Cornwall National Landscape were awarded funding from the Natural Environment Investment Readiness Fund, Environment Agency, to research private investment in Section 08 South Coast Western.
The project formed a feasibility study to structure the protected landscape for developing an investment offer and financing. We facilitated the project on behalf of Cornwall AONB Trust.
To ensure nature recovery across the boundaries of protected landscapes and to share with stakeholders our findings about blended finance for current and future agri-environment schemes.
This project was initiated as farmers and landowners were facing a reduction, and eventual loss, of basic payment (BPS) against a backdrop of uncertainty as information on new environment land management schemes was unknown. This posed a potential threat to farm businesses as they currently operated, and in turn posed a potential threat to natural capital resources on-farm.
In our Discovery process we identified a potential £15m natural capital and ecosystem service benefits could be available on the Lizard – Section 08, South Coast Western. In this study we calculated that for every £1 of public money spent there would be a £3 return on investment.
In the event that government schemes would not be able to provide the amount needed to realise this return we looked to understand if private investment and blended finance could form the solution to sustainable and successful farm businesses, whilst delivering more for nature, building resilience to/ mitigating climate change and enhancing landscape character and heritage.
Structuring the protected landscape for private investment required a feasibility study to understand how this might be achievable.
The project ran for 12 months, with a core group of farmers and land managers based on the Lizard and a group of consultant, experts in their field, who ran various elements of the projects and collaborated extensively on their findings.
The aim of this project was to further the protected landscape to develop opportunities for private investment ensuring the conservation and enhancement of the protected landscape. Our objective is secure existing and increase natural capital during a period of ecological and climate crisis.
We wanted to identify private investment opportunities for collaborative nature and landscape recovery in our geographical location. This included corporate social responsibility (CSR) products, carbon credit schemes, biodiversity offsetting and reviewing other opportunities.
Deal Structures for Potential Investors Following market testing we looked to identify expressions of interest from our buyers and suppliers and present back to our supply side the potential deal structures that would need to be in place, assessing the risks and barriers.
This strategy is based upon the findings of the feasibility study and is ground-truthed in Section 08, South Coast Western. However, this is a model and set of actions that we can roll out for the remaining 11 Sections of Cornwall National Landscape.
We have built a network of trusted and valued relationships with farmers and landowners. We ran workshops, feedback and consultations throughout to understand the opportunities, risks and how this would impact their farm businesses. This increased the knowledge of the group and confidence to develop (or not) private investment options.
A better understanding of how the Cornwall National Landscape Partnership and Cornwall AONB Trust CIO were perceived and the benefits of this. We ran workshops to understand and analyse the risks and benefits for the Cornwall AONB Trust as a facilitator/ intermediary.
Cornwall National Landscape and the farmer group have a road-map to develop private investment opportunities further. As part of this strategy, and throughout the learning, monitoring was identified as necessary to develop the aims further.
The project ran for 12 months, with a core group of farmers and land managers based on the Lizard and a group of consultants, experts in their field, who ran various elements of the projects and collaborated extensively on their findings.
Cornwall National Landscape represents the 9th largest protected landscape in the country. Cornwall AONB Trust, as a charitable incorporated organisation, could act as a facilitator within the protected landscape to assist the development of ecosystem services projects. The Lizard Farmer Group is a group of forward-thinking farmers that previously co-designed a Landscape Management Framework for the Lizard with the Cornwall National Landscape team. Terranomics, Gain Consulting and the University of Exeter are also supporting this group to develop farm plans, private investment opportunities and strategies.
Through working with the Lizard farmer group, we shortlisted the following enhancement types, known as Payments for Ecosystem Services (PES) opportunities:
The overall intervention area for the PES opportunities in Section 08 is approximately 213 hectares. The largest opportunities lie with Biodiversity Net Gain (54 hectares) and Woodland Carbon (52 hectares). This could generate an uplift of 283 Biodiversity Units, or 14,000 tCO2e sequestered over 30 years. Using conservative estimates these opportunities could provide a helpful revenue stream for farmers, an interesting margin for potential investors and a cost-effective means of delivering environmental improvements.
For a potential funder or investor, the funding options could include:
This could be done directly between buyers and sellers, or via an intermediary or facilitating organisation (such as the Cornwall AONB Trust). This is a local opportunity to engage with Cornish farmers and landowners exploring new mechanisms that could generate significant benefits for nature and local communities.
This project worked with a group of farmers whose land holdings are in Section 08 South Coast Western. The group represented the supply side of private investment – farmers who could provide Ecosystem Service projects on their farms in the protected landscape.
They were mainly mixed and livestock farmers and therefore the investment opportunities we focused on for reflect this.
We worked with the farmer group over the 12-month project via workshops, interviews, farm walks, guest-speakers and various industry-expert talks to educate ourselves on private investment and opportunities on farm. We gained invaluable, continual feedback from the farmers about the barriers and risks to engaging in these schemes. Learning from all sides will contribute to Cornwall National Landscape’s future projects.
Colette Beckham, Gain Consulting and Dr Grace Twiston-Davies, University of Exeter worked with the supply-side to produce Farm Action Plans for each farm which identified opportunities for ecosystem service projects.
Mountain, moor and heathland
Freshwater and wetlands
To better understand how the Cornwall National Landscape could best structure itself to facilitate private investment in the protected landscape we worked with farmers to understand the different types of private investment and deal structures, as well as the main barriers and incentives to engaging in private finance in the short term (1-3 years).
The farmer group were most interested in grant funding, direct business investment and Wilder Carbon as mechanisms for Payments for Ecosystem services. These provide capital, are flexible in what actions can be done and help to enhance biodiversity.
