New report: how new private markets could boost farmers’ incomes

With the government working on its replacement of the EU’s Common Agricultural Policy, its proposed environmental land management system will provide farmers with an income for managing land to deliver public goods such as healthier soils, cleaner water and better access for people to the countryside. In a new report, released today, we and our partners at Green Alliance are proposing three ways that the new system can also unlock additional private investment in environmentally friendly farming. 

©National Trust Images/John Malley.

Flooding and water pollution are estimated to cost at least £2.4 billion a year to businesses, infrastructure operators and government agencies in England. Diverting even a small proportion of this money to land management changes on farmland that reduce flood risk and pollution would represent a significant addition to funding for environmental restoration, helping to achieve the ambitious goals of the government’s 25 year environment plan.

Our new joint report, Funding nature’s recovery: How new public spending can unlock private investment, estimates that farmers could earn between £5,000 and £15,000 additional profit per year by collaborating with other farmers in the same catchment in schemes funded by downstream businesses to reduce flood risk and improve water quality.

The report proposes the creation of a new type of collaborative private enterprise to deliver environmental enhancements. “Natural Capital Delivery Companies” would be cooperative style businesses owned by both farmers and downstream beneficiaries. Through these new entities farmers could jointly plan schemes and share the risks involved in long term sustainable land management enterprise with other businesses.

The government’s new environmental land management (ELM) system is an opportunity to catalyse these new markets so that farmers can benefit from private investment in sustainable land management alongside the new public money for public goods scheme.

The government could help by:

  • Providing match funding for private investments in natural capital under the new ELM system.
  • Introducing formal accreditation for brokers with the authority to facilitate funding and verify compliance

“We know that more funding is needed if the goals of the 25 year environment plan to restore the natural environment within a generation are to be achieved. While maintaining or increasing public spending is essential, there is also a unique opportunity to unlock private investment where land management change creates a private benefit. Our proposals for the new environmental land management system will help to overcome the challenges to attracting private investment.”

National Trust Outdoors and Natural Resources Director, Patrick Begg

“Given the twin crises of climate change and biodiversity loss, substantial public funding for environmental land management will continue to be necessary for the foreseeable future. But we now also have a great opportunity to unlock private investment in enlightened land management. Natural Infrastructure Schemes are clearly economically viable; this report shows how farmers and businesses can come together to make them work for mutual benefit – and for wider public benefit.”

Shaun Spiers, Green Alliance Executive Director

“Southern Water are planning to double their investment in sustainable land management from 2020 onwards. This exciting proposal has the potential to draw in other private beneficiaries to boost these schemes and achieve the scale and innovation needed to restore our environment.”

Kate Rice, Catchment Strategy Manager at Southern Water

Take a look at the report for more information.

What is the Natural Markets project?

For the past two years we’ve worked with think tank Green Alliance on a Natural Markets project, to investigate bringing new income streams from private markets to farmers.  Our reports to date have covered the development of our thinking in this space. New markets for land and nature: How Natural Infrastructure Schemes could pay for a better environment proposed a new payment mechanism to establish natural markets and bring new income streams into farming. Our follow up report, Natural Infrastructure Schemes in practice: how to create new markets for ecosystem services from land, tested the model and showed under which conditions it may work. Then Protecting our assets: using Natural Infrastructure Schemes to support sustainable agriculture studied the potential to use the scheme to improve soil and water quality in the Anglian river basin.

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