Place-based Payments for Ecosystem Service schemes are broadening to new land uses, habitats and services. The Woodland Carbon Code and Peatland Code already successfully source private funding public goods delivery alongside public funding. Now Landscape Enterprise Networks (LENs) are pooling funds from multiple private investors to deliver public goods across a broader range of land uses and habitats than ever before. In this blog, Prof Mark Reed summarises existing evidence behind the LENs approach, and considers the role of public-private partnerships in post-Brexit agricultural policy.

What are Landscape Enterprise Networks?

LENs builds coalitions of businesses around shared commercial interest in how landscapes function to drive investment and innovation around strategic assets like soils, aquifers, access infrastructure, habitats and tree cover.

For example:

• Supply chains serving Nestle’s Dalston plant (where they make their cappuccino range of products) are under threat from climate change (which will bring new animal diseases and limit water supply to dairy operations) and unsustainable agricultural practices (threatening the long-term health of soils and biodiversity)
• United Utilities share interests in improving the sustainability of agriculture in the area to enhance water quality and mitigate future water shortages
• Working with 3Keel, Business and the Community, the Game and Wildlife Conservation Trust, FirstMilk, the Rivers Trust, Woodland Trust and others, Nestle and United Utilities are pooling resources to deliver landscape scale public goods that benefit their businesses
• Dairy farmers supplying Nestle in the region have access a milk premium if they adopt measures designed to enhance public goods including animal health, welfare, water quality and biodiversity

Why do we need the LENs approach now?

Private place-based schemes:

• Are not subject to the same WTO constraints as publicly funded schemes
• Can be co-designed with land managers, including different and/or additional more attractive options
• Enable payments to be made more flexibly, at more competitive rates that are not tied to declining rates of public funding for agriculture post-Brexit
• May be more attractive to farmers, based on experience in Cumbria where LENs farmers have adopted LENs scheme options over agri-environment schemes, and gone out of milk at a lower rate than the rest of the sector without a single farmer moving to a competing co-operative
• Can be paid to land managers (as an alternative to landowners where appropriate)
• Can be paid whether or not they are active farmers, opening the opportunity for schemes to prioritise ecosystem services that cannot easily be delivered alongside the production of food or fibre

 Do LENs deliver public goods?

The Resilient Dairy Landscapes project is assessing how the LENs in Cumbria is working and will provide evidence on how the LENs:

• Deliver ecosystem services, including climate change mitigation, water quality and flood mitigation
• Affect a range of common livestock disease dynamics

The LENs approach builds on decades of research into Payment for Ecosystem Services (PES), and more recent UK-based work to develop a place-based approach to PES (Reed et al., 2017). LENs follow this place-based approach, where multiple ecosystem services are delivered in the same landscape in a voluntary transaction between buyers and sellers of services, as part of a schemes that is developed and governed by partnerships of relevant stakeholders who hold shared values for the landscape.

The UK’s Peatland Code is the first regional carbon market to be developed following this approach, following from the success of the Woodland Carbon Code. Both Codes build on a rich evidence-base showing the multiple benefits for society of woodland planting and peatland restoration, enabling the schemes to provide guarantees to investors and safeguards to landowners and managers. Validated and verified projects from both schemes show that this approach is able to leverage private investment alongside public funding to deliver public goods that would not have been delivered through public investment alone.

How do LENs work?

Place-based PES schemes like the LENs approach typically look like this:

1. Intermediary identifies public goods valued by businesses in a landscape, that without action may be under threat
2. Evidence-based actions identified to protect/enhance those public goods
3. Fundable projects developed (may be validated by independent body as likely to deliver expected benefits)
4. Businesses individually or collectively fund projects, paying farmers or working with charities or others to deliver outcomes (may be governed by contracts for delivery of goods protected by pooled buffer of unclaimed goods shared across projects)
5. Key natural assets and public goods are monitored (and can be verified by an independent body)

The Peatland Code and Woodland Carbon Code are restricted to two habitats and tend to focus on climate mitigation benefits. The Landscape Enterprise Network approach is now broadening this place-based approach to draw in a wider range of organisations to fund the delivery of a wider range of public goods from more varied landscapes and habitats.

