Financial Solutions for Peatland Restoration: Additional Modelling Method and Results Overview

1. Introduction

1.1 Background to research

Scottish government commissioned ekosgen to appraise a wide variety of financial options (instruments) that would aid peatland restoration. This analysis was to inform a commitment made in the Natural Capital Market Framework^[1], to enhance investment in natural capital markets. Scotland’s private investment in natural capital programme will coordinate a 'peatland pilot' to explore approaches to integrating public and private funding for peatland restoration. This will be delivered according to the responsible investment principles and the commitment to high-integrity natural capital markets laid out in the Market Framework.

In order to complete this commission ekosgen developed an economic model to support the appraisal of four short listed instruments and the detailed cost-benefit assessment which is summarised in this paper. The short list was derived from a shortlisting process including stakeholder engagement and a PESTLE analysis of a long list of financial options.

1.2 Purpose of this document

This document provides an overview of the results of the core analysis conducted using the economic model developed by ekosgen. The document provides information about the development process, the financial instruments that were explored as part of this, the core analysis, and the findings when applying various sensitivities.

1.3 Remainder of this report

The following details the contents of the remainder of this report:

• Chapter 2 provides an overview of the methodology undertaken for this research commission;
• Chapter 3 provides a description of the financial vehicles explored as part of this research;
• Chapter 4 provides the main outcomes around core indicators for each of the five clusters (government, carbon traders, landowners, private sector and society) explored in the model;
• Chapter 5 provides the headline outcomes arising when applying various sensitivities; and
• Chapter 6 provides the overarching commentary summarising the findings of the analysis.

Please also note that there is an appendix which contains a glossary of the acronyms and main concepts underpinning the development of this model, found at Appendix 1.

The inputs that have been sourced and developed to support the modelling can be found at Appendix 2.

The core assumptions underpinning the economic model can be found at Appendix 3.