Protected Landscapes Investment Bank
The old adage ‘Money doesn’t grow on trees’ might not be entirely true
Gain has just completed a year long project for the Cornwall Area of Outstanding Natural Beauty, working alongside fellow consultancies, Terranomics and the University of Exeter. The project – ‘A Protected Landscape Investment Bank’, aimed to investigate the initial feasibility of private finance into the farming sector and how this might be ‘blended’ with public sector funding via the new system of agri-environment payments (ELMs).
The project involved working with a group of forward thinking farmers on the Lizard peninsula (Section 08 of the Cornwall AONB). The group also helped the AONB and Gain with the Cornwall AONB Defra Test/ Trial, which preceded the NEIRF project. Gain’s role in the project was to lead on the ‘supply side’ development. In other words, to scope investable activities to restore ecosystem services on the farm holdings and co-design the investment offer with the farmer group.
The work involved a focus on woodland, heathland and species-rich grassland creation, since these were considered to be the activities which may result in carbon credits to sell via the Woodland/ Peatland Carbon Codes, or through trading of Biodiversity Net Gain Units. These mechanisms are the most developed trading mechanisms for ecosystem services at the current time and so offer the most potential.
Legume rich herbal ley
Gain also explored barriers to farmer engagement and what the farmers considered to be the most investable activities to restore ecosystem services on their farms. We found that there was a mismatch between the existing trading mechanisms and what the farmers considered were the key opportunities. Taking land out of production in order to create habitat under long-term agreements was a barrier, while agri-ecological approaches such as wood pasture and herbal leys, which could be carried out on land in production was seen by the farmers as a much more significant opportunity. The findings point to likely success for mechanisms currently in development such as soil carbon and agroforestry codes. The results also indicate that ELMs support for these approaches is the most fertile ground for blended finance (provided rules on additionality are clearer).
Gain collaborated with Terranomics in their exploration of the project from the investment (buy) side, examining the potential land area available at different scales of operation. Gain also supported market testing of the ‘buy side’, interviewing a number of possible buyers from the water, extraction, agri-food and legal sectors. Our research highlighted more to be done to raise awareness and facilitate local markets/ buyers, just beginning to explore the space. Interestingly, scale was not so much of an issue for local investors, who were interested in local, meaningful projects that were ethical, with multiple benefits. They wanted schemes that they could visit to verify successes and use in their marketing/ CSR reporting. This focus on ethics and value chimed well with the views of our farmers who wanted to know who was buying their ecosystem services and keen to ensure they were not helping companies ‘greenwash’. Farmers too were keen to deliver multiple benefits and in turn receive higher value investments, which is good news for emerging platforms like ‘Wilder Carbon’.
The final element of the project explored the issue of returns on investment and the structuring and governance required to facilitate investment into farmers, or groups of farmers working in collaboration. We found that there was potential in the investment model and good ROIs were possible, warranting further development. The project investigated the possible role of the AONB in convening and facilitating farm focused investments within the protected landscape and set out next steps for more detailed development of a business model.
