Talk by Helen Dunn from DEFRA at VNN peatland workshop, Leeds 18th January 2012

1. Payments for peatland ecosystem
services in the Natural Environment
White Paper
VNN Workshop: Assessing and valuing peatland
ecosystem services for sustainable management,
18th January 2012
Helen Dunn, Senior Economic Adviser, Defra

2. Policy background: a greater role for
payments for ecosystem services?
• UK National Ecosystem Assessment (NEA)
demonstrates significance of values of ecosystem
services
• Natural Environment White Paper published
June 2011. Key overarching message of
mainstreaming value of nature in decision-making
at all levels.
• 4 themes: Protecting and improving our natural
environment; Growing a green economy;
Reconnecting people and nature and International
and EU leadership
• Particular focus on developing a green economy.
Leveraging wider sources of finance - new
commitments on encouraging and facilitating
payments for ecosystem services

3. PES - Why are we interested?
Buildson NEA, TEEB and valuing
ecosystem services work in Defra –
want to ensure values are realised
Provide opportunities for linking more
directly those who benefit to those
who deliver and in potentially cost
effective ways
Understanding opportunities for new
financing streams
Growing number of innovative
schemes emerging (e.g. SCaMP,
WATER, NE pilots)

4. Work programme in Defra on payments for
ecosystem services
 Developing the evidence base on PES -
recent Defra publication of 2 papers
 Commitments under NEWP are focusing
increasingly on actions to support PES in
practice:
 Publish best practice guide to PES
 Develop an action plan to review barriers and
challenges and recommendations for actions
 New PES research fund to support early stage
pilots of PES

5. Key principles of PES
Definition of PES: payments to land managers and
others to undertake actions that increase the quantity
and quality of desired ecosystem services.
There is a close link between the payment and the delivery of
ecosystem services: the “directness” of payment.
There is a voluntary nature to the transaction, i.e. not because
they are forced to trade by regulation or in order to meet a
mandatory cap.
PES should recognise only the “additional” benefits from
ecosystem service delivery that arise, above and beyond land
users meeting their statutory requirements.
Many “PES-like” schemes, i.e. those that fulfil most but not all
criteria .

6. Locating PES within broader suite of market
based instruments
Source: URS/Scott Wilson report

7. Characteristics of PES
Types of PES can vary according to:
provision of ecosystem service
 one specific service
bundles of ecosystem services
financing
Government purchasing on behalf of a large number of
beneficiaries
private companies and individuals, for example, downstream
water users paying for watershed management on upstream
land
payment approaches
output-based payments (payments for results)
 input-based payments for adoption of particular land uses or
management practices

8. Opportunities for PES
• In terms of opportunities identified in URS
Scott Wilson report:
• Promise for new PES schemes appears greatest
in water quality, water resources and flood risk
management.
• Nevertheless, other opportunities in relation to:
• carbon sequestration (from woodlands and
peatland restoration)
• cultural services and wild species diversity
(e.g user fees or visitor payback schemes)
• better targeting of public payments to
farmers and woodland managers

9. MMH make major contribution to certain ecosystem services (e.g. drinking water). Emerging opportunities for watershed payment schemes. Potential opportunities to expand the r
Opportunities for PES in peatland/upland
areas
Upland habitats make major contribution to certain
ecosystem services (e.g. drinking water). Emerging
opportunities for watershed payment schemes.
Potential opportunities to expand the range of services
targeted under upland agri-environment schemes and to
elicit private sector support as well.
Restoration of habitats has potential for multiple
benefits - potential for packaging PES for water, carbon
and biodiversity together.
 BRE (2009) estimates demand from companies and
individuals to support land based carbon reduction
projects on a voluntary basis. A number of companies
willing to pay a premium for UK based projects.
Growing number of “visitor payback” schemes.

10. Barriers to PES
Barriers to PES – URS Scott Wilson concluded that none of
the barriers identified were necessarily insurmountable
• Informational
• Technical
• Spatial
• Temporal
• Financial
• Institutional
• Legal
• Cultural
• Equity considerations
Source: URS Scott Wilson

11. Next steps in Defra work
 Commissioned URS Scott Wilson to develop a best
practice guide to PES - expected completion
summer 2012
 New PES research fund to support early stage pilots
of PES – in process of commissioning round 1 of
projects but will have round 2 in early summer.
 Develop an action plan to review barriers and
challenges and recommendations for actions - to be
published by end 2012