Game & Wildlife Conservation Trust                            RNC0003

Written evidence submitted by the Game & Wildlife Conservation Trust

GWCT response to The Environmental Audit Committee’s revived inquiry into the role of natural capital in the green economy.

The GWCT[1] welcomes the opportunity to contribute further evidence to this inquiry having made a submission in September 2023 to the previous committee.

We have revisited our answers to each question and updated for subsequent developments where relevant in the light of progress within the Environmental Farmer’s groups (EFG) and a related Defra Test & Trial (GWCT T&T407).

Background

The GWCT’s Natural Capital Advisory (NCA) service[2] advises farmers and landowners on achieving the best environmental and financial outcomes from the natural capital market by aggregating NC assets.  NCA provides all executive services to the Environmental Farmers Groups which cover both upland and lowland farming landscapes. It is also leading the roll out of the Hedgerow Carbon Code which was developed by the GWCT’s Allerton Project[3]. 

Environmental Farmer Groups

Having observed the first oral evidence session on 4th December, there was interest from the Committee in how more private investment in nature recovery could be encouraged.  Given that 70% of England is farmed, obviously engaging with this industry is important.  However, that participation has to be farmer-led (voluntary) and at scale (in terms of the end market and the costs involved).  Environmental Farmers Groups are therefore an important vehicle for encouraging private investment as they are founded on the mutual motivation of a group of farmers to deliver biodiversity and species recovery, clean water and net carbon zero farming by 2040.  These groups seek to harness scale to secure credible environmental outcomes and a fair financial return for farmers.

As of December 2024, the level of EFG interest across the country had reached 348,000 hectares, which amounts to c4% of England’s farmed area and equates to the involvement of 680 farmers.  Four EFGs have been convened: the Environmental Farmers Group (covering Hampshire Avon, Test & Itchen and Dorset Stour); Peakland Environmental Farmers (covering the Dark Peak and Southwest Peak); Swaledale & Wensleydale Environmental Farmers (centred on the catchments of the river Swale and Ure); and Central England Environmental Farmer’s Group (covering catchments in Northamptonshire, Leicestershire, Rutland, Lincolnshire, Cambridgeshire, Bedfordshire, Buckinghamshire and Oxfordshire).

Terms of reference (we have only answered some of the questions to update our previous answers where relevant).

Q1. What potential contribution can private capital investment make to measures to secure nature recovery?

a)      We reiterate our view that private markets offer the financial (and environmental) incentive/opportunity for farmers to take areas of low agricultural productivity out of food production and actively or passively repurpose this land to deliver for nature recovery, especially where publicly funded grant schemes do not offer adequate incentive. This provides an opportunity for farmers to make nature recovery or the delivery of environmental goods an integral part of a farm’s income.

b)      The Defra Test & Trial (T&T 407) demonstrated that farmers that have already joined two of the EFGs are primarily driven by the expectation of financial reward for their environmental improvements which itself is rooted in their clear desire to further improve biodiversity on their farms. The majority of farmers who haven’t joined yet, either simply need more time to be convinced of the financial benefits or want to see the system working before joining (i.e., EFG members making successful trades linked to good environmental benefits). The huge benefit of these farmer-led cooperatives is the opportunity to build critical mass and make farmers investible and approachable to the private market, directly supporting current Government policy aimed at increasing private finance in the delivery of improved natural capital. These groups can be seen as market accelerators, facilitators and potentially market makers, further delivering Government promises.

c)      A particular driver is that these initiatives are “bottom-up”, developed by individuals in sharp contrast to “top down” governmental designation approaches. Fully realised they have the potential to privatise investment in nature, reducing the need for the “public money for public goods” approach adopted to deal with market failure. The additional funds can also contribute to expanding our ambition for environmental outcomes.   

d)      We recommend that Defra considers supporting these farmer-led cooperatives (EFGs) through a facilitation fund.  This is an important mechanism in achieving farmer involvement and therefore accessing private finance to support the delivery of environmental benefits far beyond what the government-funded agri-environmental schemes are currently able to deliver on their own.

e)      We would also like to reiterate that whilst Government grant schemes have helped some farmers deliver environmental projects in the past, by making it profitable to deliver environmental projects (i.e. above recovering a cost), farmers will engage in private markets.

f)       However, it should be noted that tenant farmers may not be able to take advantage of the opportunities due to tenancy restrictions.

g)      Many may be more inclined to explore such options given the economic outlook for farming.  In some situations, the risk associated with crop production outweighs the end price achieved and so repurposing the land to deliver other goods and services with a guaranteed income stream is attractive.  This will include the delivery of other net zero ambitions such as solar farms. The impact of climate change will accelerate the re-purposing of land currently used for food production with inevitable impacts on government ambition for food security.

h)      Whilst we appreciate that the focus of the inquiry is the future and therefore the potential contribution of natural capital markets, we feel it is important to note that the private sector has already been responsible for delivering gold standard examples of nature recovery and environmental gain such as achieved at the Allerton Project, the GWCT’s demonstration farm, where game management principles have been shown to increase songbird numbers at no cost to the public purse. The move towards natural capital provides an opportunity for these efforts to be quantified and rewarded although this poses the problem of the application of additionality.  In some cases, previous work has had elements of public funds (such as agri-environment payments) but additional investment in important ‘additive effects’, for example predation management for species recovery or early adopters investing in wetland creation for water quality or machinery investment in min-till systems, demonstrates the importance of attracting private finance (both philanthropic and private capital) to achieve desired outcomes.

