Naturally Enough with N Wales Ag Valuers, Betws y Coed 15 March 2018
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Presentation at the North Wales Agricultural Valuers Association, 15 March 2018 on natural capital, public goods and ecosystem services in the management and valuation of rural land
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Naturally Enough with N Wales Ag Valuers, Betws y Coed 15 March 2018
- 1. Charles Cowap MBA MRICS FAAV NATURALLY ENOUGH THINKING NATURALLY LATERALLY …. Charles Cowap @charlescowap North Wales Agricultural Valuers 15 March 2018
- 2. Charles Cowap MBA MRICS FAAV New Waves in Rural Estate Management This Photo by Unknown Author is licensed under CC BY-NC-SA Agriculture Act 1947 Agricultural Improvement Output & Self sufficiency Efficiency Joining the Common Market Environmental Impact More food than we can eat Milk Quotas, Set Aside and More CAP, Pillar II, Stewardship Diversification Farm Business Tenancies Housing Reforms Tax and Regulation
- 3. Charles Cowap MBA MRICS FAAV New Waves in Rural Estate Management This Photo by Unknown Author is licensed under CC BY-NC-SA The Market Place Getting Older The best and the rest New entrants Land Values Energy Automation and Robotics Big data Contract Farming Rents and Returns Planning Reform Breeding and genetics Tax and Regulation
- 4. Charles Cowap MBA MRICS FAAV BREXIT This Photo by Unknown Author is licensed under CC BY-SA International Trade Public Goods Agricultural Support Labour mobility European Trade Terms Ecosystem Services Natural Capital Tax Reform Biggest Opportunity since 1947
- 5. Charles Cowap MBA MRICS FAAV Which of these are ecosystem services? Ecosystem Services 1. Growing food and timber 2. The water cycle 3. Pollination by bees and insects 4. The carbon cycle 5. Rural recreation 6. Inspiration for poetry about daffodils and meadows
- 6. Charles Cowap MBA MRICS FAAV Perrot-Maître, D. (2006) The Vittel payments for ecosystem services: a “perfect” PES case? International Institute for Environment and Development, London, UK
- 7. Charles Cowap MBA MRICS FAAV Stanlow Oil Refinery
- 8. Charles Cowap MBA MRICS FAAV Gowy Meadows
- 9. Charles Cowap MBA MRICS FAAV Holnicote Estate – National Trust • Leaky sluices • Low profile mounds • New barn for a tenant farmer • Restoration of woodland water bodies • Early Experience – Positive – Maize and Organic Swedes
- 10. Charles Cowap MBA MRICS FAAV
- 11. Charles Cowap MBA MRICS FAAV What value water and carbon from Devon’s Culm Grasslands? A project for Devon Wildlife Trust
- 12. Charles Cowap MBA MRICS FAAV Total Economic Value • Use and Non Use Values • Direct market valuations – Transaction evidence – Production cost – Replacement cost – ‘Avoidance’ costs
- 13. Charles Cowap MBA MRICS FAAV In the absence of market evidence • Revealed Preference Methods (RPM) v Stated Preference Methods • RPM includes – Travel cost methods (TCM) – Hedonic Pricing – USE values only not existence, bequest and altruism values
- 14. Charles Cowap MBA MRICS FAAV Stated preference methods • Contingent Valuation Methods (CVM) – Willingness to Pay (WTP) – Willingness to Accept (WTA) • Deliberative approaches – Choice modelling – Group valuations
- 15. Charles Cowap MBA MRICS FAAV Direct v Indirect Value studies • Direct – Methods already outlined • Indirect – Benefit (or value) transfer – Various databases: EVRI, TEEB, NEA
- 16. Charles Cowap MBA MRICS FAAV DCF: Discounting Future Cash Flows Total NPV + Worthwhile Total NPV – Not worthwhile Choice of Discount Rates?
- 17. Charles Cowap MBA MRICS FAAV Headline Figures • Loss of water and carbon value from 1900 Culm converted to IMG: £32.3 million • Potential value of DWT restoration work for carbon and water: £9.139 million • Remaining Culm area water and carbon value: £35.46 million - £9 million more than if it had been lost to IMG.
