By Tom Bridge, Head of Natural Capital
The recent launch of the government’s hotly-awaited Nature markets framework represents a huge step forward in the development of a UK natural capital market – and with it a chance to attract the critical flows of funding needed to close the £56 billion gap in private finance for nature recovery over the next ten years, against a wider global backdrop of rampant nature loss and climate breakdown.
As part of an iterative process, one of the key developments of this first phase is the government’s support of ecosystem service ‘stacking’ (i.e. where more than one type of separate credit/unit is issued from the same activity on the same parcel, e.g. selling separate carbon and water quality units from the same woodland) and its commitment to developing the guidance and market infrastructure needed to enable this.
The likely challenges will centre around meeting ‘additionality’ requirements, both financial and legal, and ensuring that in creating the conditions for investment into this space, this framework does not inadvertently lead to compromised outcomes for nature and communities, or indeed to hollow claims (or ‘greenwash’). Further consideration is rightly given to the key issues of double-counting, permanence and scientific rigour.
While the report is intended to be more of a blueprint than a mature framework, it signals a clear direction of travel and highlights a number of exciting developments on the horizon, including: combining ELMs payments with those of the private sector, the potential stacking of ecosystem services as part of the Woodland and Peatland Carbon Codes, combining stacking models between compliance and voluntary markets, the potential inclusion of nature-based carbon removals within the UK Emissions Trading Scheme, the introduction of marine net gain, and the development of a Woodland Water Code and flood risk markets.
The launch of the framework has essentially fired the starting gun in earnest on a race which will hopefully revolutionise our relationship towards land, sea and nature in the UK, and not only significantly curb our nature-degrading activities, but restore and improve nature to a state that only our ancestors would be familiar with.