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

6. Comments and priorities for SG policy alignment

Issues related to the alignment of the ERC with relevant aspects of SG policy and existing nature markets and standards were discussed in a breakout session as part of the workshop with the Scottish Nature Finance Pioneers (SNFP) on 12 June (attended by 43 participants). Policy alignment was also covered in individual responses from several stakeholders and in survey responses.

Policy alignment concerns the extent to which the ERC has the potential to support the delivery of relevant SG policy objectives, or if there are potential tensions or conflicts to consider.

This chapter summarises the main policy alignment issues raised in terms of: (a) how best to achieve alignment of the ERC with SG policy; and (b) the main potential risks and unintended consequences of the ERC.

6.1 Aligning ERC with SG policy and existing nature market standards

As well as at the SNFP workshop, policy alignment issues were also discussed in a more organic manner at the supply-side workshop, particularly in relation to ensuring that the ERC is aligned with future agricultural support in Scotland (see section 4.1). The relevance of the ERC to the OECM / Nature30 initiative was also discussed extensively in other workshops (e.g. see sections 4.2 and 4.3). These specific policy alignment issues, along with several other points, were raised in the SNFP policy alignment breakout as follows:

• Consideration of water related policy / objectives and the management of aquatic ecosystems and how this interacts with land management were identified as specific gaps in ERC discussions to date. The importance of the water environment in the SBS and the critical climate risks faced by water were all emphasised as part of the justification for the more explicit consideration of water;
• Related to the above, some stakeholders highlighted how NARIA may be less capable at detecting change in aquatic ecosystems, and therefore there may be a need for additional water specific metrics in the ERC. The work of the Woodland Water Code was mentioned as a source of possible metrics;
• Several stakeholders emphasised the importance of ensuring that the ERC is well aligned with NPF4 Policy 3 and related NatureScot work on the biodiversity metric for planning; and
• Some stakeholders highlighted the challenge of developing cross-ownership boundary collaboration projects (e.g. resources, governance, cooperation) and therefore the need for the ERC to include support for collaboration, in the instances where collaboration across landholdings is required to meet the proposed 200ha minimum project size.

6.2 Potential risks and unintended consequences of the ERC

Participants were asked to consider what the main risks and unintended consequences of the ERC were in terms of policy alignment and impacts on other policy objectives. The following issues were identified:

• Some stakeholders outlined how ERC policy analysis to date had missed an assessment of how new nature / biodiversity markets in Scotland might interact negatively with key related SG policy objectives. The examples mentioned were community wealth building (CWB), land reform and new entrants to farming. For all these policy areas the ERC was considered to pose potential risks;
• A cluster of risk was identified in relation to the potential for limited pace and scale of activity under the ERC. In relation to river basin planning for example, one stakeholder emphasised the need to incentivise land managers to do “the right thing” now, including in the context of many small projects in a catchment, rather than waiting for a perfect mechanism. The importance of smaller projects on smaller landholdings contributing to the delivery of various policy goals (e.g. 30x30, water) was mentioned by several other stakeholders – not alienating smaller land managers was seen as an important principle. Further, low demand / uptake of the ERC was also flagged as a risk, limiting the potential of the Code to support positive land management change;
• Several stakeholders highlighted the risk of potential confusion or unhelpful competition between the ERC and other financing mechanisms for biodiversity, notably NPF4 and the NatureScot biodiversity planning metric (see section 6.1 also); and
• One stakeholder identified uncertainty and potential tensions between the ERC and protected area management, whereby a designation may mean that a project cannot pass a legal additionality test.

Policy alignment related priorities for next stage of ERC project

• Alignment with future agricultural support: identify practical opportunities for ERC to support agricultural policy and vice versa, with consideration across all four tiers where possible / relevant;
• Blended finance: identify relevant public grants that could be blended with private finance via the ERC to achieve value for money (delivering better or more environmental outcomes with the same or less public expenditure) and the potential funding rules / guidelines that would need to be put in place to support this, including in relation to additionality (see section 3.4); and
• Water environment objectives: consider / assess the extent to which the ERC has potential to support the delivery of water environment objectives and improvements in aquatic ecosystems, including in relation to the effectiveness of NARIA in this context (see section 3.2).