Preserving and enhancing natural capital post-Brexit

Patrick Begg, our Outdoors and Natural Resources Director is discussing next steps for UK agriculture policy at the Westminster Food & Nutrition Forum Keynote Seminar today. Patrick gave a speech on the benefits of a natural capital approach – you can find his entire speech below.

Good morning.  I want to spend a few minutes looking ahead to the future and that almost mythical – certainly mysterious – land that stretches ahead of us after March 2019.  The land known as post-Brexit Britain.

In my most optimistic moments, I can rationalise the lack of certainty we all face as an opportunity:  to create our own compelling version of the future. Which I guess is why we all gather for these events.

So, I’m going to have a go at highlighting what I think represent some of the key building blocks which we will need in that new policy landscape and which will be the cornerstones of protecting and enhancing natural capital in the future.

But first a pause to remind ourselves of the narrative here – I think it’s vital because it helps face into the legitimate challenge that I hear from a broad spectrum of commentators.  I hear that natural capital is an antiseptic term; that it turns people off nature; and that it can even risk reducing the magical essence of wildlife, habitats and the uniqueness of nature to a tradable commodity. Believe me, that’s the last outcome I am seeking.

The story for me goes like this:

  • We all agree we want to produce nutritious food, clean rivers, amazing wildlife, beautiful landscapes, etc: this needs top class land stewardship. Farming manages 70% of our land and a thriving farming sector gives us the best chance of succeeding in great land management.
  • A healthy farming sector is reliant on our natural environment.
  • But, our basic natural environment components (stable soils, clean air and water, thriving pollinators) are in decline: we have been mining our reserves rather than living off the interest.
  • We need to replete our stocks (rivers, trees and woodland, peat bogs, soils) so that ecosystems work again and we can rely as a society on their fundamental services in perpetuity.
  • We then need to find a way to use our resources much more wisely for everyone’s benefit.

The concept of natural capital provides a very neat way to describe the organising framework for tackling the challenge I have just outlined.

For me, it is most powerful when it is macro. By that I mean having a national view of the state and extent of, say, UK plc’s soils, water, various habitats, species, carbon sinks and stores, woodland, peat bogs etc. Governments and voters should be able to see a report, in simple terms, of our annual balance sheet.  This would give us the best chance to understand and get worried about what’s happening with our environment.  I like the idea of big scale numbers which lead to big scale accountability and, crucially, properly focussed national actions to bring about change.  The powerful effects of the Climate Change Act and the baselining, tracking and targeting that sit within it should be instructive.

So if we accept this framing, what are some components of a post-Brexit system?  The biggest opportunities for me are the change to a new farming support system; and the inevitable changing of environmental governance and legislative protections.

Let’s start with farming. I’m going to be bold and say that the principle of public money for public goods is now accepted and on its way in legislation. If we can keep the £3.1bn that currently goes into farming via CAP payments, then this is a hugely powerful starting point to build from.

However, we need to be very aware of the uncertainty, nervousness, and fragile mood amongst farmers as this concept beds in. Largely unconditional direct CAP payments have, for many, been like an unhealthy addiction: an almost daily fix to keep a pressurised and marginal business afloat.  And the move to the new Stewardship scheme has been a huge turn off for many at the worst possible time.  The reputation of systems which reward managing for nature has taken a knock just when we want this to be the new creed…

So what’s to be done to build a better system and help farmers play their part? Well, lots.  But there’s one dimension that we have been exploring, that seems to hit the spot for farmers and which could help build longer term, deeper returns on natural capital.  Moving to a Payments for Outcomes approach. It faces into the challenge we have around basing everything hitherto on prescriptions based measures paid for on an ‘income foregone’ formula. I just don’t agree that this is a good basis for driving the changes we want to see.

You end up with tick-list approaches that almost inevitably fail to match the bespoke, nuanced situations that arise at regional, local and farm level. Nature is complex and farm businesses are fluid and reactive. And paying on income foregone creates the deep-seated impression that thriving nature and a healthy environment are discretionary elements in farming the land: a chore, or something that can be bolted in if it makes sense financially to do so. Casting off the shackles of CAP means we can change this.

I often hear it said that “you can only farm green if you are in the black”.  I’m much keener that this becomes “farming green is the best way to be in the black”!

We’ve been working in Upper Wharfedale and Malham Tarn to design and test how an outcomes based set of payments might work, initially for pollinators, water quality and soils. We’re getting real traction. The key has been co-design and working with our tenant farmers on what we want longer term and listening to how this fits with their own business aspirations. The meeting of minds, skills and sense of joint endeavour this has produced has been remarkable. We have tenants saying they feel informed and involved like never before, and eager to get stuck into monitoring or self-assessment, and being proactive in suggesting what they might do, such as woodland extension or converting to extensive cattle. This puts more power in the hands of farmers, who are given advice and support but can do more of the monitoring themselves. Sound like the kind of engaged, efficient, and cost-effective outcomes and system that Governments should be tempted to invest in….?

