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Slides presented at RICS Wales Rural Conference, Llandrindod Wells, 5 December 2013
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Charles CowapMBA MRICS FAAVCharles CowapMBA MRICS FAAV
Payments for Ecosystem ServicesBest Practice Guidance
RICS Wales Rural Conference
Llandrindod Wells
5 December 2013
Charles CowapMBA MRICS FAAV
Ecosystem ServicesIs it:
1. Eco-babble – leave it to the sandal and beard brigade
2. It’s the environment stupid, just got up in some new imperial clothing
3. The knell of doom for traditional estate management and valuation services
4. A potentially interesting opportunity and challenge for valuers and estate managers
Charles CowapMBA MRICS FAAV
Peat’s Story
Charles CowapMBA MRICS FAAVThe mires on Exmoor
Drainage for agricultural improvement
Charles CowapMBA MRICS FAAVDomestic and commercial peat cutting for fuel
Cutting carried on until the end of the c20th
Charles CowapMBA MRICS FAAV
Charles CowapMBA MRICS FAAVContext: Exmoor example
Exmoor
R Barle
R Exe
Wimbleball Resr & River Haddeo
ExebridgePumping Station
Replenishment PumpingApprox 5 miles, lifting water from 120 to 240 m AOD
CO 2
Charles CowapMBA MRICS FAAV
Pumping Costs
Treatment Costs
Future Storage/Abstraction
Costs
Incentive payments to landowners –
managers - occupiers
Savings for water buyers
Profit for reinvestment or distribution
CARBON
Economics+ OTHER ESS PAYMENTS???
Charles CowapMBA MRICS FAAV
Questions for consideration• Contractual aspects• Land tenure• Effects on other
interested parties• Practical farming
considerations• Animal welfare and
health• Public liability
• Relationship other schemes
• Other business considerations
• Maintenance obligations
• Tax• Impact on value• Security/risk
Charles CowapMBA MRICS FAAVFinancial evaluation
Extra costs, eg• Access time to more difficult
ground• Vet and med bills• Insurance• Feed• Machinery costs (if
contracting to be offered)
Costs saved• Eg some livestock
purchases
Lost Revenue• Eg some livestock LWG or
sales
Extra Revenue eg• PES income• Contracting opportunities
for SWW
+ Balance: financially worthwhile• Consider capital and tax
implications
Balance positive: not financially worthwhile
Charles CowapMBA MRICS FAAV
How much does peat’s farming utility change with rewetting?
Charles CowapMBA MRICS FAAV
2,400 sq m: 50% useableOne hectare: 100 m x 100 m
MODEL HECTARE BEFORE AND AFTER REWETTING
600 sq m unuseable
Leaves 7,000 sq m as before
Charles CowapMBA MRICS FAAV
Financial Impacts (£/ha, Annual Costs)
Farmer Scenarios (FBS Data 2011/12)
Loss of
Revenue 100% £/ha £/ha Net Margin before rewetting 151Of which, SFP 179 Livetock Output based on 600 -600Variable Costs based on 280 280Machinery wear and tear based on 60 -15Margin after rewetting -184Therefore Loss of 335
Charles CowapMBA MRICS FAAVModelled' Loss across One Hectare
Loss of Useability across one hectareArea Loss £
0.06 1 20.10.24 0.5 40.2
0.7 0 00 0 0
Total Loss/'model' ha 60.3Margin before rewetting 151Margin after wetting and before PES 91
So the Figure to Beat is £61/ha
Can PES do it?
Charles CowapMBA MRICS FAAV
Is this a market opportunity?• Working with the positives
• Addressing the negatives
• Market infrastructure– Eg willing buyer– Trading terms
• Eg Peatland Carbon Code
– Intermediary Role
• Contractual infrastructure– Eg Law Commission
Conservation Covenant Review
Charles CowapMBA MRICS FAAV
New land management and valuation requirements are emerging
New markets
New challenges to professional practice
New environmental, social and economic opportunities and challenges
Charles CowapMBA MRICS FAAV
Defra 2013
Payments for ecosystem services: a Best Practice Guide
Published May 2013https://www.gov.uk/government/publications/payments-for-ecosystem-services-pes-best-practice-guide
Charles CowapMBA MRICS FAAVOld Ways with Land
FOOD
TIMBER
SPORTING
MINERALS
DIVERSIFICATION
DEVELOPMENT
ENVIRONMENT
SUSTAINABLE
EN
VIR
ON
ME
NT
AN
D
SU
STA
INA
BIL
ITY
INCOME
COSTS
Charles CowapMBA MRICS FAAVNew Ways with Land
NATURAL CAPITAL
PROVISIONING SERVICESFoodFibreEnergyTimber
REGULATING SERVICESCarbon cycleWater cycle
SUPPORTING SERVICESPollinationSoil Formation
CULTURAL SERVICESRecreationInspirationCreativityReflection
EXISTING MARKETS
PUBLIC SUPPORT
NEW MARKETSPESBiodiversity offsettingCarbonConservation covenants
Charles CowapMBA MRICS FAAV
New Ways of Working• New forms of appraisal• New opportunities• New values• New ways to collaborate• But will farmers be
entrepreneurial enough?• A new paradigm: farmers
as ecosystem entrepreneurs …… ?????
And New Brokerage
IntermediaryAgencyAdvisory
Opportunities?
Charles CowapMBA MRICS FAAV
Value of Environment to Wales
• £6 billion to the Welsh economy;
• 1in 6 Welsh jobs; • £821 million in
tourism spending; • 15 per cent of
goods and services produced in Wales.
Welsh Assembly 2011
Charles CowapMBA MRICS FAAVPumlumon Project
Charles CowapMBA MRICS FAAV
Charles CowapMBA MRICS FAAVThinkpiece
• Royal Charter– Promote the usefulness
of the profession to public advantage
• New opportunities in land management
• New ways of working in development
• New points to reflect in conventional valuations
• New types of valuation
Charles CowapMBA MRICS FAAVAnd we should offer:
• Our expertise
• In Land Tenure and its relationship to land management and development
• Our experience of valuation in challenging commercial markets
• Our expertise in brokerage
Charles CowapMBA MRICS FAAV
Question Time
Charles CowapMBA MRICS FAAVContact Details
In-house CPD programmes, professional-technical updates, organisational consultancy, and more:
07947 706505
Twitter: @charlescowap
Blog: http://charlescowap.wordpress.com/
Slideshare: http://www.slideshare.net/cdcowap
Translating new knowledge for rural professional practice
www.harper-adams.ac.uk