Payments for Ecosystem Services (PES) are mechanisms which allow the private and public sector to fund environmental enhancement or conservation initiatives. They create financial incentives for farmers and other landowners (“sellers”) to contribute to improving the environment above and beyond the minimum standard required by law or regulation.

The enhanced ecosystem service delivery brings direct or indirect financial benefits to industry, developers, and the public (“buyers”), incentivising them to invest in these projects.

Offsetting schemes are similar to PES schemes, except that they are driven by regulatory or voluntary caps on environmental degradation, incentivising buyers to invest in projects that deliver additional environmental gain.

Hundreds of schemes are in place worldwide, including a number in the UK, delivering benefits for water quality and quantity, flood risk, carbon, biodiversity, pest management and recreation. This is a growing market with a number of economic, regulatory, and environmental drivers.

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Key Drivers

Key drivers for PES and Offsetting schemes are economic, regulatory and environmental

There are direct financial benefits to buyers and indirect financial benefits to society. Sellers receive a secure, alternative income source for their land.

These schemes allow us to meet local, national, and international targets for water, carbon, biodiversity and other environmental factors.

Essentially, involvement in such schemes deliver enhancements above and beyond minimum legal and regulatory standards.

What does a PES scheme look like?

The following schematic shows a simplified version of a PES scheme aimed at improving water quality before and after implementation. This type of scheme could also potentially deliver benefits to biodiversity, greenhouse gas emissions, flood risk management, and recreational access.

Prior to scheme

Farm emissions of sediment, pesticide and nutrients to watercourse are in line with minimum requirements. Water company bears cost of treatment to potable standards through end-of-pipe methods.

After scheme

Water company pays landowners to change management/land use. Sediment, pesticide, and nutrient loading of watercourse caused by farms decreases. Cost of end-of-pipe treatment reduces. Other benefits may be realised.

We offer a breadth of technical expertise in land management, catchment management, environmental modelling, economic analysis and on-farm advice.

ADAS uses these services to develop PES and offsetting schemes in the following ways:

  • Matching buyers and sellers through site finding and site evaluation.
  • Intermediation between buyers and sellers. Ensuring agreements deliver value to both parties.
  • Ensuring schemes will achieve environmental and economic objectives through good design and practical advice, backed by scientific evidence and experience.
  • Application of robust environmental monitoring tools to measure scheme performance, identify and address issues, and improve the overall design.
  • Advising policy-makers and regulators to help progress, improve and initiate new schemes.

For more information, please contact Mike Image.