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Stags farm agent Charles Byrne discusses the increasing value placed on British woodland, both financially and environmentally.
Historically, the potential value of woodland was often dismissed as unprofitable when compared with bare land for conventional cropping. However, with recent changes to government and environmental policy, there is increasing opportunity for woodland to provide a long-term income, resulting in a higher level of demand for land suitable for tree planting, particularly close to villages, towns and cities. At a time of economic uncertainty and indecision surrounding the future of the Basic Payment Scheme, farmers and land managers will need to be proactive in their approach to finding alternative grant funding opportunities.
Woodland is an asset that most farms in the South West will have in varying forms, whether that is a shelter belt, steep valley side or a home wood. These types of wood are not commercially managed and when forming part of a larger farm business are instead considered to be agricultural. Commercial woodland on the other hand is managed for the realisation of profits and is usually evident by the species of trees and the presence of a woodland management plan. Contrary to popular assumption, commercial woodland is not solely tall, dark blocks of spruces but can be a variety of tree varieties.
Government ministers trying to address the UK’s carbon emissions have agreed to plant 11 million trees by 2022 with a view to hitting a target of net zero carbon emissions by 2050. To encourage the development of new woodland, a Woodland Carbon Guarantee scheme has been created. This offers farmers and landowners the option to ‘sell’ the carbon their woodland has captured as a Woodland Carbon Unit (WCU) to those looking to offset their carbon emissions, for a guaranteed price every five or 10 years up to 2055-56. This guaranteed price for the carbon credits will not only help to provide long-term strategic income planning but will also help to offset the potential change in value of the land, where typically the value of woodland has been lower than that of bare agricultural land.
WCU prices will be set through a series of online reverse auctions. These will start taking place in early 2020 and will occur every six months for up to five years. Bidding at the auction will be based on the price per tonne of carbon dioxide that is required to make an individual project financially viable. If a bid is accepted by the government, landowners will be granted a conditional 30 to 35-year contract to sell the carbon dioxide captured by their woodland, with the price agreed at auction index linked to protect against inflation.
To apply for the Woodland Carbon Guarantee, land managers will need to register their projects with the Woodland Carbon Code, which is the voluntary standard for UK woodland creation projects.
Although this is only the starting point for defining a value to removing carbon dioxide from the atmosphere, in a world of increasing environmental awareness farmers and landowners will once again play a very important role.