I’ve mentioned the importance of the Government at the very least keeping the £3.1bn we currently spend on CAP in the countryside. Recent work we completed with RSPB and the Wildlife Trusts showed that just to meet existing Government commitments around species and habitats would cost £2.4bn per annum.  We currently spend only £600m per annum. And we will need to support farming to grow new skills, build entrepreneurship and improve competitiveness. It’s a big ask of public money.

So we believe there’s an opportunity to complement public support with private investment. Natural capital is a really helpful methodology and language to underpin this approach: it supports measurement, tracking outcomes, and converting intent into a financial deal.

We’ve been working with Green Alliance to design how this might work, focussing on payments for the provision of slow, clean water. It’s an avoided costs model that is persuasive and relatively easy to understand.  Businesses and public agencies spend £100s of millions each year cleaning up after floods, building hard defences or in cleaning out nitrates or phosphorous from our water. We can show that paying land managers to reduce these risks and problems through better upstream management is significantly cheaper.  This difference in costs creates a ‘trading space’ where we believe consortia of farmers can create ideally catchment scale ‘prospectuses’ of works, via contracts, which will be attractive for a varied set of downstream buyers to purchase.

The nature of the works almost inevitably brings other benefits, which we can then stack on top of the basic proposition around water: biodiversity gains, landscape improvements, tourism offers, health and wellbeing improved, etc.

A template for the kind of interventions we have in mind is at our Holnicote estate where we’ve implemented natural flood management measures (dam construction, pond restoration, arable reversion, woodland extension, etc) to reduce flood risk. This is squarely in the middle of a farmer’s natural skill set and our experience at Holnicote is that delivering these measures, where downstream communities benefit directly (the villages in the valley at Holnicote were plagued by flooding – since our interventions, and despite significant storms, the waters have been held back upstream), creates an immense sense of pride and agency.

Having we’ve worked up the theory of Natural Infrastructure Schemes, we’re now ready and preparing to test a scheme in reality with a range of private and public partners.

I want to zoom out for my last observation today. It’s about protection and also about how we stitch local and national ambitions together so that action on the ground is as effective is possible.

We’re leaving the EU, and with that the range of structures and legislative frameworks – not perfect by any means – but which have served to prevent even worse degradation of our natural capital. We’re all legitimately concerned about what will fill that gap, if anything.

We’d be intensely naive to imagine that we will enter a new, collaborative world where all land managers, almost through good will and incentive alone, buy into securing and growing natural capital. We do need strong, legal underpinnings at least as good as we enjoy now.

Future legislation, post-CAP support systems, and regulations to protect and enhance our environment will matter little if the government and public authorities cannot be held to account. To quote the Secretary of State, we need a “world-leading… independent, statutory body”.  But this also needs proper teeth, not the wishy-washy ‘advisory notices’ it may be allowed to issue.

To do this we need to find a way to serve all our Parliaments and Assemblies; respecting devolution but setting out what we, as a set of joined nations, stand for in terms of environmental principles. We also need reassurance that bad things will be challenged and proper remedy sought.  We need a watchdog with muscle, and the powers and pathways which allow formal action to be taken whenever necessary.

Earlier I referenced the Climate Change Act. It and its rather excellent associated independent Committee have been shining exemplars of how to set ambition, targets and then hold Governments to account for action and outcomes on behalf of us all.

So, we need an ambitious Environment Bill when we see a draft this autumn, which sets out targets and then links these to the fraught but vital subject of funding.

And lastly, returning to land management and farming.  I fear the slow strangulation of top class, independent, public advice for farmers about nature and enhancing natural capital.

We know that great advice, delivered face-to-face creates so much more ‘value’ from official environmental schemes. Our own experience in the Yorkshire Dales shows this to be true, where the closeness and quality of our own ecologist’s work with our tenants has been critical to the progress we’ve made.

But Natural England has suffered a 44% cut in its budget in recent years. It’s struggling. This is a slippery and dangerous slope and risks casting adrift not only nature but farmers at a crucial moment.

So my last call is for a reboot of Natural England: give it the resources to succeed and the mandate to become a trusted partner for farmers, not the kind of weakened auditor it is often currently painted as, too stretched to help as much as its excellent people would want.

Speech by Patrick Begg, delivered on 5th July 2018.

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