- 18. Charles Cowap MBA MRICS FAAVContext: Exmoor example Exmoor R Barle R Exe Wimbleball Resr & R Haddeo Exebridge Pumping Station Replenishment Pumping Approx 5 miles, lifting water from 120 to 240 m AOD CO 2
- 19. Charles Cowap MBA MRICS FAAV
- 20. Charles Cowap MBA MRICS FAAV Questions for consideration • Contractual aspects • Land tenure • Effects on other interested parties • Practical farming considerations • Animal welfare and health • Public liability • Relationship other schemes • Other business considerations • Maintenance obligations • Tax • Impact on value • Security/risk
- 21. Charles Cowap MBA MRICS FAAVFinancial evaluation Extra costs, eg • Access time to more difficult ground • Vet and med bills • Insurance • Feed • Machinery costs (if contracting to be offered) Costs saved • Eg some livestock purchases Lost Revenue • Eg some livestock LWG or sales Extra Revenue eg • PES income • Contracting opportunities for SWW + Balance: financially worthwhile • Consider capital and tax implications Balance positive: not financially worthwhile
- 22. Charles Cowap MBA MRICS FAAV New land management and valuation requirements are emerging New markets New challenges to professional practice New environmental, social and economic opportunities and challenges
- 23. Charles Cowap MBA MRICS FAAV Thinkpiece • New opportunities in land management • New ways of working in development • New points to reflect in conventional valuations • New types of valuation
- 24. Charles Cowap MBA MRICS FAAVAnd we should offer: • Our expertise • In Land Tenure and its relationship to land management and development • Our experience of valuation in challenging commercial markets • Our expertise in brokerage
- 25. Charles Cowap MBA MRICS FAAV Valuing Natural Capital
- 26. Charles Cowap MBA MRICS FAAVValuations Compared
- 27. Charles Cowap MBA MRICS FAAV Valuation: a broad scheme Agree Terms of Engagement Must include: Defined Basis of Value .... Apply Valuation Methods Formal Reporting Requirements Follow up advice - publication issues Market Value Fair Value Worth Existing Use Value Other Basis?? Competence Purpose Assumptions Special Assumptions Inspection etc Sales comparison Investment approaches DRC Other? Extensive Revaluation Reinspection Appropriate publication
- 28. Charles Cowap MBA MRICS FAAV IS IT SO DIFFERENT (1) : BASES OF VALUE NATURAL CAPITAL VALUATION ► Altruistic ► Bequest ► Economic ► Existence ► Non-Use ► Option ► Total economic
- 29. Charles Cowap MBA MRICS FAAV IS IT SO DIFFERENT (2): VALUATION METHODS NATURAL CAPITAL VALUATION Stated Preference Methods Revealed Preference Methods Value (Benefit) Transfer • Contingent Valuations • Choice modelling • Travel cost • Hedonic pricing • Avertive expenditure • Replacement cost • Direct market valuation • Comparison!
- 30. Charles Cowap MBA MRICS FAAVNew Ways with Land NATURAL CAPITAL PROVISIONING SERVICES Food Fibre Energy Timber REGULATING SERVICES Carbon cycle Water cycle SUPPORTING SERVICES Pollination Soil Formation CULTURAL SERVICES Recreation Inspiration Creativity Reflection EXISTING MARKETS PUBLIC SUPPORT NEW MARKETS PES Biodiversity offsetting Carbon Conservation covenants
- 31. Charles Cowap MBA MRICS FAAVSo what? ► Land Use and development decisions ► Client advice ► Competition with traditional valuation and appraisal approaches ► Extending our knowledge and skills base ► Opportunities to build on existing experience and skills ► Who will be first to broker a commercial ecosystem service deal with Network Rail or another buyer to protect vital infrastructure or other interests? ► Or have you done it already?
- 32. Charles Cowap MBA MRICS FAAV NATURAL CAPITAL COMMITTEE
- 33. Charles Cowap MBA MRICS FAAV Workbook: How to do it Natural Capital Committee 2017
- 34. Charles Cowap MBA MRICS FAAV 25 Year Environment Plan NCC Advised: • One ha of nature reserve per 1,000 people • Two ha of natural greenspace within 300 m of every home • Twenty ha of greenspace within 2 km of every home • Farm funding limited to public goods and high welfare standards • 250,000 ha of woodland by 2040
- 35. Charles Cowap MBA MRICS FAAV #25YEP • An environmental net gain principle for development, housing and infrastructure; • A new Environmental Land Management system; • New farming rules for water; • More efficient fertiliser use; • Crop protection while reducing pesticide impacts; • Better information on soil health • Peatland restoration and an end to the use of peat in horticulture by 2030; • Larger scale woodland creation and the appointment of a national Tree Champion; • More use of natural flood management; • More sustainable drainage systems; • Flood risk properties to be made more resilient; • Opportunities for the reintroduction of native species; • Improved biosecurity to protect and conserve nature; • Potentially more National Parks and AONBs; • New approaches to water abstraction, greater efficiency in water use, less personal use of water; • Environmental therapies through mental health services; • More green infrastructure and more trees in towns and cities; • 2019 Year of Green Action; • Reducing food supply chain emissions and waste; • Improved management of ‘residual’ waste and wastewater; • Fly tipping crackdown; • Reduced chemical contamination in water.
