IntroductionClifton Bain, Aletta Bonn, Chris Evans, Klaus

Glenk, Viki Hirst & Mark Reed

Valuing Nature Network

Valuing Peatlands project

Valuing changes in stocks and flows of ecosystemservices in complex socio-ecological systems – usingpeatlands as a case study

Using this information to help design financialmechanisms to pay for the provision of ecosystemservices in future

Why are we here?

Huge interest in Payments for Ecosystem Services

Why are we here?

National policy:

Natural Environment White Paper, Payments forEcosystem Services Action Plan &Best Practice Guide (this pm)

Emphasis on valuing theenvironment andincorporating these valuesin decision-making inLiving Wales Green Paperand Scotland’s Land UseStrategy

Why are we here?

Growing interest from water companies and otherbusinesses in PES:

Presentations from water companies today

See case studies being developed for DEFRA PES BestPractice Guide

Ecosystem Markets Taskforce exploring PES and othermechanisms to “develop green goods, services,investment vehicles and markets which value andprotect the environment”

Why are we here?

New research and networking initiatives: Valuing Nature Network

Ecosystems Knowledge Network

Follow-on to the National Ecosystem Assessment

NERC KE fellows e.g. Viki Hirst

Upland Hydrology Group: Water companies & uplands, the nextchapter (15th March)

NERC workshop “Natural Capital and Ecosystem Services forBusiness: collaboration opportunities" (13th March)

Natural Capital Initiative: Forging interdisciplinary links to inform publicpolicy (8th May)

CIWEM event: Water & Ecosystem Goods and Services, Translatingthis into routine operation (12th June)

IUCN/BES Investing in Peatlands conference (26-28 June)

Goal

To exchange ideas from ongoing research andnetworking initiatives & experience from watercompanies, regulators etc. (usingupland/peatland catchments to illustrate whereuseful) to inform Government and businessabout opportunities to spread the cost ofproducing clean water(helping meet WFDrequirements) usingPayments for EcosystemServices

Rationale

Improving water quality at source can reducewater treatment costs and help implement WFD

Water companies aren’t the only beneficiaries:

Recreational waterusers and visitors torestored or moresensitively managedcatchments

http://www.ukriversguidebook.co.uk/news/the-home-of-uk-canoeing-and-kayaking-news-reports-river-guides

Rationale

Water companies aren’t the only beneficiaries:

Freshwater habitats and species

Terrestrial habitats and species in restored or moresensitively managed catchments

http://www.allposters.co.uk/-sp/White-Clawed-Crayfish-Male-Norfolk-UK-Posters_i4016570_.htm

Rationale

Water companies aren’t the only beneficiaries:

Global society by reducing carbon emissions (instream water and from water treatment) andincreasing carbon sequestration and storage (inrestored peatlands)

Rationale

Payments for Ecosystem Services is all aboutgetting society to pay for the benefits we take forgranted from nature

By creating markets for the carbon, biodiversityand visitor co-benefits of producing clean water,might it be possible to:

Share the costs of reaching WFD targets; and

Meet these targets whilst minimising trade-offs withother ecosystem services and optimising co-benefits?

Bundling

In most natural systems, services are producedin bundles – they are all linked together

Improve your water quality by reducing DOC and youreduce fluvial carbon loss

Restore peatland for carbonand improve biodiversity

By paying for bundles ofservices, you can avoid trade-offs and exploit co-benefits toincrease revenues by payingfor a wider range of services

Types of bundling

“grouping multiple ecosystemservices together in a singlepackage for payment”e.g. bundling carbon water quality,biodiversity, visitor benefits andwildfire risk benefits in a peatlandrestoration scheme

“schemes where payments are madefor different ecosystem servicesseparately from the same system”e.g. the restoration project runs acarbon offset scheme in parallel witha scheme where water companiespay for water quality, whilst doingvisitor payback

Direct saleapproach

Shopping basket approach(sometimes referred to as layering/stacking)

Shopping basket approach

Shopping basket approach may lead to double-counting, assumes services are producedindependently and can be delineated, quantifiedand valued separately

However shopping basket maybe necessary if no buyers fordirect sale of multiple bundledservices – still have opportunityto co-ordinate between servicesto avoid trade-offs

Direct sale approach

Trade-offs between services less likely

Can charge a premium if co-benefits quantified

Makes payments more diverse = resilient

Less transaction costs than establishingmultiple markets

Attract new buyers interested in

Specific co-benefits

Wider spatial scales

May increase political/public supportfor scheme

Bundling peatland PES

1. Regulation of water quality

2. Climate regulation through carbonsequestration and storage in peat soils

3. Regulation of wildfire risk

4. Cultural ecosystem services

1. Regulation of water quality

Some water companies already paying for WQvia land management

In peatlands, most interest from companies:

With high proportion of peatland catchments uponwhich they can influence land management

With current DissolvedOrganic Carbon problems(brown water)

With concerns about futureDOC problems underclimate change

Flood regulation

Evidence too equivocal for inclusion in PESschemes

Impact of restoration on flood regulationdepends on: Type of peat

Its topographic and catchment location

Intensity & type of restoration

Location of restorationwith respect to riverchannels (danger offlood wave synchronicity)

2. Climate regulation

Potential to enhance this service:

Restoration can stem loss & absorb carbon

Short-term CH4 problem, long-term GHG benefit

Co-benefitse.g. biodiversity

Market demand

Market demand estimated between 1-10Mtonnes carbon reduction p.a. (BRE, 2009)

Pay premium for UK-based carbon from land-based project that has co-benefits

Voluntary carbon markets and CSR operating ata very small scale

Need Government guidance to help regulate &expand this emerging market to ensure:

Long-term, additional climate benefits

Avoid trade-offs with other important services

UK Peatland Code

Provide projects & investors with scientific basisfor good practice in peatland restoration

Option to include peatland restoration in officialcarbon accounting to become “carbon neutral”via Corporate Social Responsibility payments

Greenhouse Gas Accounting Guidelines

Can count towards Government climate targets

Option to trade on voluntary carbon markets

Similar to UK Woodland Carbon Code – we canlearn from their experience

3. Regulation of wildfire risk

Restoration raises water table

Reduces risk of wildfires burning deep into peat

No market for wildfire risk regulation, but maycontribute towards the attractiveness of PESschemes based on carbon or water

4. Cultural Ecosystem Services

Biodiversity benefits of restoration

Hard to monetarise, but options emerging

Spatial planning approaches to pay forrestoration of sites that could be used forrestoration near new developments

Section 106 agreements

Habitat banking/ biodiversity offsets

?

X Where visitor payback

schemes elicit paymentsfrom individual visitors orcompanies that pay forspecific projects thatenhance ecosystem services

Bundling visitor payback withother ecosystem services viashopping basket approach?e.g. offset your travel

Visitor Payback as a PES

DEFRA PES Best Practice Guide

See handouts

Opportunity todiscuss thisafternoon

We want yourfeedback

Next

Some of the latest research: natural science &economics

Regulator and water company perspectives

A land owner’s perspective

Discussion to feed intobriefing note to informpolicy and business

A mechanism to integrateinsights from future meetings& continue the conversation?