Brexit requires the UK to deliver its own rural land policy; one that is tailored to our particular needs and aspirations. Currently the EU’s Common Agricultural Policy provides payments to farmers, often for uncertain reasons and with little requirement, or even expectation, that the payments will encourage any broader social benefit. Payments to farmers are mostly paid at the same rate per hectare and do not target farmers with the lowest incomes or areas where environmental benefits are highest.
George Eustice, Minister of State at the Department for Environment, Food and Rural Affairs (DEFRA), commented in an interview with the Farmers Weekly last year that “We should be paying [farmers] and rewarding them for the ecosystem services they provide – not giving them a subsidy and saying they should be grateful, …”.
But what might a policy to pay farmers for the delivery of ecosystem services look like? In our Policy Brief, we sketch out an approach to a British Ecosystem Services Policy (BESP).
The various benefits that arise from the management of rural land are increasingly characterised as ‘ecosystem services’. These include marketed products, such as wheat, milk or renewable energy. But they also include other benefits, such as wildlife, landscape, water management, carbon storage or public access, that are valued by the community but which are not bought and sold.
The objective of a BESP would be to deliver the greatest total value of ecosystem services from the land over the long term, taking account of both marketed and non-marketed outputs.
One element of this approach would be to promote new markets for ecosystem services, where those valuing a service, perhaps a water company wanting higher water quality, can buy that service directly from suppliers, perhaps farmers who can change their farming methods to deliver higher standards, beyond those required by law. There are some promising pilot schemes indicating that there is potential here for new markets in particular circumstances, such as for flood control or carbon sequestration. But the scope for markets of this sort is limited.
Therefore the main operation of the BESP would be through the government buying services on behalf of society, using public procurement funds. Public funding would be used to support the delivery of specific ecosystem services where these are not adequately provided through markets.
These procurement funds would support biodiversity conservation, greenhouse gas mitigation, flood control, protection of heritage sites or landscape enhancement. Funds could be used for a variety of purposes beyond payments to individual landholders to alter their land management, for example to support farmer groups or conservation organisations working together to deliver ecosystem services, or to support long term arrangements such as land purchases or setting up trusts for land conservation. The government might offer matching funding to complement funds raised through voluntary or corporate donations.
We envisage a series of both national and locally-based funds. National funds would provide payments in order to meet nationally determined targets. These would relate to international commitments for biodiversity and climate change and for the protection and enhancement of nationally significant landscapes and heritage sites.
They would operate in a similar way to current agri-environment schemes but greater emphasis would be on payment by results and the competitive allocation of contracts. Funding would be targeted, such as towards locations that are best suited to the conservation of particular species and habitats or towards the activities that can mitigate emissions of greenhouse gases most cost effectively.
Local funds would be locally controlled in order to deliver ecosystem services that are valued by local communities, particularly landscapes and public access. They would have better information on local priorities as to how funds can best be allocated. They would also fill in gaps that arise from the allocations made by the national procurement funds.
At this stage, the appropriate scale for these funds in open for discussion but examples might be of the management of water resources at a catchment or river basin scale or of the operation of National Parks. The approach would build on current arrangements for collective action, such as have been developed in Nature Improvement Areas, Catchment Partnerships or Landscape Partnerships.
There would of course be gainers and losers from this new approach. The aim is to leave decision-making to those who have the best information at the appropriate level. This would encourage land holders to become more entrepreneurial, to look for new ways in which their land can deliver ecosystem services and hence attract funding.
Landholders have the best information about the costs and opportunities presented by alternative approaches to land management, providing mixes of marketed agricultural products and non-market ecosystem services. We can envisage farmers developing portfolios of activities, such as flood mitigation, wildlife conservation and public access, alongside their commercial production. They possess the best information about what options are possible on their land, what they will cost and how they may best be implemented.
On the other hand, farmers would no longer receive public subsidy unless their activities can be shown to deliver public benefit. In many cases, this would mean that they could continue be paid for their agricultural production but only where that supports valued landscapes and conservation goals.
It will take time to develop a comprehensive BESP. What is critical at this stage is to identify clearly the new approach and map out the means by which it can be implemented. Government should signal the shift in direction and the longer term goal of developing a more comprehensive policy.
In the shorter term, funding would be gradually transferred from the current fixed area payments under the Common Agricultural Policy to new national and local schemes as the capacity to implement them effectively is developed. The new approach should be adopted in a planned and systematic way as rapid change would run the risk of environmental and social harm.
After Brexit, public funding for agriculture will have much tougher competition. It will become increasingly critical to demonstrate that government funds paid to landholders deliver clear social value in order to compete with demands for funding for health, education and social services. This is the aim of a BESP.
By Ian Hodge, Professor of Rural Economy and Fellow of Hughes Hall in the University of Cambridge.