Ecosystem Restoration Code (ERC): engagement phase results and analysis

2. Comments on the objectives and framing for the ERC

The ERC engagement workshops were designed to gather stakeholder views on the purpose of the ERC and the operational detail required to deliver that purpose. This included discussion of the proposal to adopt an ecosystem approach to the ERC, in line with the Scottish Biodiversity Strategy (SBS) and relevant international biodiversity policy.

2.1 Comments on the aim / objective for the ERC project

In general stakeholders were highly supportive of the SG’s goal of supporting the development of new nature / biodiversity markets for Scotland by developing a new high-integrity market mechanism (the ERC).

One academic stakeholder explicitly questioned the rationale for the ERC and the perceived assumption that nature / biodiversity credit markets are a viable policy option for achieving SG biodiversity policy goals, especially given uncertain demand for these credits (see Chapter 4).

One professional body / association stakeholder sought to clarify the interventions and outcomes that the ERC would support, suggesting that this should be carefully determined first before developing detailed market rules, selecting metrics etc.

Several stakeholders sought clarity on alignment of the ERC with related SG biodiversity policy (e.g. the SBS, 30x30, biodiversity related planning policy) and finance (e.g. the Woodland Carbon and Peatland Code biodiversity crediting project) initiatives, especially in terms of the measurement approach being adopted.

Stakeholders generally encouraged SG to “not let perfect be the enemy of good” and would support an ERC that evolved over time (e.g. to incorporate different metrics and use cases) rather than seeking to adopt a “perfect” mechanism straight off.

Related priorities for next stage of ERC project

• Strategic intent: clarify the strategic intent / purpose of ERC and its intended relationship with relevant SG policy goals (e.g. biodiversity framework);
• Strategic use case: describe the specific use case intended for the ERC – i.e. the specific biodiversity / nature restoration finance remit it aims to fulfil, as well as those aspects that it doesn’t; and
• Evolution of the ERC: set out likely and / or potential future changes and evolutions of the ERC following its initial adoption (e.g. incorporation of further metrics and use cases).

2.2 Comments on the proposed ecosystem approach to the ERC

Stakeholders generally support the goal of seeking to adopt an ecosystem approach to the ERC, especially in terms of the ERC promoting activity that can conserve and restore ecosystem functions at scale, linked to SG biodiversity policy goals.

However, the concept of a minimum project size (200 ha) as a means of achieving sufficient spatial scale to encompass whole ecosystems as a “functional unit” received less support. This is because the proposed 200 ha threshold would exclude many smaller landholdings and potential projects. Further, one professional body / association stakeholder argued that an ecosystem approach does not necessarily require large or landscape scale projects and that the question of “scale” should be aligned with specific ecosystem functions and conservation objectives.

Concern about the minimum size proposal was a distinct theme across the engagement, including in terms of how this relates to choice of metric(s) (sections 3.1 and 3.2) and eligibility criteria for the ERC (section 4.3).

Related priorities for next stage of ERC project

• Minimum project size: explore / clarify options and constraints for different sizes of project under the ERC (e.g. in relation to choice of metric(s), alignment with ecosystem approach principles).

2.3 Other general comments on the ERC

Several stakeholders asked whether the ERC would penalise landholdings / projects that had already undertaken nature restoration (i.e. where baseline ecosystem condition is relatively high, affording the landholding less “room” to deliver significant uplift with the associated credit issuance and revenues). This led to the concept of “conservation” or “stewardship” credits being discussed, and how these could be measured, priced and valued. These credits would reward ongoing good ecological management, but may attract a lower price (e.g. because market appeal / demand is uncertain and as maintenance costs may be lower than for capital restoration works).

Whilst stakeholders generally support the innovative ecosystem approach SG is pursuing for the ERC, stakeholders often highlighted the risks of this innovation (e.g. because credits associated with an improvement in ecosystem condition are not routinely traded in UK nature markets). This is closely related to the question of demand drivers and the strong feedback from stakeholders that an underpinning regulatory framework will be required to underpin robust demand (see Chapter 5).

Related priorities for next stage of ERC project

• ERC relevance to different landholdings: consider equity dimensions of the ERC in relation to historic good-practice ecological land management and baseline ecosystem condition. Consider options, benefits, risks etc for a “stewardship / conservation” credit.