Costs and characteristics of long term agreements for the provision of ecosystem services by land managers

Transcription

1 Costs and characteristics of long term agreements for the provision of ecosystem services by land managers Laurence Smith, SOAS, University of London Alex Inman, Kelvin Balcombe LUWQ 2013 The Hague 13th June 2013 Westcountry Rivers Trust

2 Two RELU funded projects: Catchment management for protection of water resources Focused on a holistic template for collaborative catchment governance and adaptive management Innovative market-based mechanisms and networks for long term protection of water resources Focused on understanding PES potential and necessary institutions, mechanisms, tools and partnerships Today s outline: - conceptual frameworks; putting long term agreements in context - is it possible to secure multi-generational land management agreements to deliver long-term strategic protection of water resources? - do legal instruments exist for robust long term agreements? - conclusions

3 Ecosystem services framework Provisioning services food energy (hydropower, biomass fuels) water supply Non-rival, nonexcludable and problematic property rights, hence market failure and typically under provision Regulating services carbon sequestration and climate regulation flood and drought regulation Supporting services purification of water and air pest and disease control Rival, excludable, and defined property rights, hence markets or public/community provision Cultural services cultural and psychological benefits recreation and tourism

4 No single solution; complementarities of policy approaches Land purchase Coordination requires a catchment scale vision (and a spatial plan?) and collaborative management INCENTIVES Provider is paid Agri-environmental Schemes Paid Ecosystem Services Quality Assurance Schemes narrower targeting Works but needs institutional and market development (and an ethical broker?) Works but needs regulation and enforcement by a costeffective regulator REGULATION Polluter pays Cross Compliance Nitrate Vulnerable Zones WIN-WIN Provider saves Cost-Benefit advice Best Practice farming Works but requires consistent trusted engagement by technical providers Provides for additionality for PES? universal coverage? broad targeting Source: L. Couldrick, WRT and L. Smith, SOAS

5 Payments for Ecosystems Services (PES) voluntary transactions in which an environmental service (often a land use providing this service) is paid for by one or more buyers

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7 from: Payments for Ecosystem Services (PES) An overview of current thinking, Steven Smith, URS, presented at CIWEM & WSKEP Conference, London, 12 June 2012 NB: agreements with farmers in the form of Restrictive Covenants.

8 Limitations of incentive approaches adopted so far: Promotion of win-wins can only go so far and does not address trade-offs There are limits to the conditionality (on land use) that can be attached to capital grants Agri-environmental payments (based on income foregone and transaction costs), tend to be based on short term contracts (ELS = 5 years, HLS = 10 years) Is it possible to secure multi-generational land management agreements to deliver long-term strategic protection of water resources? Two farm surveys focused on: One-off payments to landowners who are prepared to take areas of farmland out of intensive agricultural production on a long-term basis Primarily focused on small plots of marginal land (such as wetlands or boggy ground, and key riparian buffers/strips); not prime agricultural land.

9 1) Exploratory survey of 42 landowners in three catchments in the SW, 2009 purposive sample and deliberative two-stage survey: face-to-face farm visit with detailed explanation of proposed scheme, followed (3 weeks) by a telephone interview 76% of respondents stated they would be interested: 38% very interested, 38% quite interested longevity of the agreements the main reason for reticence 78% would consider 5m strips and other types of land e.g. wetlands, marsh, field corners and parts of fields too wet to farm easily ; typically up to 3% of total landholding many would prefer >2m strips because wider strips are regarded as easier to manage than narrow strips due to the option to graze managed options (grazing and topping), preferred to unmanaged payment estimates/ha: mean 25k, st.dev 13k, min 2.5k, max 50k. Smith, L.E.D., Inman, A, and Cherrington, R., The Potential of Land Conservation Agreements for Protection of Water Resources, Environmental Science and Policy, 24, 2012, p DOI: /j.envsci

10 Choice Modelling Survey Choice Set Example Option 1 Option 2 Option 3 Payment Level (ha) 15,000 35,000 25,000 Length Of Agreement Buy Out Option Yes Yes No Type Of Land Management Requirement Provision Of Public Access Good Land (not buffer) Reversion To Scrub Full Public Access Marginal Land (not buffer) Extensive Permanent Pasture Full Public Access Buffer Strip (on Marginal Land) Reversion To Scrub No Public Access From the stated preference data, it is possible to derive a valuation for each attribute level which corresponds to the level of payment (WTA) farmers require to adopt each attribute level Stated preference data can also be used to assess how farmers trade-off attributes against each other

11 2) CV and Choice Modelling surveys to further examine farmer preferences: 100 SW landowners, high levels of adoption if the price is right (not seen as disruptive to core farming business) payment estimates/ha: 30-35k (49 years) Agreement Attribute Level Payment Requirement Differential (per ha) medium length agreements cost a bit more long term commitments cost a lot more public access costs more! buffer strips on marginal land are least cost other marginal land not much more (target areas) retiring good land costs more 60% prefer to retain extensive grazing 40% accept reversion to scrub (but costs + 17k) To go beyond 49 Years Years 4,210 Over 499 Years 24,950 To allow public access... Partial Access 18,715 Full Access 37,430 To go beyond marginal land on buffers... Marginal Land Outside Buffers 1,760 current land values a starting point for negotiation land ownership is retained but management costs and loss of operational flexibility expected Buffer Strips On Good Land Good Land Outside Buffers 9,790 17,950

12 Payment estimates appear relatively high. Do legal instruments exist for robust long term agreements? 1) Restrictive Covenants a clause in a deed that limits what an owner can do on his/her land in law a contract between two parties and not a sale of interest or property rights under English common law subject to appurtenance requirements for the landholding that benefits from the restrictions imposed according to legal precedent it is only possible to create a perpetual covenant on freehold land if created for the benefit of the appurtenant land and as a restrictive obligation (The Law Commission, 2013).

