Ecosysytem Enterprise Partnership – A Nature Fund Project

Pembrokeshire Marine SAC is in unfavourable status and environmental pressures could limit future commercial development. This project through the Nature Fund is to establish whether offsetting can be used to give industry confidence in investing in Pembrokeshire, using that opportunity to mitigate any negative effects of development and by creating a market for environment improvements, producing ecosystem resilience.

The project has emerged in response to growing recognition of the need to create a new, innovative and collaborative approach to how we manage our natural resources and enable economic growth, supporting the emerging green growth agenda in Wales.

Ecosystem Enterprise Partnership will create a partnership framework between land managers, industry, commerce, government and third sector working collaboratively to develop and pilot an Ecobank – a nutrient offsetting scheme for the Milford Haven and Cleddau catchment. The Ecobank will be a market-based offsetting scheme that provides a streamlined, consistent and robust nutrient assessment process for developing a rigorous and credible offsetting scheme.  Ecobank also provides opportunity for rural landowners to generate income by managing land for conservation.

Ecobank will enable ‘nutrient credits’ to be generated by landowners who commit to improve and enhance management practices on their land through an Ecobank agreement. These credits can then be sold, generating funds for the management of the site. Credits can be used to counterbalance (or offset) the impacts on nutrient loading values that are likely to occur as a result of development. The credits can also be sold to those seeking to invest in conservation outcomes, including philanthropic organisations and government.

This project funded by the Nature Fund forms the initial ground work for assessing the viability of a nutrient offsetting scheme. From a series of discrete work packages an Ecobank Business Plan will be produced to include a proposed Ecobank Toolkit and implementation plan.

Despite considerable effort through a plethora of extensive policies, plans and legislative tools, evidence suggests that the ability of our natural resources to provide the services on which we depend is diminishing.  The recent “State of Nature” report provided a clear message that immediate action is now required to reverse the considerable and rapid decline in biodiversity.

At the same time there is also a strong and negative perception by industry that the current regulatory regime in Wales is both costly and prohibitive.  As global competition to attract business increases we run the risk of losing vital business on which our economy and associated communities depend.

We must therefore accept that the current systems and practices are not working. Urgent action is required if we want to continue to benefit from our natural resources and avoid compromising future generations own ability to also enjoy the same benefit.  We need to grow sustainably, increase resilience and diversity and manage natural resources efficiently. This will require a step change and a new way of working.  Measures will need to be introduced which will both allow future development and increase the resilience of ecosystems in the face of climate change.

Milford Haven has been selected as the pilot area for the project due to its considerable environmental value and high concentration of economic activities.  The energy companies around the Haven Waterway produce about 25% of the UK’s total energy needs. These companies and their supply chains employ over 5,000 people across South Wales.

The Cleddau River watershed is also vitally important for water abstraction, providing approximately 47Ml/d of drinking water every day, equating to around 90% of the County’s daily demand. A further 27Ml/d is abstracted to supply industrial customers. Future water availability will be affected by upcoming changes to abstraction licences under the Habitats Directive and the predicted impacts of climate change.

In addition, the county has an outstanding natural environment. The international and national significance of Pembrokeshire’s biodiversity is reflected by the fact that more than 6% of the total land area is within Sites of Special Scientific Interest (SSSI).  There are eight National Nature Reserves and seven terrestrial SACs as well as the Pembrokeshire Marine SAC. There are also five SPAs designated under the EU Birds Directive.  This rich and diverse natural resource serves as the basis for an important tourism industry, as well as agriculture and fishing.  Despite these valuable assets unemployment in Pembrokeshire is currently just below the Welsh average and Pembrokeshire has the third lowest level of household income in Wales.

There is also growing concern over the loss of biodiversity in Pembrokeshire, primarily due to changing and intensifying land management practices¹.  Intensive dairying can result in problems of disposal of organic waste, which can cause serious pollution incidents, and agriculturally derived bacterial runoff in coastal catchments can cause failures in bathing beach standards and negatively effect fish/shellfish growth.  The extended growing seasons that are occurring as a result of changing climate can have negative environmental consequences.  Cultivation of crops such as maize and potato can result in bare soil during periods of high rainfall, with subsequent run-off of enriched sediment, and therefore increased soil erosion and potential water quality issues.  Consequently, the majority of Pembrokeshire Marine SAC features are in unfavourable conservation status and nutrient loading into the Milford Haven has been identified as a key priority action. Existing actions within the SAC management scheme adopted in 2008 are not in themselves adequate to address this. With the Waterway considered as being “full” with no headroom in the Milford Haven catchment, this presents a potential barrier to development and therefore any future schemes requiring a permit to discharge into the catchment will require some form of offsetting scheme.

¹ State of Wildlife in Pembrokeshire Report 2011. Available: http://www.pembrokeshire.gov.uk/content.asp?id=22546&d1=0

The Ecosystem Enterprise Partnership (EEP) project aims to address this challenge through establishing a collaborative forum of land managers, industry, commerce, government and third sector to find multiple benefits for society, economy, environment and people.

It will build a relationship between economic, social and environmental drivers recognising how interdependent they are – working across policies and sectors. Due to the competing demands and value of the study area, it provides a policy nexus of business, land management, biodiversity and spatial challenges.   This creates an opportunity to “test out” emerging national policy and in particular the Planning, Environment and Future Generations Bill through practical local delivery.

EEP proposes to develop of a nutrient offsetting scheme, creating headroom for potential projects using mitigation or compensation either by developers or land managers.  These credits could then be sold through private contractual arrangements.  This would incentivise habitat creation by land managers and encourage developers to build mitigation into their forward planning.  Only projects offering a net ecosystem gain would be eligible for this scheme and therefore projects would be dealt with on a case by case basis with some developments failing to meet the improvements or maintenance test.

Given the novel nature of this initiative, research will feature strongly with Welsh Universities and economists delivering on key elements of the project in relation to background research, development of the Ecobank credits and economic framework to ensure the scheme has the ability to be self-sustaining.

With the 6 month timeframe for this project the main focus is testing the validity of development of a Welsh nutrient offsetting scheme.

Background Research
Initial groundwork will be required to establish the framework for the development of the project through four key areas of research:-

1. Global Ecosystem Banking Initiatives
2. Review and analysis of Pembrokeshire case studies
3. Land Manager Assessments – Credits
4. Credit Purchasing Potential Assessment – Debits

In order for this project to be a success it is vital that a collaborative partnership approach is established from the outset. This will include forming the following groups:

Ecosystem Enterprise Delivery Group
Ecosystem Enterprise Technical Advisory Group
Ecosystem Enterprise Stakeholder Forum

From the background research working in close liaison with key stakeholders a toolkit and a development plan have been produced.

Ecobank Toolkit
Ecobank Business Development Plan – Recommendations for Project Implementation

Working with