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Introduction toNature Markets Assessing landopportunities Working withother farmers Baselining,planning andmeasuring Workingwith buyers Farm businessplanning Liability & riskmanagement Using repayablefinance Signing legalcontracts Public sectorfunding & policy Tenancy &ownership
  1. Groundwork
  2. Market Engagement
Introduction toNature Markets Assessing landopportunities Working withother farmers Baselining,planning andmeasuring Workingwith buyers Farm businessplanning Liability & riskmanagement Using repayablefinance Signing legalcontracts Public sectorfunding & policy Tenancy &ownership
  1. Groundwork
  2. Market Engagement

Summary of Spains Hall Estate

Spains Hall Estate is a 2,000-acre estate in Essex which has been integrating environmental land management under its current Estate Manager, Archie Ruggles-Brise. In 2022 the Estate embarked on a 50+ year habitat creation programme and has been generating Biodiversity Net Gain (BNG) units for sale to local developers. The Estate plans to generate over 500 BNG units over 100 hectares.

The Estate was part of Natural England’s Biodiversity Net Gain pilot, which gave access to funding and project support including an ecologist to help develop a farm management plan and an external valuer to help with financial planning. The Estate is implementing a variety of interventions to create a diversity of habitat types including ponds, orchards, grasslands and wetlands.

 

Farm Profile:

  • Location: Essex
  • Size of Land: 2000 acres
  • Tenancy & Ownership: Owner/Occupier
  • Nature Market Focus: Biodiversity Net Gain
  • Interventions: Habitat creation and restoration: orchards, ponds, wetlands, woodlands, scrub, grassland
  • Project Partners: Atkins, Environment Agency, Natural England

 

What do I need to know about nature markets to begin with?

 

This section of the Toolkit provides a brief overview of nature markets in England and how they relate to farmers. It is designed to answer some of the early questions that farmers may have around nature markets. All Toolkit content, including this Introductory section, will be updated regularly.

 

What market opportunities are available to me based on my land and goals?

 

This milestone will guide you through an initial assessment of your land as you determine what your broad vision is in relation to nature and help you to identify what opportunities might be available to you to attract private sector finance.

The actions taken at this stage can be taken before you’ve made the firm decision to engage in nature markets. The considerations presented in this milestone will help you determine whether nature market participation makes sense for your goals, the condition of your natural capital and your farming business.

You can also apply many of these considerations to develop a broader vision around your natural capital and other potential funding sources – such as government grant schemes or philanthropic funding.

 

Will I need to partner with other farmers, and if so, how?

 

Once you have a vision for your farm, the environmental enhancements or changes you want to make and a sense of the related income opportunities, you may want to consider joining up with other farmers in your area to implement your outcomes at scale to attract buyers.

Aggregation models, often started among farmer clusters or as farmer cooperatives, bring together multiple farmers or landowners to collectively participate in nature markets. These models aim to harness the combined efforts and resources of farmers to maximise environmental benefits and economic opportunities. This section will introduce the factors that may influence your decision to join up with other farmers and some of the key considerations to keep in mind when setting up and participating in such a group.

 

How do I measure the environmental outcomes that I can produce in a robust way?

 

At this stage you will have developed an overarching vision for your land and a rough plan for what you want to improve. You will now want to make robust baseline measurements of the condition of your land and develop a detailed plan for interventions and intended outcomes. Plans will also include how you intend to maintain your interventions, measure the impact you are having and verify your outcomes in order to sell them.

 

How should I identify and approach buyers for my outcomes?

 

During your initial project scoping, you may have identified potential buyers of the environmental outcomes you are planning to deliver. Now that you have a project plan and a robust baseline, you will be ready to approach and engage buyers more formally.

Buyers will vary in their expectations and requirements. This milestone will help you prepare for initial conversations with potential buyers to ensure you are empowered to ask the right questions and present a project that will attract a fair price. Your buyers may be within your own supply chain such as retailers and businesses, or organisations who benefit directly from your ecosystem services such as water companies or firms who seek to offset their own environmental impacts.

 

How would this project fit in with my current farming business model?

 

Nature market projects are often just one part of a farmer’s wider business. Some people compare building nature market projects to developing ‘micro businesses’ for the farm. As such, much of the content you see here will be familiar to you.