Q2. How can investment best be aligned with environmental benefits, so as to achieve or surpass the Government’s targets for nature recovery?

a)      In answer to this question in our first submission we highlighted the importance of stacking benefits.  Private capital investment must be encouraged to focus on the optimisation of multiple benefits as opposed to the maximisation of one output. 

b)      The results from our T&T407 demonstrated that farmers are generally keen to stack environmental benefits (biodiversity of different types, carbon sequestration, phosphates, and nitrates) on the same piece of land and show a great commitment for the Government’s environmental targets. Farmers regard stacking generally as an opportunity to deliver more for the environment, an aspiration that should be supported by Government. Most farmers feel that biodiversity units should be worth more if building on an already high level of biodiversity, with significantly more farmers in the Uplands thinking so than Lowland farmers.

c)      As a result, we recommend that Government consider making changes to the current stacking rules, allowing BNG, nutrients & carbon to be stacked together whenever possible or desired.

d)      Exploiting synergy between measures maximises the outcomes per unit of land allowing food production to continue elsewhere.

Q3. What measures are necessary to (a) establish and (b) maintain the high-integrity markets in ecosystem services which are expected to attract private investment? What confidence do investors currently have in the UK’s arrangements for these markets?

a)      The establishment of nature and environmental markets will rely on the engagement of farmers and land managers/owners and so it is vital that these contributors have confidence in the marketplace, particularly those investments requiring longer timescales (although in the short term these timescales may only be of 1-5 years).  Recent budgetary and grant funded support changes have undermined this confidence and will impact investment in environmental schemes.

b)      Our Defra T&T407 explored the mechanisms to establish minimum price thresholds for environmental outcomes and their impact on private sector interest.  None of the private companies we approached during this project felt able to pursue any actual investment at this stage. Equally, the EFG farmers struggled to fully identify the voluntary market investible options that would attract those companies. Factors that are influencing that situation would seem to include: a desire to invest in a voluntary rather than statutory trade (e.g., not a nutrient neutrality trade or BNG); uncertainty as to how these voluntary markets work; the lack of clear financial trading structures or means of ‘packaging’ natural capital of this type into an investible/ tradeable entity. 

c)      As a result, we recommend that the Government provide:

1. grant funded support or loans to bring forward farmer environmental projects (especially BNG-type options),
2. clarity (through policy or central communications) for organisations looking to purchase UK carbon on what is a high integrity credit and what is not, and
3. new policy to provide guidance to corporates on their future nature reporting requirements and possible mandated nature contributions.

Q6. How can the operation of natural capital markets ensure genuine net gains for nature? How do such markets address the risk of ‘greenwashing’ of investments and the offsetting of natural recovery in the UK against environmental degradation elsewhere?

a)      We stated in our September 2023 submission the importance of monitoring and evidence in ensuring the validity of natural capital markets and to “ensuring that credits deliver their intended environmental outcomes” (from Voluntary carbon and nature market integrity: UK government principles Introduction to the principles - GOV.UK).  Our T&T407 demonstrated that farmer-led practitioner surveys are an ideal way to enthuse farmers to farm in a more nature-friendly way, and hence involving them in such monitoring should be actively encouraged by Government. 

b)      We therefore recommend that the Government continues to encourage and financially support EFG cooperative farmers and their volunteers to collect monitoring data (such as single species survey data – the GWCT’s Grey Partridge Count Scheme for instance, or species presence/absence data) because it is a proven motivating factor to deliver more for nature.

c)      However, the presence/absence of species data is generally UNLIKELY to deliver long-term trend data towards measuring Government targets (such as species recovery trends). Nonetheless, the more practitioners collect and aggregate data, the more it will become useful for determining long-term trends, so current limitations are expected to reduce over time and scale.

d)      The T&T407 also considered what systems/tools could be used to aid delivery, monitoring, or demonstrating value for money including stacking of public/private schemes.  The results showed that farmers generally like the idea of practitioner monitoring. However, when implementing standardised monitoring protocols, they are typically unable to commit to the necessary time needed to collect data over an extended period. Farmers prefer single species monitoring, and generally struggle to engage with multi-species surveys. The identified methods delivering long-term trend data are either still in development or are delivered already through long-term monitoring schemes such as the Breeding Bird Scheme run by the British Trust of Ornithology. Given the geographic spread and size of the EFG cooperatives, we are confident that the instigated land changes across the EFG catchment groups will allow these long-term monitoring schemes to track progress against Government targets.

e)      We therefore strongly recommend that Government/Defra considers providing financial support mechanisms to scientific institutions to task them to further develop and test suitable technologies that will aid practitioner monitoring in the future, such as single species monitoring, AI technology, and farmer-led habitat mapping technologies. We also advise Defra to aid the roll out of these technologies to farmers, and to support them in their adoption of these technologies.

f)       There are also a couple of points that we would like to re-emphasise in relation to market operation.  Firstly, the market must recognise that ecosystem services are delivered by both existing ecosystems (such as ancient woodland) and new ecosystems (new plantings). It is important for nature recovery that such ecosystems are recognised and valued given the length of time they take to reach their optimum. Although the ecosystem services provided might not meet ‘additionality’ principles and therefore cannot be sold as an offset or to mitigate emissions, they could be sold to different nature markets (or indeed could be purchased by government).

g)      Secondly, and this relates to our answer to Q2, the market must define ‘stacking’ and ‘bundling’ of ecosystem services over the same parcel of land. Recognising multiple ecosystem services on the same parcel of land minimises the potential for the negative effects, such as we have seen of monoculture forests across large swathes of land.

GWCT Policy

December 2024