Blended Finance Group Meeting Notes 28/5/2020
As the volunteer farmer Advisory Team work through the Dartmoor ELMs Test and Trial smaller subgroups will explore different elements. The objective of the Blended Finance group is to work with a range of businesses to look at whether there are environmental outcomes they would be willing to pay for; how they might pay for these; whether it would require landscape-scale action by suppliers of such benefits to attract purchasers; and the sort of advice/environmental brokering arrangements that would need to be put in place to deliver such a model.
The first meeting of the blended finance subgroup was to ascertain where there might be particular areas of interest in creating a market or a type of market framework, also to identify which ideas the group were less keen on exploring.
It was suggested the group may want to look at some resources in advance, such as the Land Management 2.0 webinar on Business Demand for Resilient Ecosystems.
A summary of options was also circulated:
Net Gain: this is, essentially, biodiversity offsetting. When new development takes place the developer is supposed to retain/restore/replace as much of the natural capital lost in the development on site as possible but they are supposed to deliver an overall increase in natural capital value. It’s highly likely they won’t be able to deliver an increase on site but landowners elsewhere may be able to offer land for that purpose, for 30 years minimum. It might work well for the T&T geographically due to the number of building companies currently working in the area. However, there appears to be uncertainty as to whether net gain can be applied to actively farmed land or whether it’s restricted to land for conservation and recreation only. This is a new are of potential investment, still in development, so it’s possible that this element is still open for interpretation.
Carbon Offsetting: a longer standing mechanism/market for people to offset carbon, or carbon equivalent emissions. Because it’s a longer standing option there are a number of companies/schemes/accreditations we could look at working with. It has largely focused on tree planting but we could look at working with the Peatland Code. Devon County Council are also developing a Devon Carbon Plan, they’ve only just started but it but they will be looking in future at allocating money to accredited carbon sequestration within the County.
Climate Change Mitigation and Adaptation: again a new market. Climate Impacts Group for Devon, Cornwall and the Isles of Scilly has been convened to look at the delivery of mitigation and adaptation in the region. The learning from other projects is that businesses would appear to be most interested in investing in this area when they have already experienced extreme weather events, like flooding.
Tourism: one of Devon’s biggest industries. Might there be an interest around support for species re-introduction to make Dartmoor an even more popular visitor destination?
Water: this is the only existing model for private finance being invested into Dartmoor, through Upstream Thinking. Options are around water cleanliness, working with South West Water. Alternatively one could look at flood mitigation with housing development businesses.
Reverse Auctions – where farmers bid (often against each other) to deliver interventions in the landscape which deliver an environmental objective. Has been tried on Dartmoor, the reviews are not particularly positive. People are looking at how the approach could be made less competitive and more collaborative.
Land Banking – Setting aside land in the landscape for conservation with the potential for receiving net gain payment. Might work well with the concept of nature recovery networks/areas.
Tree planting carbon credits – whilst woodland creation has been done agroforestry hasn’t and it may be a more appealing prospect for farmers because it could be designed to deliver carbon sequestration and farm business benefit.
Peat management credits – done though the Peatland Code, something various Dartmoor stakeholders have been involved with for years. Robust existing approach and obviously Dartmoor has peat which not all landscapes do so it’s a USP.
Landscape services – develop a transaction approach to deliver alterations in the landscape which local businesses desire, for example water storage measures to prevent flooding. Something like the existing LENs model.
Hybrid – potential to combine multiple approaches e.g. land banking and carbon credits, land banking could be used to support reforestation along water courses on the common, carbon credits could be used to support agroforestry on (appropriately selected) home farm fields but the marketing platform/framework could sell both options simultaneously.
Notes from the discussion:
Find the concept of offsetting morally objectionable.
Blended finance, is this coming from Defra? Yes this has come through Defra who are fully expecting private finance to contribute to future land management.
Feel that it’s a worrying precedent to rely on industry in this way, enables government not to take responsibility.
Group generally feeling that capital works would be preferable, over money for maintenance.
Concern over who holds and distributes the money? What happens if development companies go bust? How do you ensure that even should a company go bust money committed to farmers still comes in? Who is the broker, how do we know the money is secure and who administers it?
Thinks this could be a good opportunity for up front capital investment which may otherwise be unlikely under ELMs.
Private finance supporting tree/hedge establishment would be valuable.
Reverse auctions taken off the table due to association with encouraging farmer to compete against one another which was considered particularly unsuitable for a farming community which collaborates on the management of common land.
Blended finance should be specific funding for core projects.
Concerned about business motives, so that the farming community isn’t exploited with low payments for farmers but big company PR for investors.
We need to be bold, adventurous, progressive and business assertive.
The challenge with peat is that not all commons have it.
Not confident local councils will want net gain finance to go into Dartmoor because they take it for granted as a regional asset and they’re most likely to want to spend their money locally to impress voters.
Big bank of land from development to deliver big projects on Dartmoor, we can offer scale of delivery.
Wouldn’t want too many trees but some land owners might.
Is peat too difficult to measure? What’s the science? Trees might be easier to measure? Steep wooded valleys wouldn’t be missed. More woodland areas might also be combined with increased access as a way of absorbing visitors.
We need to be careful about segregating areas into farm or environment we need to look at whole farm approaches.
Some areas of tree planting already in place, available for people to visit to think about what could be done in future.
Careful about using productive land with common rights because that could have unintentional consequences.
Commons and trees is a definite no no.
Conclusion: Project Officer to continue pursuing a variety of options and bring them back to the group for consideration (ideally focusing on capital payments).