Overall barriers to entering into private finance deals in the short term were public sector uncertainty and concerns over ethics and that there is little opportunity to support biodiversity actions. Although Biodiversity Net Gain and Wilder Carbon were discussed, the group felt that there were not enough opportunities to support farmers who want to go the extra mile for biodiversity.
Overall incentives to entering into private finance deals were clarity over when blended finance should start, clarity over ELMs and support with finding biodiversity and carbon opportunities on their farm. It was clear that until the government provide clarity over future Agri-environment schemes and over how they expect blended finance to work, engagement in private finance from the supply side will be difficult.
The farmer group were most interested in the Bundling and Group and Aggregated private finance structures. This was because these structures provide opportunities to enhance biodiversity and provide the support needed to help farmers to work together to provide products at scale.
Engagement in the NEIRF project overall increased farmer awareness, knowledge and understanding of the different private finance options a lot. Overall, their confidence in being able to access private finance in the medium term (4-10 years) had increased slightly.
Key actions that Cornwall National Landscape could take to position themselves as a facilitator or programme manager to support private investment into farms were to form a collaboration with the Farming and Wildlife Advisory Group (FWAG) and /or other trusted organisations such as dairies or marketing boards in the farming sector.
“It has been eye-opening the whole process, I’m glad I have been involved and something I’d recommend a farmer doing if they have the chance. I’ve looked forward to the meetings and always come away with a nugget of information”
“I’m keen to keep working with the AONB and experimenting with new opportunities. I’ll always keep looking for what’s next”
“I think we all started thinking – why would we want to make other people’s businesses look better than they are – but working with the group has shown this may not be such a problem and that ethics are being considered”
“Farmers want to see how it all works on the ground so more farm walks about carbon, trees or biodiversity net gain would be a good idea”
Private finance that works in harmony with sustainable food production and that is considered ethical by the farmers is key.
The project shortlisted PES Transactions which included the sale of carbon credits (woodland carbon and soil carbon) and biodiversity units. The types of potential finance supplementary to this includes:
Direct business investment, grants and Wilder Carbon. These provide capital to the farm business and offer more flexibility for the farmers to create actions for biodiversity and carbon sequestration that fit with their farming practices. Wilder Carbon was popular because it included actions to enhance biodiversity and wasn’t just focused on tree planting. Soil carbon, Agroforestry Carbon Codes (in development) along with Biodiversity compensation (such as Biodiversity Net Gain) were all somewhat popular.
Payments to incentivise a performance or goal which are not paid back
Credit for a specific purpose, paid back with interest over a timeframe
Cash injection provided in return for a share of the company and profits
Low levels of credit and business inputs from actors in the value chain
A promise to cover losses that a lender might experience
Use of public funds to mobilise private finance
Short-term, it is expected that further development work is required. It is anticipated that grant funding will be needed to move the protected landscape to a position where it can begin to initiate the model. Public funds will be required to provide staff capacity and external support in the development and initial phases. Roles include Project Management, Finance, Administration, Farm coordination, and advice. Due to the understandable reluctance of the farmer group to engage in private finance in the short term, it was recommended that Cornwall National Landscape start to pilot small projects that can help build trust and legitimacy in the farming sector to engage future suppliers. These projects could provide case studies and the key to engaging in the supply – farm walks and practical exemplars.
Farmers want to see how it all works on the ground so more farm walks about carbon, trees or biodiversity net gain would be a good idea
In this structuring stage, we have begun the initial development of a really innovative and attractive offer that would allow us to achieve, through a blended finance approach, a significant return on ecosystem service benefits, fulfilling our primary purpose to conserve and enhance the protected landscape. Cornwall National Landscape is not an asset holder; therefore, what we can offer to both buy and supply side is a unique proposition to build a bespoke offer that makes the best use of the Landscape Recovery Framework and Natural Capital Prospectus. Success relies on the capacity to draw people into a collaboration due to issues around the scale. Addressing the scale issue is dependent on several players, making this more time-consuming, although the investment offer is likely to be resilient where there is a high number of supply-side deliverers. If we want to do this at scale, a mechanism is required which enables farmer collaboration.
There are 19,227 hectares within Cornwall National Landscape’s Section 08 South Coast Western, of which 14,170 hectares could be agricultural land. The overall intervention area for the PES opportunities in Section 08, based on the Lizard Farmer Group extrapolations and the area available for agricultural land, are estimated at 4,308 hectares. These are very high-level estimates using average values based on a small sample size of farmers, with above-average interest in environmental interventions. There might, however, be a lower proportion of agricultural land on the Lizard due to the large extent of semi-natural habitats. This would also require buy-in from a larger group of farmers and landowners in the Lizard, with whom Cornwall National Landscape might not have already engaged. At the £550 per hectare asking price, the total annual required investment would be £2.4M or £71.1M over 30 years. This could generate an estimated gross margin of £500,000 a year for buyers. Estimated ROI per year = 21%
2016 – Natural Capital in the Protected Landscape (Research Project) Natural capital put simply is the elements of the natural environment that provide humans with services, services, such as flood control, water and air quality, carbon storage and food production.
2018 – Farming for the Nation Test Trial Cornwall National Landscape test trial examined how Defra’s Future Schemes (ELM – Environment Land Management) can use a fuller understanding of natural capital, and ecosystem services, to provide a positive change for the biodiversity and heritage of the Lizard Peninsula, whilst also delivering wider multiple benefits for local communities.
2021 – NEIRF Project (something that highlights this as the project you are looking at ie current)
2022 – Seedcorn – Lizard Farm for Nature