EB – request for papers

Agenda Item 9Executive Board MeetingMemo No 19/177 June 2017

Status: OFFICIAL

Economic mechanisms for woodland creation

Purpose
  1. This paper updates the Executive Board on work by the Economics and Climate Change team in Corporate and Forestry Support to encourage woodland creation, and seeks the Board’s views on future priorities.

Background/Introduction

  1. Woodland creation faces various barriers and opportunities, a number of which are economic in nature; crucially, markets largely fail to value many of the benefits provided by woodlands, thereby giving little financial incentive for land managers to plant new woodlands. There is growing awareness of the capacity of woodlands (and other forms of natural capital) to deliver services which businesses and society require. However, further ‘hard’ evidence is neededas well asmore mechanisms to integrate natural capital into markets.
  2. A paper to the Executive Board in December 2016 describedactivities by the Economics and Climate Change team to address woodland creation.
  3. Progress since the December 2016 paper is described below.
Work programme
  1. To help identify priorities for further evidence, Prof. Ian Bateman’s team at Exeter Universitywas commissioned to review evidence on the social and environmental values of woodlands, in the context of recent developments in economic thinking(for example, on natural capital). The review was published in February 2017 as an FC Research Report, alongside a Woodland Valuation Tool which enables users to search for values for different woodland benefits. A short FC Research Notewas written to sit alongside this in order to help make this work more accessible to a wider audience.
  2. A significantevidence gapconcerns the economic value of woodland in flood alleviation. JBA consultants were commissioned to incorporate woodland planting into hydraulic modelling of a proposed flood defence scheme at Southwell in Nottinghamshire. Results show that woodland can provide a notable and cost-effective contribution to flood risk management either as a stand-alone option or as part of a wider scheme. CFS is working with the Environment Agency (EA) to disseminate the results and sees this study as a first step to integrate woodlands into standard assessments of flood defence schemes for the EA.Further ‘hard evidence’ of this type will be required for other locations and catchments in order to build a stronger business case for investing in woodlands in future flood defence schemes.
  3. Further evidence gaps are being addressed, both through the FC’s research programmes and through collaborations with other bodies; notably, the Office for National Statistics (ONS) which is developing a set ofnationalnatural capital accounts.
  4. Flood alleviation. We have asked Forest Research hydrologists to propose a method to assess the contribution of the existing forest estate to flood alleviationat regional and national levels (in contrast to the site-level work at Southwell in paragraph 6). This will provide a basis to estimate an economic value, and will be taken forward once results have been published from a current review by the EA of evidence on natural flood management.
  5. Air pollution absorption.The ONS has commissioned CEH/Eftecto assess the values of different habitatsin intercepting pollutants and, therefore, in reducing health impacts. Results are expected later in June and will include revised estimates for woodlands.
  6. Urban woodlands. The ONS has also commissioned an assessment of how urban ecosystem service values could be incorporated into a natural capital accounting framework. The contribution of Forest Research to the use of theiTree tool has assembled valuable evidence on the value of urban woodlands.
  7. At an organisational level, corporate natural capital accounts offer a means for businesses and organisations to understand and measure their impacts and dependencies on nature.This is being explored through close engagement in forestry-related work of the Natural Capital Coalition ( a global initiative to harmonise approaches to natural capital. Support has been provided toForest Enterprise England (FEE) in preparing its forthcoming natural capital accounts for 2016-17 and advice given on the scope of the accounts in future; future data improvements may enable flood alleviation and air pollution absorption to be included, and work by Forest Trends( and others is looking at ways to include biodiversity in such accounts.Presentations toa delegation from Natural Resources Wales in Bristol in February, and to a workshop held by Coillte and the Irish Natural Capital Forum in Dublin in March ( will help to promote FEE’s natural capital accounts.
  8. A number of tasks are being taken forward on market instruments.
  9. Finance specialists, Numbers for Good ( been commissioned to examine potential new investment mechanismswhichcouldchannel additional finance into forestry. As part of this project, a workshop in London in March (attended by DEFRA, the FC, the forest sector, the Woodland Trust and others) explored mechanisms including innovative forms of bonds and community shares. The final report is in preparation –consultants have been asked to identify necessary ‘steps to market’ for such instruments to be implemented.
  10. Work to mainstream the Woodland Carbon Code into the activities of the wider FC is ongoing (for example, through Areas and Conservancies), and is examining whether the scope of the Code could be broadened in future (e.g. to cover harvested wood products, urban trees). The Woodland Carbon Code was presented at a meeting of BEIS, DEFRA and Treasury to examine future options for domestic offsetting in the UK; having a standard such as the Code in place would be an essential step in building a scheme which would attract investor confidence. There is also continued engagement in international discussions about the future framework for carbon markets following the 2015 Paris Agreement.
  11. A proposed ‘payment for an ecosystem service’ approach to new woodland planting on the Hampshire South Downshas been discussed with FCE’s South East London Area. Economic analysis is needed of how water companies might fund suitably located woodland planting in order to intercept agricultural pollutants to improve water quality and thereby reduce downstream treatment costs. Investigations are underway to see whether a European research network on woodlands for water (PESFOR-W led by Forest Research might provide information and expertise to support this work.
  12. Numerous requests have been made by colleagues and stakeholders for advice on appropriate economic numbers to use in written and verbal briefings. A short infographic on ‘forestry in numbers’ has been drafted to provide this. Feedback from colleagues and stakeholders in England and Scotland has been sought, and discussions initiated with communications colleagues on how to brand and disseminate this information.Ready access to key economic values associated with woodlands will be helpful in promoting the case for woodland creation.
Resource Implications
  1. The work described in paragraphs 5-10 is being carried out largely using current resources, although opportunities are being taken to secure additional finance. For example, the work detailed in paragraph 9c has been incorporated under a call forNERC innovation funding. Continued partnership building with other government bodies and stakeholders will lever additional expertise and funding.
Risk Assessment
  1. As described in the December 2016 Executive Board paper, the work is intended to keep the FC at the forefront of current practice on new investment mechanisms with potential for forestry, and to ensure that there is an adequate infrastructure of tools and skills to help the FC meet policy priorities for the FC, particularly on woodland creation. Consistency with country policy priorities and the objectives of the Science and Innovation Strategy for Forestry is essential.
Communications Issues
  1. Regular input to national and area/conservancy/district teams across the FC supports the case for investment in forestry, and contributes to wider land-use initiatives, both in national and international fora. Results are publishedto be as ‘accessible’ as possible to a wide range of stakeholders.
Implementation and Evaluation Proposals
  1. CFS will continue to work closely with colleagues across the FC, Forest Research and beyond to deliver the work programme. It will be important to continue to buildnew networks (for example with experts in finance) in order to draw in expertise to meet the challenges and opportunities of generating greater investment in woodland creation.
Conclusion
  1. The Executive Board is invited to discuss the work above, and to provide comments on where future priorities lie.

Pat Snowdon
Head of Economics and Climate Change

Corporate and Forestry Support
29thMay 2017

1 | Executive Board | Pat Snowdon | 12/01/2018