Milestone 01

Bristol Avon Catchment Market

Initial Project Scoping

 Project Overview

The Bristol Avon Catchment Market is an online marketplace for buying and selling local and verified environmental services, including biodiversity, carbon reduction and natural flood management.

The project is being delivered through a collaboration between Avon Wildlife Trust, Wiltshire Wildlife Trust and EnTrade (the BACM team). It is working with landholders and buyers of credits (such as developers) across the catchment to deliver a pipeline of projects and generate fair prices for environmental services. This will be done through a user-friendly trading platform that operates in ‘Market Rounds’ that aggregate buyers and seller offerings within set timeframes.

Milestone 1: Initial Project Scoping

Often the initial task is to understand the site(s) you want to use and the land use change needed for nature restoration or creation. This includes considering the goals of the land managers involved, the vision within the wider catchment or neighbouring area, and whether there are permits or planning consent needed for any proposed changes.

At this stage, you can also conduct a high-level assessment to determine which revenue streams can be generated from ecosystem services , e.g. carbon credits, flood reduction cost savings, or biodiversity units, which will be crucial for identifying buyer interest.

Finally, it is useful to have an idea of the costs of the project and potential grant funding that may be available to support initial development.

Milestone 2: Identify and Work with Sellers

Initial ownership of the ecosystem services will belong to the landowners or, in some cases, the tenants of the sites that the project is using. However, these can be passed onto others, such as third-party project developers, with appropriate legal arrangements and compensation. In some cases, there may be a sole seller of the ecosystem services, where the site or landholding is large enough that it delivers the volume of ecosystem services needed to cover the costs of the project and attract buyers.

However, in order to achieve scale and impact, a project will likely involve multiple sellers, such as neighbouring farmers and estate managers. Scale of land is often needed to deliver significant environmental outcomes, and also to attract private finance. Project developers must plan how they initially contact and engage with these sellers going forward, building their wants and needs into the project.

Milestone 3: Baseline and Estimate Ecosystem Services

At this point, you will have understood the vision for the project and identified a particular ecosystem service or set of services to be sold. The next step will be to carry out detailed analysis – baselining each ecosystem service and quantifying what will be able to be delivered from the interventions, as well as planning how to monitor and maintain these interventions. You will need to rely heavily on ecological expertise for this more scientific Milestone.

At this step, standards, verification and accreditation methods will be considered in more depth.

Milestone 4: Identify and Work with Buyers

Based on your earlier market analysis in initial project scoping, you will have identified one or more groups of beneficiaries who may be willing to ‘buy’ or pay for the ecosystem service(s) to be created, restored or maintained. Buyers vary – as do their requirements – but at this step, greater buyer engagement is now needed to develop a deal that channels money towards the nature-positive outcomes that your project wants to deliver.



Milestone 5: Develop Business Case and Financial Model

You’ll have started building your business case and financial model in earlier steps – laying out your project’s vision, the market proposition and estimating costs and income. This step offers a review, in addition to providing details needed to build out the financial model and business case more fully. Both of these key documents will be iterated throughout project development, and will likely be altered during project delivery as new information emerges. These documents are interlinked and, if developed correctly, will ensure your project’s viability and help you with discussions with stakeholders – including sellers, buyers and future investors.

The financial model will also enable you to better understand the type of structure your project may take to attract investment (i.e.a loan, an equity investment, a bond) and what sort of returns you can afford to pay/offer.

Milestone 6: Develop a Governance Structure

A governance structure will inform the way in which the project is run when fully operational and for what purpose. It identifies appropriate decision making processes, who is responsible for what actions, and what controls are in place to make sure that the project is meeting its stated goals, all while abiding by the risk appetite of its engaged stakeholders. The legal entity to host the project will be a key driver in this, and the appropriate choice of entity will be dependent on several factors that are outlined below.

Your governance structure should align with and underpin your business case, as a necessary component of how the project will deliver its environmental outcomes and other strategic targets.

Milestone 7: Identify and Work with Investors

It is important to note that not all projects will need up-front investment, but for those that do, this section provides a framework for thinking around the development of the investment model. This does not constitute financial advice – as the GFI is not licensed to do so. However these considerations are based on the insight offered by project developers and other market stakeholders.

An investor will be a new core stakeholder in your project, and it’s just as important to think of what you require from investors, as much as what they require from you – so that you can build a positive and collaborative relationship with them.

This entails defining the investment ask (in line with the financial model), the strategy for approaching the right investors, and the negotiation of terms that can then be formalised in contract development (Milestone 8).


