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DEFRA HOLNICOTE PAYMENTS FOR ECOSYSTEM SERVICES (PES) PILOT RESEARCH PROJECT 2014-2015 FINAL REPORT TO DEFRA ON PROJECT NR0156 SEPTEMBER 2015 AUTHORS & SUGGESTED CITATION Authors: Sacha Rogers (Penny Anderson Associates) Steve Rose (JBA Consulting) Janet Spence (JBA Consulting) Nigel Hester (National Trust) Suggested citation: Rogers, S., Rose, S., Spence, J. and Hester, N. (2015). Holnicote Payments for Ecosystem Services (PES) Pilot Research Project 2014-15: Final Report to Defra on Project NR0156. 150317 i Defra – Holnicote Payments for Ecosystem Services (PES) September 2015 Pilot Research Project 2014-2015: Final Report CONTENTS Page ACKNOWLEDGEMENTS ..................................................................................... 1 EXECUTIVE SUMMARY....................................................................................... 2 Conclusions .................................................................................................................. 4 1. INTRODUCTION.................................................................................. 5 1.1 Background to Round 3 PES Pilots................................................................... 5 1.2 Development of an Ecosystem Approach at Holnicote ..................................... 5 1.3 Links With the Holnicote Multi-Objective Flood Demonstration Project ............ 6 1.4 Objectives of Holnicote PES Pilot...................................................................... 7 2. METHODS ........................................................................................... 9 2.1 Identifying a Market for Ecosystem Services .................................................... 9 2.2 Identifying Potential Buyers and Sellers and other Actors ................................. 9 2.3 Assessing the Prospects for Trade .................................................................... 9 2.4 Opportunities for Development of PES ........................................................... 10 2.5 Resolving Technical Issues ............................................................................. 11 3. IDENTIFYING A SALEABLE ECOSYSTEM SERVICE..................... 12 3.1 Review of Previous Ecosystem Services Work............................................... 12 3.2 Opportunities Assessment............................................................................... 13 3.3 Identifying Saleable Ecosystem Services........................................................ 13 4. IDENTIFYING STAKEHOLDERS...................................................... 15 4.1 Identifying Potential Buyers............................................................................. 15 4.2 Identifying Sellers ............................................................................................ 16 4.3 Identifying Other Stakeholders ........................................................................ 16 5. ASSESSING THE PROSPECTS FOR TRADE ................................. 17 5.1 Development of a PES Approach.................................................................... 17 5.2 Development of Key Messages / Ecosystem Services ................................... 18 5.2.1 Flood Regulation................................................................................... 18 5.2.2 Carbon Storage and Sequestration ...................................................... 19 5.2.3 Erosion Regulation and Water Quality ................................................. 21 5.2.4 Biodiversity............................................................................................ 22 5.3 Testing Ideas in the Market Place ................................................................... 24 150317 ii Defra – Holnicote Payments for Ecosystem Services (PES) September 2015 Pilot Research Project 2014-2015: Final Report 5.4 Initial Feedback from Potential Buyers............................................................ 25 5.4.1 Environment Agency............................................................................. 25 5.4.2 Flood Insurers....................................................................................... 25 5.4.3 Local Residents .................................................................................... 27 5.4.4 Local Businesses................................................................................. 28 5.4.5 Visitors .................................................................................................. 29 5.4.6 Corporate Business .............................................................................. 30 6. OPPORTUNITIES FOR DEVELOPMENT OF PES ........................... 32 6.1 Refining the Scope of PES Opportunities ....................................................... 32 6.2 Integrating PES with a Visitor Giving Scheme ................................................ 33 6.3 Use of Agri-Environment Schemes ................................................................. 34 6.4 Woodland Carbon Code .................................................................................. 35 6.5 Peatland Carbon Code .................................................................................... 36 7. SUMMARY AND CONCLUSIONS..................................................... 38 7.1 The Opportunities for PES............................................................................... 38 7.2 Proof of Concept and Potential Showstoppers................................................ 38 7.3 What Has Been Achieved Through the Pilot ................................................... 40 7.4 Project Legacy................................................................................................. 40 7.5 Prospects for PES Going Forward .................................................................. 41 7.6 Lessons Learnt from the Project...................................................................... 41 7.7 Transferability to Other Parts of the Country................................................... 43 7.8 Actions for Government to Facilitate or Remove Barriers............................... 44 7.9 Conclusions ..................................................................................................... 45 8. REFERENCES................................................................................... 46 FIGURES (IN TEXT) 1 Location of Holnicote Estate 2 Potential Buyers and Beneficial Ecosystems Services 3 Illustration of PES Model Based on Outcomes TABLES (IN TEXT) 1 Estimated Carbon Storage in Different habitats 2 Summary of Potential Carbon Storage Associated with the Flood Project 150317 iii Defra – Holnicote Payments for Ecosystem Services (PES) September 2015 Pilot Research Project 2014-2015: Final Report APPENDIX 1 Summary of Opportunities Assessment Work 150317 iv Defra – Holnicote Payments for Ecosystem Services (PES) September 2015 Pilot Research Project 2014-2015: Final Report ACKNOWLEDGEMENTS The project team would like to thank the following people and organisations for their valuable contributions to the project: Christine Blythe, EDF Energy Colin Smith, Helen Dunn and Nick Haigh, Defra Graham Haw and Anne Shaw, Community Flood Group Helen Batt, River Stewardship Company John Buttivant, Environment Agency National Trust tenant farmers and businesses Rebecca Clark, Natural England Richard Andrews and Fleming Ulf-Hansen, Natural England Sarah Bryan, Exmoor National Park Authority Selworthy and Minehead Without Parish Council Tamsin Mosse, National Trust Teresa Bridgeman, The West Somerset Flood Group 150317 DEFRA – Holnicote Payments for Ecosystem Services (PES) 1 September 2015 Pilot Research Project 2014-2015: Final Report EXECUTIVE SUMMARY The Holnicote Payments for Ecosystem Services (PES) pilot research project is one of a number of initiatives funded by Defra to test the potential for a PES approach. The project was carried out at the National Trust owned Holnicote Estate located in West Somerset which covers some 50km2 of pastoral farmland, semi-natural ancient woodland and heathland/blanket bog habitat on the fringes of Exmoor National Park. The Estate encompasses two river catchments, the Aller and the Horner which together cover 40km2, and is the location of one of three Defra funded multi-objective flood demonstration projects. The 'From Source to Sea' flood project has piloted the delivery of natural flood management, taking a holistic, catchment wide approach which has sought to deliver multiple benefits for water quality, soil management and biodiversity alongside natural flood management. The Estate contains iconic upland and coastal landscapes and receives in the order of 1.2M visits from the public each year. Key environmental issues for the National Trust at the Holnicote Estate are soil erosion and management on the steeply sloping land, managing flood risk for the villages of Allerford and Bossington which lie at the foot of the river catchments and safeguarding the Estate's exceptional biodiversity and landscape quality. Defra funding for the flood demonstration project came to an end in March 2015 and a new source of funding is needed to continue to explore and implement further natural flood solutions. Against this backdrop, the PES pilot research project aimed to identify potential markets for financial investment to allow for the long term continuation and expansion of the flood project. The project objectives were to: design a robust and realistic PES scheme which is strongly supported by relevant stakeholders; identify the most promising
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