Stacking and Bundling - maximising nature market credits
The government has committed to supporting the achievement of protecting 30% of the world's land and oceans by 2030 and the stacking of nature market credits has an important role to play in delivery of this target. It has also been suggested that the government will support greater use of stacking as well as explicit bundling.
What is it?
Bundling: where a single credit is sold representing several different environmental benefits e.g. a wetland unit delivering carbon, biodiversity and water quality benefits.
Explicit Bundling: where several different benefits are quantified.
Implicit Bundling: where only one benefit is quantified but others are assumed to be sold alongside it.
The first phase of rules for biodiversity net gain (BNG) and nutrient neutrality set out that 'farmers and other land and coastal managers selling these units will also be able to sell units into a voluntary nature market' only where a subsequent habitat improvement is delivered on top of an initial activity and it does not negatively impact on the original scheme objective.
BNG and nutrient neutrality units can both be sold from the same project. These rules will apply until at least March 2025.
The government will analyse whether a greater degree of stacking should be permitted between compliance and voluntary markets in the next phase. This will include consideration of environmental outcomes and implications for market dynamics across all markets. Schemes should ensure they do not issue credits where the activity providing ecosystem services is being carried out to meet an existing regulatory obligation on the part of the landowner or manager.
The goal is for ELM payments to form part of a growing market for the environmental outcomes where scheme participants can earn income from both public and private sector sources, as long as this does not lead to double counting. This will mean greater income opportunities for farmers and land managers, and greater total investment in our environmental and climate priorities.
If you are considering diversifying your land or delivering BNG, please do get in touch!