Milestone 8: Establish Legal Contracts and Closing

When all relevant stakeholders have been engaged and their terms of engagement are clarified as much as possible, this is the time to develop the legal contracts and close the deal. This stage is last because legal fees are expensive, and it is generally advised to determine as much as possible in previous stages before starting to draw up contracts in earnest.

Note: The information in this Milestone does not constitute any form of legal advice but instead serves as practical advice on how to manage engagement with lawyers and the process of contract development.

The Green Finance Institute is not a firm of solicitors or connected in any way with the courts. The information and opinions we provide in this section and across the Toolkit do not address your individual requirements and are for informational purposes only. They do not constitute any form of legal advice. We recommend that appropriate legal advice should be taken from a qualified solicitor before taking or refraining from taking any action.

Community Engagement

Community engagement is highly advisable for any project that aims to sell ecosystem services, to ensure fair outcomes for local communities and the long-term success of the project. Project developers can build connections with local stakeholder groups early on to spot both risks and opportunities.

Policy and Regulation

Project developers and enterprises will need to keep a continuous check on how current and future policy may affect the project, and also opportunities for the project to inform policy. The role of private finance for nature across the UK is being encouraged by the UK government and its devolved administrations, and new rules, standards and markets are being developed.



With many thanks for their time and insight on this case study:

Chelsie Fuge, Team Manager, Bristol Avon Catchment Market




Amy Coulthard, Director of Operations, EnTrade

Rebecca Burville, Operations Manager, Entrade




Date published: 11/05/2023

Next Milestone

Project Mandate

The Bristol Avon Catchment Market (BACM) project aims to reverse the loss of biodiversity and nature that has affected the catchment, reflective of the loss across the UK. In the UK, 15% of species are facing extinction and the abundance of priority species has declined by 60% since 1970.

In the Bristol Avon Catchment, key challenges include high phosphate levels, high sediment loading, flooding and reduced natural habitat and biodiversity. There is also significant new housing and development planned for the area. For example, there is a target for over 20,000 new homes in North Somerset over the next 15 years.

The Avon Wildlife Trust, Wiltshire Wildlife Trust and EnTrade (a subsidiary of Wessex Water) came together in order to pioneer a ‘catchment market approach’. These organisations have historically been working together on environmental issues through the Bristol Avon Catchment Partnership, but decided to adopt this holistic approach that would allow multiple environmental services to be delivered across the catchment.

Catchment markets reward land managers for the multiple ecosystem services delivered by nature-based projects, and offer buyers verifiable environmental credits. The approach uses an online platform and a unique market settlement mechanism, designed by the University of Exeter, to efficiently match supply and demand, and aggregate local projects to substantially reduce the transaction costs to buyers and sellers of contracting for the environmental goods and services delivered. It is one of three Catchment Markets currently being developed in England.



Developing a New Market Concept

The concept of a ‘Catchment Market’ was developed by the Broadway Initiative, outlined in a publication in July 2020, and further guided by the Strategic Directions report of the Financing Nature Recovery Coalition (FNRC) – led by the Broadway Initiative, Green Finance Institute and Finance Earth. This report sets out the high-level principles of High Integrity Environmental Markets, such as standards and accreditation, good data, aligned incentives and regulation, and clear market rules for participants.

Several experts were brought in from different areas of expertise, to establish the concept of a Catchment Market.

The market settlement process has been designed by experts from the Land, Environment, Economics and Policy Institute at the University of Exeter (UoE). Key to this process is the Lindsay Mechanism (named after Dr Luke Lindsay of the UoE), which ensures payments are fair both for project suppliers and those buying environmental credits.

Amy Coulthard, Director of Operations at EnTrade explained that EnTrade brought key knowledge and infrastructure, as their core mission centres, working with multiple farmers and landholders to develop and provide accreditation for projects, that can deliver ecosystem services. When started in 2015 by Wessex Water, EnTrade focused solely on single-ecosystem service deals, such as nitrogen and phosphorus reduction schemes where Wessex Water acted as the primary buyer. However, EnTrade has since broadened its focus to include multi-benefit auctions and the Catchment Markets. Since 2015, EnTrade has been gathering data on environmental auction behaviour, and has built an online trading platform that facilitates the bidding and price settlement process.

Other experts and key design stakeholders include Wheatley Young Partners, which worked with EnTrade to develop the Catchment Market High Level Design, Market Rules, legal framework and other Market Instruments. The Legal Agreements were developed by EnTrade working with Wheatley Young Partners and with legal expertise provided by Wessex Water and Osbourne Clarke.

Over eight years, this group have designed and built core components of the ‘Catchment Market’ concept, including the central role of the Market Operator (in the case of BACM; EnTrade), the Market Rules of participation, the standards and accreditation processes, and the contract mechanisms. These have been aligned with the FNRC’s recommendations for high-integrity markets for nature.