Policy idea

Here is the big idea: Government could encourage and co-ordinate with private place-based schemes alongside publicly funded schemes.

The UK has led Europe in the development of private schemes for the delivery of ecosystem services, pioneering the development of the Woodland Carbon Code, the Peatland Code and the LENs approach. These approaches have particular value in a post-Brexit policy environment where there may be greater scrutiny of compliance with WTO rules.

Further information

The Resilient Dairy Landscape project is funded by the Global Food Security’s ‘Resilience of the UK Food System Programme’ with support from BBSRC, ESRC, NERC and Scottish Government. Find out more at: www.resilientdairylandscapes.com

The Landscape Enterprise Network approach was developed by 3Keel and Business in the Community with Nestle. Find out more at: https://www.3keel.com/landscape-innovation/

Reed MS, Allen K, Dougill AJ, Evans, K, Stead SM, Stringer LC, Twyman C, Dunn H, Smith C, Rowecroft P, Smith S, Atlee AC, Scott AS, Smyth MA, Kenter J, Whittingham MJ (2017) A Place-Based Approach to Payments for Ecosystem Services. Global Environmental Change 43: 92-106 https://www.sciencedirect.com/science/article/pii/S095937801630632X

The full policy brief can be accessed here.

For more information contact Mark Reed (mark.reed@newcastle.ac.uk) or Jenny Gilroy (jenny.gilroy@newcastle.ac.uk)

Christopher Ritson is an Emeritus Professor at the Centre for Rural Economy. This blog was developed from a briefing paper he wrote for the Mid-Northumberland University of the Third Age Brexit Discussion Group.

Image credit: bbc.co.uk

Go back three years and I doubt whether many of us had heard the term “Customs Union”, never mind knew what one was. I did, because on my first visit to Cyprus to advise the Government there on their agricultural policy relative to trade with the (then) EEC, I was confronted with the statement “We want to establish a Customs Union with the EEC”; and the question “Does this mean we will have to adopt the Common Agricultural Policy?” I was vaguely aware that somewhere in the Treaty of Rome (Article 9 as it happens) it says “The Community shall be based upon a Customs Union” and that (Article 38) “The Community shall extent to agriculture and trade in agricultural products”, but I had to find out what that really meant.

I lay out my findings here, in an attempt to help demystify the current political situation we find ourselves in. As far as I am aware, the idea of presenting these alternatives as:

A HIERARCHY OF FORMS OF ECONOMIC AND POLITICAL INTEGRATION

is my own, although probably others have done likewise. The reason is that each “level” absorbs those that precede it. Here goes.

Level 1 TRADE AGREEMENT

An agreement between two countries, or one country and a bloc of countries, which regulates trade between them. This would usually involve the reduction or elimination of tariffs (taxes) and quotas (quantitative restrictions) on imports from each other on a list of products specified in the Agreement. Sometimes there will be tariff quotas – that is, the tariff reduction will apply only up to a specified quantity, often based on historic trade flows. For some agricultural products there are also tariff calendars, where the tariff reduction applies only during the out of season period for domestic production (e.g. EU citrus fruit).

Level 2 FREE TRADE AREA

What it says on the tin. The member states of the Area eliminate tariffs and quotas on trade between them. The best known is EFTA- the European Free Trade Association, known originally as the “Outer Seven” (as the countries involved, including the UK, more or less surrounded the six original Common Market countries). Another example is NAFTA-the North American Free Trade Agreement, which Trump has recently had his knife into.

