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A greener, more pleasant land, a new report from Bright Blue, sets out a vision for a new market-based commissioning scheme for rural payments after Brexit, which would replace the EU’s Common Agriculture Policy (CAP) and fund ecosystem services, such as woodland creation, restoration of peatlands and removing invasive plant species.

Under the scheme, ‘suppliers’ would bid to supply ecosystem services to paying ‘beneficiaries’ in specific catchments via online market-places. Suppliers would include farmers, landowners, and land managers. Beneficiaries would include the general public (represented by central, devolved, and local government), private interests (such as water companies, other land managers, and insurers), and other groups (such as conservation NGOs, civil society groups, land trusts, philanthropists, local communities via town and village halls, or crowd funders). Contracts for supplying ecosystem services would pay quarterly based on results, potentially with incentives to encourage performance.

Bright Blue’s main recommendations are:

  • The establishment of a new market-based commissioning scheme for rural payments where farmers, land owners, and land managers (‘Suppliers’) bid together or individually to supply ecosystem services to ‘Beneficiaries’ in specific catchments via online market-places.

  • Encouraging a catchment-based approach to commissioning. While the scale at which commissioning would take place (sub-catchment all the way to national) would depend on the type of outputs and services, a catchment-based approach is generally the most appropriate scale to successfully mobilise beneficiaries and suppliers, organise online market-places, and manage the production of appropriate ecosystem services.

  • Enabling and encouraging the crowding in of non-public funding from groups that have clear interests to commission more ecosystem services, but who currently do not or do but could do more. These include water companies, insurers, property developers, conservation NGOs, civil society groups, land trusts, philanthropists, local communities via town and village halls, or crowd funders. The groups would leverage the money made available from central, devolved, and local governments.

  • Ensuring that as current CAP subsidies are phased out, public funding for market-based commissioning scheme and means tested livelihood support is phased in pound for pound.

  • The creation of a single rural payments budget from central government that identifies exactly and merges existing government budgets for production and land management support (under CAP), natural flood management, and payments for ecosystem services. Merging these current expenditures into a single rural payments budget would result in at least £3.1 billion being made available per year.

  • A phased approach to implementation with a long-term commitment of central government funding of at least £3.1 billion a year on rural payments until 2026-27. Only after new arrangements have been established and are working effectively should levels of public funding be reviewed.

  • The establishment of a government-backed Natural Environment Finance Facility that would provide low-cost finance to suppliers, particularly for smaller farmers, land owners and land managers in less developed parts of the country.

  • The elimination of all production subsidies in agriculture, and ensuring instead that farmers have three forms of income available to them. The first from the new market-based commissioning scheme for rural payments, the second from a form of means-tested livelihood support, and the third from agricultural produce or other monetisable services sold at market prices without production subsidies. These sources of income are not mutually exclusive.

  • Market-based commissioning of rural payments combined with a properly enforced system of environmental regulations, targeted livelihood support (particularly for smaller farmers), and consumer demand for high-quality UK produce will together drive higher environmental standards across the UK.

Senior Associate Fellow Ben Caldecott, who co-wrote the report, says:

”We have a unique opportunity to enhance this country’s natural environment as we leave the EU. Policies and funding for rural activity and the natural environment can now be brought together into a consistent framework delivered efficiently and effectively.

“Commissioning ecosystem services efficiently and effectively using the dynamism of market-based approaches will bring significant public benefits, including a more sustainable farming industry, enhanced natural beauty and landscapes, greater biodiversity, increased carbon sequestration, improved natural flood defences, better water quality, better mental and physical health, and better air quality.

“This is a journey, but a necessary one, and one that will positively shape rural activity and the natural environment for many decades to come.”

Commenting, Zac Goldsmith MP, member of the Environment Audit Committee, said:

“The Government is transferring existing EU environmental regulations into UK law, and is committed to filling the governance gap that will open up as we leave the EU. That is good news, but it is only the beginning of what we can and must do to ensure we take full advantage of the opportunities presented by leaving the EU.

“And the biggest opportunity by far is the ability we now have to redesign the way we subsidise rural activity via whatever regime replaces the Common Agriculture Policy, something environmentalists have long dreamed of being able to do. Instead of simply paying people for owning land, no matter what they do to it, we can finally tailor that support to reward good stewardship of the land to boost biodiversity, minimise floods, improve water quality and access, and deliver food security. It is an exciting time, and this brilliant report maps out a vision of how we can do that.”

Commenting, the Rt Hon Caroline Spelman MP, former Environment Secretary, said: 

“Bright Blue has made a useful contribution to the debate surrounding post-Brexit agricultural policy and correctly recommend a market-based approach which embraces all the stakeholders in agriculture.”