Exploring Ecosystem Markets for the Delivery of Public Goods in the UK: Stakeholder Interviews, 2018-2021

Environmental restoration and conservation challenges go beyond what can be financed publicly. There are significant opportunities for private investment in the delivery of public goods, benefitting both commercial organisations whose business relies on ecosystem services, as well as landowners, land managers and the general public. Thus, public-private financing of natural capital improvement presents an opportunity to increase the availability of funding for payments for ecosystem services that provide environmental and societal benefits. Though public-private partnerships for the financing of ecosystem services is in its infancy in the UK. This study explores the voluntary ecosystem services market in the UK. This is achieved by developing an understanding of how key actors (schemes, stakeholder engagement initiatives, trading platforms and supporting modelling tools) operate, and by identifying possible synergies, examples of good practice and challenges to implementation. Topics covered include, understanding how the identified actors account for the social distribution of ecosystem services, how values are attributed to ecosystem services, and the legal obligations linked to ventures’ operation.This project will explore new ways to make dairy systems better for the natural environment and farmers' livelihoods, while maintaining the long-term supply of dairy products at reasonable prices in the face of unpredictable challenges like climate change. We will do this by combining the latest natural, social, biological and veterinary science with industry expertise and experiential farmer knowledge, to devise and test innovations that could increase the resilience and sustainability of dairy farming in a rapidly changing world. THE CHALLENGE The UK alone has the tenth largest dairy sector in the world, producing 14 percent of the EU's milk and representing over two per cent of global milk production. A sustainable dairy industry must improve or maintain water, biodiversity and soil quality, meet social expectations, offer farmers a livelihood and provide accessible and affordable dairy products to consumers. However, a number of important changes threaten the long-term future of the sector. The UK dairy industry has suffered from low and sometimes negative profit margins in recent years, worsened by high input costs, competition between retailers, global oversupply and, since 2014, Russian dairy import bans. Dairy production depends on nature but, if poorly managed, can erode the natural capital upon which it depends, for example by polluting rivers. Dairy systems also use a lot of water, and so are vulnerable to reductions in water availability and quality caused by climate change, and they are also vulnerable to the introduction of new animal diseases transmitted by ticks or insects. In order to make systems resilient to these future changes, and to make them sustainable and socially responsible, we need to understand the complex links between dairy production, animal health, and the natural ecosystems upon which they depend. OUR APPROACH We will do this by investigating a range of innovative, practical measures developed with, and applied by, major players in the dairy industry in collaboration with dairy farmers in the north of England and south of Scotland, that are designed to improve animal health and milk production while improving the natural environment. This will include the use of new pricing models being piloted by Nestle that reward more sustainable production decisions and enable farmers to adapt more effectively to future change, so guaranteeing the long-term supply of dairy products to manufacturers. We will also investigate a range of other innovative interventions, which we will develop in collaboration with farmers and other stakeholders, for example new techniques for loosening compacted soils and methods from precision agriculture. With the possibility of a post-Brexit reduction or cessation of direct payments to dairy farmers it is critical and timely to improve both financial and environmental sustainability in the sector. The project combines cutting edge social, economic, natural, biological and veterinary science to identify and test new approaches in close collaboration with industry partners in the UK. The work will provide evidence to the devolved administrations, Defra (notably feeding into their two forthcoming 25-year plans) and the third sector to inform post-Brexit policy on food, farming and environmental policy, and will support the Government's role in providing early warning of major, notifiable or new and emerging animal diseases in the dairy sector. We will use computer models and an international stakeholder network to identify lessons for the industry internationally.