However, these projects also have key features that separate them from the businesses that farmers usually engage in. For example, the longer timeframes associated and the current uncertainties relating to how nature market projects (and the deals that result) can be blended with government schemes.

Below is a list of questions that will help you think through how to incorporate these projects into your current farm business plan. This includes considerations on building a cashflow or partial budget, but also the less quantifiable factors, such as the potential drawbacks and opportunities to your wider farm that nature markets present.

 

What kind of risks should I be aware of and how can I manage them?

 

Like with any aspect of a farm business, risk management is critical – especially for nature market projects that can run over several years. As the landholder, you may be leading the development of the project, be part of a wider group of farmers, or be working with a third-party project developer that is taking the majority of the risk.

In any case, it’s advisable to have a clear understanding of the likelihood of the risks involved, what will happen if the risk materialises, what you as the landholder might be liable for, and how the risk is being managed to prevent this liability.

This Milestone sets out the different types of risks that nature market projects (and the deals that result from them) often carry. The last section covers the types of legal entities that farmers might form, as these can help to manage certain risks and benefit the overall operations of the project.

 

Is it possible to use repayable finance upfront to meet any of the costs?

 

Repayable finance from investors – typically debt or equity – is not always necessary in nature markets if upfront costs can be met by the buyer or through grants.

It’s also important to note that, even when repayable finance is needed, farmers do not necessarily have to secure this themselves.

In the UK, there are very few examples of individual farmers taking out loans and no examples of farmers issuing shares to use specifically to finance a nature market project. Typically, the upfront capital required is organised by a third party – for example, a third-party project developer, a broker etc.

However, as nature markets develop further, and in the case of larger farms, there is potential for farmers to secure repayable finance and meet up-front costs, as with other parts of their business.

The below therefore sets out some questions that farmers (and, more likely, third party project developers) could ask themselves to secure repayable finance from lenders and investors, whether that’s taking on finance independently, or as part of a larger group or partnership.

 

What do I need to be aware of when signing contracts?

 

This Milestone is about the legal contracts you will use and sign to officially commit to the project and transition it to a fully fledged deal. As business owners, farmers are familiar with contracts and understand the need to carefully review the details before signing any such agreements.

Any nature market deal is likely to involve legal agreements that will be tailored to each set of circumstances. However, for ease this Milestone sets out what contract set-ups are used in this space, common contract types, and other key considerations to ask yourself at this stage.

Disclaimer: The information in this Milestone does not constitute any form of legal advice but instead serves as practical advice that has been written by speaking with lawyers, farmers and other practitioners. We recommend that appropriate legal advice should be taken from a qualified solicitor before taking or refraining from any action relating to your contracts and projects.

 

Can I participate on tenanted land?

 

The tenancy and ownership structure of land can have significant implications for farmers engaging in nature markets in the UK. The rights of tenants in relation to nature markets is still not entirely clear in the UK and may differ on a case by case basis. Below are some key considerations which can help both tenants and landlords in asking the right questions when considering engaging in nature markets as policy and legal frameworks develop. Further guidance prepared by the Tenant Farmers Association and the Country, Land and Business Association can be found here. 

 

How do public sector funding and policy align with nature markets?

 

In England, the role of public funding and support to farmers is undergoing change on a scale not seen in decades. The government hopes to strengthen the link between environmental and farming practices to meet its climate and nature restoration targets, while maintaining food security and the viability of farm businesses across the country.

This section offers a summary of how government is working with farmers to access nature markets, and provides guidance on:

 

  • How nature markets might work with public subsidy schemes,
  • What development funding is available for farmers to explore their opportunities,
  • What ‘market infrastructure’ the government is supporting – including Standards and Codes.

Groundwork

 

We have separated out these Milestones into ‘Groundwork’ and ‘Market Engagement’ to indicate which Milestones you will want to read as you consider and/or prepare for nature markets (Groundwork) and those you will move through if and when you decide to become a seller of environmental outcomes (Market Engagement).  

We recommend all farmers read through the Groundwork Milestones in addition to the Introduction to Nature Markets in order to understand better whether nature markets are for them, and how they can, at the very least, explore and baseline their farms so they are ready for any opportunities that may arise later.  

