Part 2: Will ELMS achieve their environmental objectives?

Goal 1 of the UK Government’s newly published Environmental Improvement Plan (EIP) is ‘Thriving plants and wildlife’. The EIP puts heavy reliance on ELMS to meet statutory targets:

Our new farming schemes are expected to:

• Contribute at least 50% of the target of bringing protected sites into favourable condition by 2042.
• Contribute 80 to 100% of the target to restore or create more than 500,000 hectares of wildlife-rich habitat outside of protected areas by 2042, by including the contribution from peat restoration and biodiverse woodland creation.

Whilst it is impossible to predict with confidence what the outcomes of such novel and wide-ranging schemes will be on the environment, what are the factors that may affect how successful ELMS will be?

Budget and payment levels

In order to incentivise farmers and land managers to enter into agreements, payment levels must make them financially attractive. If payment levels are too low, farmers and land managers may instead try to maximise income by intensifying production. If a good income is not possible from either ELMS or production, farmers may have to sell their land or give up their tenancies, undermining any hope of a ‘just transition’.

The budget for all payments in England is an average of £2.4 billion per year to 2024/2025. It is worth noting that ELMS use an income foregone model for setting payments. This means that payments are based on how much money is ‘foregone’ by not producing food in a particular area. Farms in different settings will therefore receive different payments for the same actions. For example, on low input grassland, the action ‘manage grassland with very low nutrient inputs’ is paid at £151 per hectare outside of Severely Disadvantaged Areas (SDAs) and £98 inside SDAs. ELMS pay farmers for environmental goods and services, so effectively this means that 100 individuals of a priority species or a tonne of sequestered carbon are valued differently in different places.

Another point that has been raised is that the number actions offered are heavily skewed towards providing options for lowland and arable farms. Actions can be ‘stacked’, which means the same bit of land can receive payments for different actions as long as they don’t contradict. The more options that can be stacked, the more payments the land manager can receive. Upland farms are generally less profitable from food production, and many farmers in these areas are estimating that with inflation and payment levels, upland farm incomes may be halved by the end of the transition period.

Actions vs outcomes

SFI and CS explicitly pay for actions, rather than outcomes. There is a large literature discussing the pros and cons of whether payments should be made for actions or outcomes in schemes that are designed to deliver ecosystem goods and services. When paying for actions, a key determinant of success is the evidence base for whether actions will actually give rise to a certain outcome. For example, will skylarks actually nest in skylark plots, and increase the population of this species? This will depend on the action in question, but without adequate monitoring it will be impossible to measure success or adapt the schemes to optimise outcomes. In its announcement, Defra says that ‘We will improve these existing actions where possible as we evolve CS, by making them more ambitious and outcome focused, less prescriptive and more flexible about how to achieve the intended outcomes.’

Flexibility

The flexibility in ELMS is designed to maximise take up, but there may be a trade-off between increasing ease of uptake and benefits for the environment. Is it better to have a greater area under agreements that offer little environmental benefit per acre, or smaller areas where require more effort but have greater environmental benefits? Defra’s strategy aims to ensure that farmers and land managers enter into agreements, and then encourage them to ratchet up environmental ambition. For this to be successful, actions that have greater benefits for nature, which may take more effort to implement, must be financially attractive.

Connectivity

Connectivity is a vital part of ecological recovery, and the environmental benefits of ELMS will not be maximised if actions remain atomised and on a small-scale. Connectivity both between and within farms is important.

With regards to connectivity between farms, with the exception of LR and payments to farmers on common land, farmers and land managers enter into agreements on an individual basis. There does not need to be any coordination with neighbours. Individuals should evidently be free to make their own decisions about their own businesses, but it is worth noting that ecology and wildlife do not respect property borders. In their 26 January announcement, Defra does say that as part of its plans to evolve CS it will reward those who ‘work together across multiple holdings to deliver specific environmental outcomes relevant to the locality, and join up connecting habitats across local areas’, but it does not give further detail.

Under ELMS, farmers and land managers can choose to implement different actions across their properties, meaning that they can enter the scheme and not implement any of the relevant actions on some of their fields. If lots of people enter into agreements that only cover parts of their land, then the benefits delivered by areas where actions are ongoing may be undermined due to poor connectivity.

In case you missed it, read Part 1 of this blog series to find out more about ELMS. The BES policy team will provide further updates on ELMS as the schemes are rolled out across England – follow @BESPolicy on Twitter to stay up to date on BES policy news and events.