In the latest in a series of thought leadership reports promoting the development of ecosystem services, Green Alliance and the National Trust have put flesh on the bones of how to commercialise the Natural Infrastructure Scheme (NIS) model they first mooted in 2016.
The NIS concept is based on building a market for avoided costs, whereby ‘buyers’ including water companies could pay ‘sellers’ (typically land managers) for ecosystem services that would deliver desirable outcomes more efficiently than traditional routes.
The new report, Natural Infrastructure Schemes in practice, focuses on alleviating flooding. It firstly identifies three conditions that must be met for NIS transactions to be possible. These are: technically viable water attenuation projects; provable cost savings for private organisations that would otherwise be exposed to high costs from flooding; and the development of a robust commercial framework including contract and payment terms.
Secondly, it models the economic viability of NIS transactions, based on a thought experiment for a flood risk management scheme in north west England. This scheme is found to save £4.7 million compared to business as usual options. The report said: “Splitting this saving equally would give the group of buyers a cost saving of £2.35 million over 15 years, and the [ten] farmers would earn £15,658 each in profit per year for 15 years.”
Finally, Green Alliance and the National Trust call on the government to help such market mechanisms to take off, including by:
Using smart regulation to remove barriers and encourage behaviour change.
Improving local planning and procurement of flood risk mitigation.
Providing research funding to increase knowledge about, and reduce costs of, natural flood management.
Introducing quantifiable objectives for environmental restoration in the forthcoming 25 year plan for the environment.
Using post-Brexit agricultural policy to nurture new market-based mechanisms to support sustainable farming and land management.
In 2017-18 the National Trust and Green Alliance will be working with leading land managers and water companies to test the NIS concept in a real setting.