13 Upstream Thinking: Use of Restrictive Covenants for grants over 5,000, SWW and WRT require the farmer to place a deed of covenant on his/her property (10-25 years) typical restrictions (based on whole farm plan) include: limiting livestock head planting cover crops after harvesting refraining from planting maize in sensitive areas maintaining specified uses of manure stores or other infrastructure

14 Problems with Restrictive Covenants Registry issues In UK, the burden is recorded in land registry, but the benefit is not. Leads to benefits becoming forgotten or confusion and loss of purpose for the covenant Murkiness and complexity of existing law Different rules for benefits and burdens and very few of them are especially clear Can be difficult to enforce, particularly over longer time horizons and multiple generations English common law has generally not favoured creation of long-term burdens on use of land and there is a presumption that restrictive covenants are personal to the parties and do not necessarily run to successors in the land Can organisations seeking long time environmental conservation meet the appurtenance requirements?

15 2) Land Conservation Agreements (LCAs) also known as: conservation covenants, conservation agreements conservation easements conservation servitudes agreements between a landowner and another party which place long-term restrictions on the use or management of a parcel of land a contract, usually attached to deeds, which specifies conditions for the use of the land, and is intended to be binding upon current and future owners of the land thus a voluntary partial transfer of property rights, or voluntary acceptance of limitations to the landowner s original bundle of rights may also require commitment to specified management actions and monitoring arrangements widespread use in USA, Canada and Australia

16 E.g. Conservation Easements, USA Created by state statutory law. Only North Dakota has not adopted conservation easement enabling legislation. National Conservation Easement Database lists 17.7 million acres held in conservation easements across the country, and estimate that 40 million acres are covered in total = km 2 67% of UK 3.9 x Netherlands Drivers in USA: tax benefits costs: 40% less than outright ownership

17 Owners of conservation easements, USA

18 LCA advantages: long term conservation without change in land ownership, and thus a capital cost saving compared to land purchase land can be retained for some private uses and benefits, for example, sustainable felling under a forest conservation agreement flexible agreements that can be well matched to the mutual objectives and circumstances of both parties a capital payment for landowners in exchange for the rights foregone in some jurisdictions additional financial benefits for the landowner via income, property or inheritance tax concessions; corresponding reduction in the payment from the buyer access to revenue streams from ecosystem service markets that require permanence such as carbon sequestration, and support to development of such markets by providing a stronger guarantee that supply of an ecosystem service will be sustained it may be possible to value rights acquired as balance sheet assets for the purchaser

19 LCA disadvantages: higher transaction costs compared to ownership as both the purchaser and landowner may exert time and money to specify, monitor and enforce divided ownership monitoring and enforcement costs that may extend into perpetuity abuses that may arise if financial incentives such as tax concessions become the overriding motivation for landowners limited effectiveness for conservation purposes if the spatial implementation of LCAs is voluntary and ad hoc, and thus not strategically targeted and coordinated planning matters; no conservation sprawl a risk of negative impacts on local economic activity and property-based tax revenues costly amendments at a later date if LCAs made today do not match the preferences of society in future exceptions in state laws, e.g. gas development no guarantee of public access.

20 Comparing LCAs and Restrictive Covenants for use in UK LCAs may provide a stronger form of long term protection, particularly if land is sold or inherited. easier to place affirmative requirements; for example, requiring maintaining of a wetland or mitigation of diffuse water pollution practical and cost reducing that parties to a LCA need not hold neighbouring land to that restricted LCAs (known as conservation covenants) are in use in Scotland but do not currently exist in law in England and Wales, Northern Ireland (or Republic of Ireland). The Law Commission is examining whether there is a case for introducing conservation covenants into the law in England and Wales and the elements that a new statutory scheme may require; with a view to publishing proposals by end of 2014 (The Law Commission, 2013) Elsewhere in the EU?

21 In conclusion it is possible to secure multi-generational land management agreements to deliver long-term strategic protection of water resources at a price? there is need for flexible and individually negotiated agreements (albeit raising transactions costs) LCAs are potentially better than RCs for long term and spatially targeted protection (does the UK lack this option?) LCAs should be conveyed as part of catchment scale spatial planning to limit ad hoc conservation sprawl

22 Elements for PES for water resources protection Knowledge base Regulatory and legal framework Collaborative catchment planning and management Regulator Land managers Trusted broker Beneficiaries and payers Technical and knowledge providers

23 Thank you for your attention Project Principals and Partners Funding: RELU programme of UK research councils, Defra and Scottish Government Principal investigator: Laurence Smith, SOAS, Univ. of London Co-investigators: Kevin Hiscock, UEA, Kelvin Balcombe, Univ. of Reading, Keith Porter, Cornell Law School Other partners: - The Westcountry Rivers Trust - The Association of Rivers Trusts - The Upper Susquehanna Coalition, NY and Pa, USA Research Team: Dylan Bright; Hadrian Cook; Laurence Couldrick; Alex Inman; Tobias Krueger; Mary Jane Porter; Paulette Posen, Sergio Rudin, Emily Rockett For more information: