designed to meet the requirements of the
Verified Carbon Standard:
 Peatland Code would be cheaper alternative, better
tailored to the UK context, that would still provide
investors with confidence
 Possible to generate tradeable carbon credits for
voluntary carbon market (and compliance in future?)
 Similar to UK Woodland Carbon Code &
German MoorFutures: we can learn from their
experience

32. Targets under WFD &
Habitats Directive Legislative targets
UK climate targets
Funding Kyoto targets Co-benefits
GHG change from peats UK opt into WDR
damaged/restored since Art 3.4 Kyoto
1990 in GHG inventory Climate regulation
Private Government
CAP Rural Re-wetting/conservation
Development eg
Agri-environment
Peatland CRUs
Peatland carbon markets Changes to
REDD & Peatland
Art 3.4 VCS AAUs
EUETS & JI accred-
Compliance C market
Value of carbon itation
Voluntary C market outweighs accreditation
& other costs
Regional Carbon Market Higher uptake if
carbon accounting
Peatland becomes mandatory
Corporate Social across all sectors
UK Peatland projects used in
Responsibility
Carbon Code corporate C
GHG Accounting accounting
Guidelines integration
Underpinned by robust scientific evidence and monitoring, overseen by a science panel

33. Next steps
 Developing metrics
 DEFRA PES Pilot with
German MoorFutures and
learning from UK Woodland
Carbon Code
 Plan to launch draft code for
CSR (not offset) investment
summer 2013
 Market research to tailor the
code to needs of the market

34. Next steps
 Consider for inclusion in Defra/DECC GHG
Accounting Guidelines for corporate carbon
accounting
 Option to trade on voluntary C markets if prices
increase
 Recommended to Secretaries of State for
DEFRA/DECC/BIS in March