- 36. Charles Cowap MBA MRICS FAAV
- 37. Charles Cowap MBA MRICS FAAVGove’s Command Paper: Health and Harmony • More travel in the same direction? • Simpler stewardship • Polluter pays: a higher bar? • Cap on individual [CAP] payments • Ill defined transitional period • What WILL the farmer and farm of the future look like? • Much hangs on AI, robotics, ‘quality’ and de-regulation – from Don Curry to Glenys Stacey • Ill defined on new entrants and opportunities • Labour issue – undeveloped? • Agriculture Act 1947 defined good husbandry and good estate management – do we need new definitions for 2019 and beyond?
- 38. Charles Cowap MBA MRICS FAAV WELSH DIMENSIONS
- 39. Charles Cowap MBA MRICS FAAV Wellbeing and Future Generations (Wales) Act 2015
- 40. Charles Cowap MBA MRICS FAAV Three New Laws
- 41. Charles Cowap MBA MRICS FAAV
- 42. Charles Cowap MBA MRICS FAAV
- 43. Charles Cowap MBA MRICS FAAV Q&A, DISCUSSION
- 44. Charles Cowap MBA MRICS FAAV Contact Details In-house CPD programmes, professional-technical updates, organisational consultancy, and more: cdcowap@gmail.com 07947 706505 Twitter: @charlescowap Blog: http://charlescowap.wordpress.com/ Slideshare: http://www.slideshare.net/cdcowap Translating new knowledge for rural professional practice
Editor's Notes
- First thoughts on today’s 25 year Environment Plan? Confirmation of the direction of travel we have seen since the Natural Environment White Paper of 2011: The Natural Choice: securing the Value of Nature The headline points for farmers and land managers: An environmental net gain principle for development, housing and infrastructure; A new Environmental Land Management system; New farming rules for water; More efficient fertiliser use; Crop protection while reducing pesticide impacts; Better information on soil health Peatland restoration and an end to the use of peat in horticulture by 2030; A new Northern Forest (recently announced separately); Larger scale woodland creation and the appointment of a national Tree Champion (a heart of oak presumably); More use of natural flood management; More sustainable drainage systems; Flood risk properties to be made more resilient; Opportunities for the reintroduction of native species; Improved biosecurity to protect and conserve nature; Potentially more National Parks and AONBs; New approaches to water abstraction, greater efficiency in water use, less personal use of water; Environmental therapies through mental health services; More green infrastructure and more trees in towns and cities; 2019 Year of Green Action; Reducing food supply chain emissions and waste; Improved management of ‘residual’ waste and wastewater; Fly tipping crackdown; Reduced chemical contamination in water. Other measures are aimed at the marine environment and promote the UK as a global leader in the environment. A new independent body is proposed to hold the government to account. This will be supported by an annual report, the development of new metrics, better local planning, a Green Business Council and more effective partnerships. Landowners, farmers, estate managers and their advisers must take a close interest in the emerging policy. Public funding is likely to be focussed exclusively on the provision of public goods – a clear signal for the future of government agricultural support. The supporting documents also make clear that the ‘polluter pays’ principle will continue and is likely to be strengthened, so environmental outcomes will be achieved by a combination of stick and carrot with the regulatory bar rising ever higher. While the 25 year plan will provide new opportunities and approaches it will also require us to re-examine traditional practices. This may be uncomfortable, particularly given our post-Brexit economic uncertainty and the plan’s commitment to maintain environmental regulation at a minimum of existing EU levels, with Theresa May’s introduction saying: “When the UK leaves the EU, control of important areas of environmental policy will return to these shores. We will use this opportunity to strengthen and enhance the protections our countryside, rivers, coastline and wildlife habitats enjoy, and develop new methods of agricultural and fisheries support which put the environment first”. Regrettably the plan does not take us much further forward on the development of private sector opportunities. In a section towards the end of the report headed Catalysing private investment we are told that the business case for natural capital investment will be sharpened by measuring the benefits of natural capital improvement (put at a cost:benefit ratio of 1:3 to 1:9 elsewhere in the report) and that, “the government will take steps to encourage private sector investment wherever possible, targeting public funds at projects that provide purely public goods”. In other words if you want it you’re going to have to pay for it. Perhaps still a little early for the age of the eco-entrepreneur?
- The success of the ES paradigm has seduced ecologists into the uncritical use of economic terminology. Now, even scientists who may eschew market valuation of nature refer to nature as ‘natural capital’. It is naive to think that adopting such economic terminology is merely a tactic with no practical consequences, as some appear to believe [7]. After all, if there are no consequences, why do it? If nothing else, redefining nature as natural capital implicitly places all environmental policymaking into the sphere of economics and it is thus neoliberalising [8]. Since economics seems incapable of managing economies, why should ecologists believe that ecology would benefit by becoming a subdiscipline of the dismal science? https://static1.squarespace.com/static/53ef7f3be4b07998dc387a48/t/570ab0357da24f23ceb3db86/1460318263557/Silvertown_2016_Trends-in-Ecology-Evolution.pdf