Market Engagement

 

We have separated out these Milestones into ‘Groundwork’ and ‘Market Engagement’ to indicate which Milestones you will want to read as you consider and/or prepare for nature markets (Groundwork) and those you will move through if and when you decide to become a seller of environmental outcomes (Market Engagement).  

We recommend all farmers read through the Groundwork Milestones in addition to the Introduction to Nature Markets in order to understand better whether nature markets are for them, and how they can, at the very least, explore and baseline their farms so they are ready for any opportunities that may arise later.  

 
Acknowledgements

 

With many thanks for his time and insight:

Archie Ruggles-Brise, Estate Manager

 

 

Date Published: 19/11/2023

Next Milestone

Key Takeaways

  • Spains Hall Estate is a 2000-acre estate in Essex, generating Biodiversity Net Gain (BNG) units through large-scale habitat creation on low-productivity land. The Estate has begun to generate over 500 units as of September 2023
  • Spains Hall Estate began to explore its natural capital to make it more resilient financially, environmentally, and from a supply chain perspective
  • Archie Ruggles Brise, estate manager, developed a skeleton of how the Estate could diversify to achieve this, and then worked with Atkins, a consultancy and a professional ecologist for a natural capital appraisal
  • It identified BNG as a useful option for its more unproductive parcels of land, and then took part in Natural England’s Biodiversity Net Gain pilot scheme to further build on this

 

 

What was Spains Hall Estate’s overarching vision for the land and why did they decide to engage in nature markets?

Archie Ruggles-Brise, Spains Hall Estate’s Manager and 11th generation landowner knew he wanted to achieve long-term financial and environmental resilience on the estate. Looking at the land through the lens of natural capital allowed Ruggles-Brise to identify material risks to the estate and wider landscape, such as soil erosion and lack of habitat connectivity. Ruggles-Brise wanted any natural capital project designed to attract private sector finance, to generate co-benefits for the wider farming business, and did not want to take productive land completely out of agricultural production, though he is also changing the farming system alongside BNG.

Through setting out his vision for the estate, Ruggles-Brise identified some potential interventions he wanted to pursue, such as implementing agroforestry on arable fields and planting and restoring hedges. He then needed to determine where these interventions would be best placed by assessing the condition of the estate’s existing natural capital and ecosystem services.

 

 

How did Spains Hall assess what land opportunities would be possible?

Spains Hall Estate worked with Atkins using Environment Agency funding to conduct initial assessments of the estate’s natural capital through soil risk assessments and hydrological modelling. Atkins used open-source data to conduct this initial analysis ahead of the more robust baseline measurement conducted with by ecologist.

The initial assessments were then run through a scenario analysis that was based on the environmental outcomes that the estate wanted to deliver, and modelled to identify what the quantity of change was likely to be. In order to determine which interventions would be best to pursue, the estate conducted an initial review of the market to see which interventions would be best placed to attract private buyers. The estate took part in Natural England’s Biodiversity Net Gain pilot programme, which gave them access to an ecologist to conduct further, ground-truthed baselining and develop a land management plan. (Read more about Spains Hall Estate’s approach to baselining in its Milestone 3 case study).

 

Why did Spains Hall Estate pursue Biodiversity Net Gain?

For Spains Hall Estate, the choice to pursue BNG was due to a variety of factors. Ruggles-Brise saw habitat improvements as having the potential to deliver broader beneficial impacts on the estate. For instance, recreating wetlands in the right place can support the hydrology of other parts of the farm. With increasing drought events expected in the coming decades, this was viewed as a way to improve the estate’s resilience to climate change.

BNG was also seen as particularly useful for using less pieces of land. Ruggles-Brise wanted natural capital projects to work alongside the farming business, rather than against it. Most of the BNG interventions being considered could be managed through agricultural practices such as grazing, thus keeping them in low level agricultural production and reducing the risk of negative tax implications. The potential income opportunities from BNG were also a key motivator. In the initial assessment, 500 acres were identified as having the potential to generate BNG credits and the prices being mentioned through engagement with the BNG pilot made the projects seem financially viable and worth pursuing.

 

Image by William Joshua Templeton

 

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