Level 3 A CUSTOMS UNION

In a Customs Union, the member states agree, in addition to free trade between them, to impose the same tariff on imports from outside the Union (called in the EU the CET– the Common External Tariff, or in official EU documents the CCT – the Common Customs Tariff). This means that once a product has been imported from a non-member country, it can move about within the Union without restriction – known as Free Circulation. In contrast, in a Free Trade Area, individual member states have their own arrangements for treatment of imports from outside the Area. In that case it is still necessary to monitor trade within the Area; otherwise if country A has a zero import tariff on apples, and country B imposes a tariff of 50%, then all imports of apples destined for country B would flow first through country A. This can become complicated; Rules of Origin have to be set, whereby for processed products there will be a maximum proportion of the product (say 10%) that can originate from outside the Union. With the apples, country B will allow free trade for apples grown in country A, but impose a 50% tariff on any apples originally imported by country A from a non-member country.

       The Irish Border

This distinction between a Customs Union and a Free Trade Area is at the heart of the problem of the Irish Border. If the UK continues to belong to the EU Customs Union, then it will continue to impose the CET (or anyway a tariff which is the same as the CET) on imports from non-EU member states. So Australian apples can continue to be imported into the UK and then move freely into the EU. However, in this hypothetical example, if the UK “does a deal” with Australia which includes free trade in apples, then Australian apples would be subject to an import tariff if they move across the Irish Border.

Level 4 THE SINGLE (COMMON or INTERNAL) MARKET

The Single Market seeks to extend the free movement of goods to encompass free movement of Capital, Services, and Labour, and to eliminate member state regulations, which, either by accident or design, discriminate against imports (known as non-tariff barriers). The intention is to create equal conditions of competition – “a level playing field.” The main method of avoiding discrimination has been that member states are obliged to recognise goods which can be legally marketed in another member state, unless they can show some good reason (e.g. consumer safety) for not doing so. This followed a famous ruling by the European Court of Justice, known as the Cassis de Dijon case (finding against Germany that then had a law which said that fruit spirits must have a minimum alcohol content of 25%- all German made fruit spirits of course did have, but Cassis was around 15-20%). The alternative is harmonisation of product standards – which originally was mainly applied in the case of health and safety (e.g. food labelling law), but now covers approximately 50% of products traded within the Single Market.

Another important feature of the Single Market is the control of State Aids aimed at advantaging domestic producers. Where state aids have been widespread and agreed to be required, then a Common Policy is introduced – e.g. the Common Agricultural Policy. From its onset, the CAP has been based on three Principles consistent with a Common Market: Free intra-Community trade in agricultural products, Common Financial Responsibility, and “Community Preference” –member states give preference to agricultural products produced within the Common Market. Until quite recently, something like three-quarters of the entire EU budget was expenditure under the CAP, although it is now closer to 40%.

       The EEA (European Economic Area)

This is a separate treaty. The EEA member states are all the EU states, plus three of the four current EFTA countries –Iceland, Norway and Liechtenstein, and when a country joins the EU, it does not automatically join the EEA, but has to apply. However, in practice what the EEA amounts to is a mechanism that allows Iceland, Norway and Liechtenstein to belong to the Single Market, in return for an annual fee, but excuses them from participating in the Common Agricultural and Fisheries Policies. (The fourth EFTA member, Switzerland, has a separate treaty which provides a similar arrangement.) So when the UK leaves the EU, if it nevertheless remained in the EEA, this would be the so-called “Norway Option”. (The “Canada Plus” option is a trade agreement with an ambitious coverage of goods and some services.)

          The WTO (World Trade Organisation)

The WTO is the successor organisation to the GATT (The General Agreement on Tariffs and Trade) one of the many international organisations established after 1945. Its objective is to reduce tariffs and other restrictions on international trade. It works on the basis of “Rounds” in which the participating countries, and county blocs, negotiate down tariffs on a reciprocal basis.

In its early years the GATT was quite successful in bringing about reciprocal reductions in import tariffs for manufactured products, but singularly unsuccessful with agricultural trade, for which many other forms of trade distorting policies were common (e.g. subsidies under the Common Agricultural Policy). To deal with this problem the GATT (which was in the process of changing its name to the WTO) introduced the concept of tariffication in which the participating countries had to express their various state aids to agricultural in the form of the tariff that would provide the equivalent benefit to domestic farming.  This produced some very high “tariff equivalents” for agricultural products. The negotiation then involved reciprocal reductions in these, which are then “bound” in the Agreement. There are variously coloured “boxes” which dictate the extent to which agricultural supports have to be incorporated into the measure of support, which forms the basis for reciprocal tariff reduction. But with Brexit, the important point is that it is these bound tariffs which would confront UK exports. This is what is implied by “operating under WTO Rules.”

