Charles CowapMBA MRICS FAAVCharles CowapMBA MRICS FAAV

Payments for Ecosystem ServicesBest Practice Guidance

RICS Wales Rural Conference

Llandrindod Wells

5 December 2013

Charles CowapMBA MRICS FAAV

Ecosystem ServicesIs it:

1. Eco-babble – leave it to the sandal and beard brigade

2. It’s the environment stupid, just got up in some new imperial clothing

3. The knell of doom for traditional estate management and valuation services

4. A potentially interesting opportunity and challenge for valuers and estate managers

Charles CowapMBA MRICS FAAV

Peat’s Story

Charles CowapMBA MRICS FAAVThe mires on Exmoor

Drainage for agricultural improvement

Charles CowapMBA MRICS FAAVDomestic and commercial peat cutting for fuel

Cutting carried on until the end of the c20th

Charles CowapMBA MRICS FAAV

Charles CowapMBA MRICS FAAVContext: Exmoor example

Exmoor

R Barle

R Exe

Wimbleball Resr & River Haddeo

ExebridgePumping Station

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

CO 2

Charles CowapMBA MRICS FAAV

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???

Charles CowapMBA MRICS FAAV

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

Charles CowapMBA MRICS FAAVFinancial evaluation

Extra 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

Charles CowapMBA MRICS FAAV

How much does peat’s farming utility change with rewetting?

Charles CowapMBA MRICS FAAV

2,400 sq m: 50% useableOne hectare: 100 m x 100 m

MODEL HECTARE BEFORE AND AFTER REWETTING

600 sq m unuseable

Leaves 7,000 sq m as before

Charles CowapMBA MRICS FAAV

Financial Impacts (£/ha, Annual Costs)

Farmer Scenarios (FBS Data 2011/12)

Loss of

Revenue 100% £/ha £/ha Net Margin before rewetting 151Of which, SFP 179 Livetock Output based on 600 -600Variable Costs based on 280 280Machinery wear and tear based on 60 -15Margin after rewetting -184Therefore Loss of 335

Charles CowapMBA MRICS FAAVModelled' Loss across One Hectare

Loss of Useability across one hectareArea Loss £

0.06 1 20.10.24 0.5 40.2

0.7 0 00 0 0

Total Loss/'model' ha 60.3Margin before rewetting 151Margin after wetting and before PES 91

So the Figure to Beat is £61/ha

Can PES do it?

Charles CowapMBA MRICS FAAV

Is this a market opportunity?• Working with the positives

• Addressing the negatives

• Market infrastructure– Eg willing buyer– Trading terms

• Eg Peatland Carbon Code

– Intermediary Role

• Contractual infrastructure– Eg Law Commission

Conservation Covenant Review

Charles CowapMBA MRICS FAAV

New land management and valuation requirements are emerging

New markets

New challenges to professional practice

New environmental, social and economic opportunities and challenges

Charles CowapMBA MRICS FAAV

Defra 2013

Payments for ecosystem services: a Best Practice Guide

Published May 2013https://www.gov.uk/government/publications/payments-for-ecosystem-services-pes-best-practice-guide

Charles CowapMBA MRICS FAAVOld Ways with Land

FOOD

TIMBER

SPORTING

MINERALS

DIVERSIFICATION

DEVELOPMENT

ENVIRONMENT

SUSTAINABLE

EN

VIR

ON

ME

NT

AN

D

SU

STA

INA

BIL

ITY

INCOME

COSTS

Charles CowapMBA MRICS FAAVNew Ways with Land

NATURAL CAPITAL

PROVISIONING SERVICESFoodFibreEnergyTimber

REGULATING SERVICESCarbon cycleWater cycle

SUPPORTING SERVICESPollinationSoil Formation

CULTURAL SERVICESRecreationInspirationCreativityReflection

EXISTING MARKETS

PUBLIC SUPPORT

NEW MARKETSPESBiodiversity offsettingCarbonConservation covenants

Charles CowapMBA MRICS FAAV

New Ways of Working• New forms of appraisal• New opportunities• New values• New ways to collaborate• But will farmers be

entrepreneurial enough?• A new paradigm: farmers

as ecosystem entrepreneurs …… ?????

And New Brokerage

IntermediaryAgencyAdvisory

Opportunities?

Charles CowapMBA MRICS FAAV

Value of Environment to Wales

• £6 billion to the Welsh economy;

• 1in 6 Welsh jobs; • £821 million in

tourism spending; • 15 per cent of

goods and services produced in Wales.

Welsh Assembly 2011

Charles CowapMBA MRICS FAAVPumlumon Project

Charles CowapMBA MRICS FAAV

Charles CowapMBA MRICS FAAVThinkpiece

• 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

Charles CowapMBA MRICS FAAVAnd 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

Charles CowapMBA MRICS FAAV

Question Time

Charles CowapMBA MRICS FAAVContact Details

In-house CPD programmes, professional-technical updates, organisational consultancy, and more:

cdcowap@gmail.com

07947 706505

Twitter: @charlescowap

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

Slideshare: http://www.slideshare.net/cdcowap

Translating new knowledge for rural professional practice

www.harper-adams.ac.uk