Ecosystem Service Markets as a means of sharing land management benefits: UK case study

Charles CowapMBA MRICS FAAV

Annual World Bank Conference on Land and Poverty 2013

Ecosystem Service Markets as a means of sharing land management benefits: UK case study

Charles Cowap

RICS, London, UK

Harper Adams University

11 April 2013

Charles CowapMBA MRICS FAAVCharles CowapMBA MRICS FAAV

New land management Requirements are emergingNew markets

New challenges to professional practice

New environmental, social and economic opportunities and challenges


Peat’s Story


Distribution of upland peatlands in the South West of England

http://www.google.co.uk/url?sa=i&rct=j&q=outline+map+of+gb&source=images&cd=&cad=rja&docid=ITGeBPUclRTePM&tbnid=7SY_u145orkvHM:&ved=0CAUQjRw&url=http://www.activityvillage.co.uk/outline_maps.htm&ei=yZNaUZXmGoKn0AXFsYHgAQ&bvm=bv.44442042,d.d2k&psig=AFQjCNEQtJgUa-IeoiOvBsgeeYY8NvzbFQ&ust=1364976913986483


The mires on Exmoor

Drainage for agricultural improvement


Domestic and commercial peat cutting for fuel

Cutting carried on until the end of the c20th


Where?- the pink bits

5,000 m



Context: Exmoor example

Exmoor

R Barle

R Exe

Wimbleball Resr & R Haddeo

ExebridgePumping Station

Replenishment PumpingApprox 5 miles, lifting water from 120 to 240 m AODCO 2


Pumping Costs

Treatment Costs

Future Storage/Abstraction

Costs

Incentive payments to landowners –

managers - occupiers

Savings for water buyers

Profit for reinvestment or distribution

CARBON

Economics+ OTHER ESS

PAYMENTS???


Top Three Concerns

• Confidence

• Revenue/Cost

• Scheme Relationships


Top Three Questions

• Legal/ownership concerns

• Revenue and cost

• Confidence


PROSPECTUS

• Proposed scheme(s)• Basis(es) of offer


Questions for consideration

• Contractual aspects• Land tenure• Effects on other

interested parties• Practical farming

considerations• Animal welfare and

health• Public liability

• Relationship other schemes

• Other business considerations

• Maintenance obligations

• Tax• Impact on value• Security/risk


Financial evaluationExtra costs, eg• Access time to more difficult

ground• Vet and med bills• Insurance• Feed• Machinery costs (if

contracting to be offered)

Costs saved• Eg some livestock purchases

Lost Revenue• Eg some livestock LWG or

sales

Extra Revenue eg• PES income• Contracting opportunities for

SWW

+ Balance: financially worthwhile• Consider capital and tax

implications

Balance positive: not financially worthwhile


POLICY CONTEXT


Foresight Land Use Futures 2010


White Paper

• Growing a Green Economy

• Green market opportunities– Ecosystem Market

Taskforce

• Valuation of Nature– Natural Capital Committee


Top 10 Business Opportunities

1= Biodiversity Offsetting (BDO) and Conservation Banking• Estimated size of market £50 – 300 million

pa from housing, plus other sectors• Brokerage, certification and registration• Additional costs to builders/developers

deducted from land value

1= Peatland Carbon Code and Carbon Credits• Peat restoration for carbon storage• Management schemes and incentives• Certification and brokerage


2. Woodfuel and Woodburning Stoves

3. UK ecosystem knowledge economy

4. Layered PES– Different Environmental Services

to different buyers– Eg


6. Carbon sequestration

7. Sustainability certification– Opportunities for

intermediaries

8. Sustainable tourism


9= Global centre of excellence in ESS certification

9= Water re-use technology

11 Reducing insurance risk through green infrastructure

12 Environmental bonds

http://www.valuing-nature.net/opportunities-uk-business-protect-and-value-natures-services-report-published-today [accessed 19 July 2012]

http://www.valuing-nature.net/opportunities-uk-business-protect-and-value-natures-services-report-published-today




NEW VALUATION REQUIREMENTS ARE EMERGING




SOME WORK HAS BEEN DONE ALREADY





ECONOMIC APPRAISALWe face challenges to valuation



ECOSYSTEM SERVICESAnd Now




ECOSYSTEM SERVICES


APPROACHES FOR THE ESTIMATION OF NATURE’S VALUES

From TEEB Foundations, Chapter 5


Market Analysis

Group Valuation

Contingent Valuation

Cost Methods

Replacement Cost

Methods

Avoided Cost

Methods

Deliberative Valuation

Regime Shift Analysis

Insurance ValueResilience

Value Risk Analysis

Ecological Footprint

Mitigation Cost

MethodInput/Output

Analysis

Joint Analysis

Production Function


WHERE DOES IT FIT?Valuation


Thinkpiece

• Royal Charter– Promote the usefulness

of the profession to public advantage

• New opportunities in land management

• New ways of working in development

• New points to reflect in conventional valuations

• New types of valuation


And we should offer:

• Our expertise

• In Land Tenure and its relationship to land management and development

• Our experience of valuation in challenging commercial markets

• Our expertise in brokerage


Key points from RICS Launch

Experts:Michel Pittini

Director for Sustainable Land Use, Rural Evidence and Analysis, Defra

Prof Alister ScottBirmingham City

University

Paul Collins, Nottingham Trent University

Duncan Cairns, Director, Environment Bank Ltd

ESS Language – a problem?

Problems of long term control v opportunism Need for compelling

evidence

Is it going to pay a firm’s salary bill?

ESS – or Biodiversity Dumping??

One stop shops to realise value? Does DCLG understand? Joined up government needed

Rapidity of recent progress – catch up!

Land merely a commodity for big business?

What are we learning from abroad? NZ was doing this 25 years ago


So to conclude:

• New markets

• New challenges to professional practice

• New environmental, social and economic opportunities and challenges


Contact Details

Translating new knowledge for rural professional practice

[email protected]

07947 706505

Twitter: @charlescowap

Blog: http://charlescowap.wordpress.com/

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Ecosystem Service Markets as a means of sharing land management benefits: UK case study

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