Changing the way land-use subsidies are implemented would enhance the value for UK taxpayers and boost efforts to achieve environmental goals like Net Zero.
A significant change in the implementation of land-use subsidies can provide taxpayers with better returns and increase the UK’s potential to achieve its environmental objectives.
The government’s aim to significantly expand woodland cover—marking the largest increase in 50 years—to attain Net Zero by 2050 necessitates financial incentives for landowners to convert farmland to forestry.
Currently, these payments operate through flat-rate subsidies, granting a uniform payment per hectare to landowners, irrespective of how conducive the land is for tree cultivation.
Research from the University of Exeter Business School indicates that these flat-rate subsidies are not only unproductive but may also raise overall greenhouse gas emissions.
This occurs because a standard payment structure encourages use of subsidies by farms with lower agricultural productivity, often situated on carbon-dense soils where tree growth is less effective. Such tree planting may also deplete peaty soils, releasing greenhouse gases instead of trapping them.
The researchers suggest a shift away from blanket subsidies, advocating for focused assistance based on anticipated impacts. This ‘Natural Capital’ strategy emphasizes regions with the highest potential for environmental benefits, climate resilience, biodiversity, and recreational opportunities.
In a study published in PNAS, the team assessed three subsidy distribution strategies: the existing flat rate, the Natural Capital framework, and the ‘Land Use Scenarios’ method, as proposed by the UK National Ecosystem Assessment, which encourages tree planting across a wide range of areas.
The researchers employed the NEV (Natural Environment Valuation) decision support system to compare these strategies, integrating various scientific models to measure environmental, agricultural, and economic results.
Maps illustrating new afforestation show how these strategies differ spatially, with flat-rate subsidies leading to tree planting concentrated in regions where farming yields are lowest, making it more appealing to accept the subsidies.
While this approach provides certain advantages, it offers limited value for its primary goal of carbon capture. Subsidizing tree growth on carbon-rich lands resulted in more greenhouse gases being emitted into the atmosphere.
On the other hand, the Land Use Scenarios method expanded woodland across the largest area of Great Britain and facilitated significant carbon storage, yet nearly doubled the expense of subsidies, as it promoted planting on some of the nation’s most productive agricultural lands.
Ultimately, the Natural Capital approach achieved the best outcomes regarding environmental impact, social benefits, and taxpayer value.
Utilizing the Natural Capital Framework—from which the UK Government’s 25 Year Environment Plan is derived—this method resulted in a higher concentration of planting near major urban centers, enhancing public access to quality natural spaces for large populations and yielding a net benefit that is 50% superior to the current flat-rate strategy. Additionally, this method fostered better biodiversity and, crucially, fulfilled climate goals by achieving the removal of 13MtCO2 annually by 2050.
Professor Ian Bateman, Director of the Land, Environment, Economics and Policy Institute at the University of Exeter Business School, remarked: “The widespread use of flat-rate payments in policy implementation is so common globally that its inefficiencies often go unnoticed. This research exposes these shortcomings and illustrates how the decision-making strategies used in policy implementation can significantly influence its effectiveness.
“By directing public funding to areas where it can achieve the most benefits, we can tackle climate change, combat biodiversity loss, and enhance food security, while greatly improving the value for taxpayers.
“This isn’t just a minor technical issue; different methods lead to various outcomes, which means that how we make decisions affects the decisions we ultimately adopt.”
“How to make land use policy decisions: Integrating science and economics to deliver connected climate, biodiversity and food objectives” is published in the journal PNAS (Proceedings of the National Academy of Sciences).