A problem that would confront the UK operating under “WTO Rules” is what is known as the Most Favoured Nation Clause. This says that a country which offers a lower or zero import tariff for a product to one country, must do so for all WTO participating countries, unless the reduced tariff is part of a Trade Agreement. Thus the logical thing for the UK to do without a Brexit Agreement, would be to adopt the same import controls as under the CET, which it could then offer reductions on in Trade Agreements (which are, however, notoriously lengthy to negotiate).

(The following complete the hierarchy:)

Level 5 ECONOMIC AND MONETARY UNION

Here, responsibility for macro-economic policy (e.g. money supply, interest rates, exchange rates) passes from member state Governments to the supra-national authority. The most important element in this is probably the adoption of a common currency.

Level 6 POLITICAL UNION

At some point the degree of control exercised by the central authority (and its elected parliament) is such that the “Union” of member states begins to be thought of as a country, – the United States of – – -, or the United Kingdom of – – -. This can of course subsequently go backwards (Devolution).

Professor Mark Shucksmith, Director of Newcastle University’s Institute for Social Renewal, discusses his recent visit to Taiwan, where he was a guest of the Taiwan Rural Sociology Society.

Last month I visited Taiwan, as a guest of the Taiwan Rural Sociological Society, to speak at an international conference in Taipei, to lecture at the National Taiwan University, and to visit rural communities and hear what they were doing. I also met the Minister of Agriculture, Mr Lin Tsung-hsien, and rural champion, Dr Frida Tsai MP. Before my visit I read that the people of Taiwan are renowned for their kindness, and I can confirm this: everyone I met was extraordinarily kind and thoughtful. But I also learned from my visit, I hope, so here are a few reflections.

The concept of networked rural development is well known in Europe (now repackaged as Smart Villages). Taiwan, I learned, has also started to pursue this approach, with government support since 2010. A rural regeneration programme offered funding to villages and community development workers, usually under the name of community development associations, at least in its first phase. A second phase from 2017 has provoked some controversy by restricting payment for people’s time and requiring voluntary effort instead. The government recently announced a major research programme, Social and Cultural Survey of Rural Taiwan, to further inform its enabling state role. At community level I saw examples of asset-based community development and social innovation (an eco-village, a ‘paper dome’ wedding/tourism venue, authentic Haka cuisine), institutional capacity (a network of agricultural marketing, training and financial services organisations) and learning through networks. It was especially interesting to observe how the networked rural development approach might operate in the context of a weak civil society, hampered by patriarchy and clientelism, and where mistrust exists between villages and government to the extent that rural activists formed a Taiwan Rural Front. Often crisis was the catalyst for rural regeneration efforts, whether earthquake destruction or the impact on farmers of joining the WTO.

I was interested too to discover that attracting and supporting young people to move to villages, often to engage in farming, is a major interest not only in Taiwan but also in Korea and Japan. Indeed the theme of the international conference was ‘new rural returnees’. We heard from numerous young people, not just dissatisfied with urban life but looking for alternatives to neoliberalism incorporating more utopian values and a better work-life balance which left time for family and relationships. Governments sought ways to support these young people to move and pursue their dreams, seeing them as vital to the social sustainability of ageing villages. In one example, a group of young people had formed a cooperative social enterprise to farm with ageing farmers who find it increasingly hard to work their land but could not give up their holdings. Some of these experiences and ideas might resonate also in Britain.

There is indeed an appetite from my hosts and others in Taiwan to compare their experiences with ours in Europe and for us to learn from one another. In a short visit I was only able to gain a very superficial insight into Taiwan’s approach to rural policies and regeneration activities, and there is much more to learn. I encourage colleagues to continue this process of knowledge exchange and dialogue: apart from mutual learning, you will be greeted with great kindness.