A brief video of the market structure can be found below.



Curating a connected landscape

The Bristol Avon Catchment comprises an area of 2810km² and drains parts of Gloucestershire, Wiltshire and Somerset.

To first understand what nature restoration and habitat creation was needed across the catchment, the BACM team pooled their datasets and previous research findings. These datasets are largely public, including Wessex Water’s Water Efficiency Management Plan (WEMP) that has nature recovery mapping within the catchment. The data included estimated land values, agricultural land classification, nutrient mitigation issues, and soil profiles, among other data points. This gave a clear indication of ‘priority areas’ across the catchment (shown as green in the map below), and quantified targets of what the BACM team hope the market will deliver in its first round, including:

  • 58 hectares of species rich grassland
  • 65 hectares of new woodland
  • Five hectares of wetland


Chelsie Fuge, Bristol Avon Catchment Market Manager, says that the WEMP dataset was a key asset to curating a connected landscape. However, the BACM team understood that the priority areas would only be as useful in understanding where nature restoration is most preferred, as the market pilot relies on a more ‘organic’ journey where landholders (sellers) would volunteer their sites as projects. Given this, the team agreed that while sites in these areas would be prioritised in the screening stage of the market, landholdings across the catchment would be eligible.

The type of landholder is similarly unrestricted, including tenant and owner-occupied farmers, estate owners, companies and local authorities. Land agents, advisors and other intermediaries could also submit projects to the market on the landholders’ behalf. Sites were carefully screened for opportunities and constraints.

However, the team were conscious of attracting sellers that were genuinely interested in improving their natural capital and already using best practices in land management. After analysing the data, the team went into a detailed desk-based study of existing landholder projects, assessing a wide range of land features, from historic environmental records through to proximity of notable or protected species, habitats, soil types, topography and more. The Wildlife Trusts’ existing knowledge base and network was helpful in pulling together this insight, informing the BACM team of what sellers it wanted to attract to the BACM. In turn, this work informed the design of the project screening stage. Reflecting on this work, Fuge says the team found that including desk-based studies yielded better results than solely relying on the data and enabled crucial consideration toward other landscape considerations.

Overall, initial project scoping was a relatively quick process, reliant upon more detailed assessment further down the line when individual landholders registered their interest, with more specific locations in mind. Scoping is also made far more efficient by the availability of supporting guidance, including Nature Recovery Network mapping or habitat opportunity mapping, such as provided by Forestry Commission (Forestry Commission Map Browser (


Funding Project Development

The BACM team initially began scoping this project in 2020, and received £1.7m of funding in 2021 from the Government’s Green Recovery Challenge Fund (GRCF), which is aimed at environmental charities and their partners to start work on projects across England to restore nature and tackle climate change.

The BACM also uses EnTrade’s online trading platform, which is being used across the three catchment pilots and represents investment from Wessex Water of more than £1 million.

The market has been designed to become a self-sustaining process, not to generate a profit but to cover market operation fees and a revolving fund to support nature’s recovery. Project establishment costs will be supported by the GRCF to kickstart this process, generating a surplus of finance for future market rounds.

To date, pre-market settlement, the projects greatest expenditure has been on staffing and external consultants/specialists directly associated with the development of new concepts and at a time when much of the key government policy and guidance was still in development.


Key Learnings

The BACM and Entrade teams offer the below learnings for other project developers:

  • A pipeline of projects for emerging markets takes time to develop and landholders will be wary of entering agreements whilst ambiguity remains e.g. tax implications of selling environmental services
  • Legal Agreements are resource intensive and it is important to balance the needs of both sides of the market and manage risks and liabilities for all market participants including the Market Operator
  • Many stakeholders remain sceptical about the role markets and private investment can play in nature recovery projects which impacts on engagement and can lead to misconceptions. Stakeholder engagement is a key element of market development.
  • Robust standards and standardisation of as many aspects as possible can make project development more efficient but there remains a need for flexibility to account for location specific circumstances.
  • Mapping and targeting key areas or landscape features is good practice and may be a requirement for some environmental services e.g. Nutrient Reduction Credits, but should not become a barrier to participation; with new concepts, participation is key to benefit from the exploration and learnings that individual cases present.
  • Don’t underestimate the amount of time required for raising awareness, marketing and communications; new concepts, particularly complex one’s, take time to understand and become known through engagement.
  • Working closely and openly with other stakeholders, such as local authorities, is key when working across boundaries and disciplines.
  • Additional specialist support is likely to be required, including legal, ecological, and financial expertise.