Sustainable and integrated farming and crofting activity in the hills and uplands of Scotland: blueprint - report

6. Peatland restoration and management

Peatlands undoubtedly form one of Scotland's most precious and fragile habitats and cover a significant proportion of Scotland's total landmass^[6]. They host a wide range of important wildlife and can play a key role for water quality and flood management. Most importantly, they are of particular relevance in a climate context because the peaty soil contains a high proportion of carbon and therefore forms the most significant terrestrial habitat type for the capture and long-term storage of carbon.

Although peatlands provide an opportunity to capture and hold vast amounts of carbon, large areas of peatland across Scotland are degraded as a result of historical land management practices and land uses. This has resulted in Scotland's peatlands currently being a net source of carbon emissions. An estimated 6 to 10Mt of carbon being released on an annual basis from peatlands is due to be added to the LULUCF sector within Scotland's national emissions inventory next year.

The HUCG notes that ongoing initiatives such as NatureScot's Peatland Action have already helped to promote the importance of restoring degraded peatlands and facilitate the provision of public funding to carry out restoration works. The group also notes that Scottish Government committed to making available £250m for peatland restoration projects across Scotland over the next ten years up to 2030 in recognition of the need to stop significant emissions occurring from degraded peatlands.

The HUCG recognises that upland and hill farming and crofting systems have an important role to play when it comes to protecting peatlands and believes that peatland protection and integration with agricultural land use can offer a mutually beneficial opportunity going forward.

The following points outline the group's position and recommendations with regards to ongoing and future peatland restoration and management within the context of climate, environment and wider land use interests:

• The restoration of degraded peatlands should remain key in an attempt to reduce the significant soil carbon losses that are currently occurring. The group notes that current progress is partly limited due to a shortfall in contractor availability which is an area of great concern. The 10-year funding commitment from Scottish Government is therefore welcome as this should provide the necessary reassurance to potential contractors that they can invest in machinery, equipment and training to set up a viable and longer-term enterprise. Going forward, the group stresses that it is important that depending on budget availability and the need for the continued provision of public funding for peatland restoration beyond 2030, government should announce any further (multi-annual) funding commitments as early as possible to enable existing and potential contractors to plan ahead and (continue to) invest with confidence.
• The HUCG notes that some concerns have been raised amongst group members and within the industry with regards to the current ability for smaller Estates and/or peatland restoration projects to be able to access public funding, and whether preference is initially being given to larger-scale applications that are submitted by larger Estates and landowners. The HUCG has not been able to conduct an in-depth review to identify whether this is the case, but whilst the group recognises that there is a clear need to restore as much of our degraded peatlands as possible and as quickly as possible, it wishes to highlight that it is absolutely crucial to ensure that smaller projects are not put at a competitive disadvantage due to their lesser scale as this could have severe unintended consequences going forward if policy is to be introduced that will provide support to land managers on the basis of achieving actual outcomes. The group notes that the peatland restoration scheme is not competitive per se but because annual budgets are limited, this means that some projects could potentially be lined up but not yet able to take place. In a worst case scenario, any smaller Estates and farming or crofting units could therefore be unable to (initially) access monies through a future outcome-based support scheme because their ability to achieve the necessary outcomes has been held back. Although it is likely that funding will increasingly be provided from the private sector over the coming years, consideration should therefore be given, depending on spending abilities of Scottish Government within annual budget commitments and restrictions, to bringing some of the £250m budget allocated to peatland restoration forward where the total value of applications in any one year exceeds the current annual budget of £25m spend for restoration projects. This will need to be closely aligned with a strategy, as previously mentioned, which gives individuals the confidence to set up a contracting business to carry out peatland restoration works
• In order to protect the integrity of and vast carbon stocks within peatlands and ensure that they remain unchanged as a wetland habitat, the establishment of forestry through planting on peatlands of any depth (including shallow peatland) should not be permitted. Although native natural regeneration on shallow peat is not deemed an issue, consideration should be given to putting a mechanism in place whereby land owners and managers should have to take active steps to prevent natural regeneration of scrub as a result of under-grazing on certain depths of peatlands. Natural regeneration can pose a particular issue where this occurs from a nearby non-native planted woodland due to its potential impact on local biodiversity interests and should therefore be controlled.
• Consideration should also be given to extending peatland restoration schemes and initiatives to include the provision of adequate levels of funding to remove woodland plantations that are sited on peatland.
• The HUCG notes that there is an increasing interest in using private sector intervention towards peatland restoration projects in return for carbon credits arising from such projects. In addition to public funding being made available by government, this provides a distinct opportunity to increase the rate at which peatland restoration could take place over the coming years, but some concerns have been voiced over the benefits of carbon credits being lost to the LULUCF (and agricultural) sectors even though these sectors are still classed as net emitters. Whilst the HUCG recognises the importance of attracting private investment for public goods projects and supports the continuation of such investment, it is important to recognise that there is an argument for using carbon credits within the land-based sectors where they are generated to reflect the true net emissions from a given source, or else there is a risk that these land-based sectors fail to meet their targets on paper even though the emissions reductions are in reality achieved by the sectors and not the purchaser of the carbon credits. In a worst case scenario, the LULUCF and agriculture sectors could become a focus point for government intervention through regulation in an attempt to ensure that targets are met on paper, and this would be both counterproductive and ineffective when these sectors may in actual fact already have contributed significantly towards an overall reduction in national net emissions
• The HUCG notes that carbon is traded on the basis of estimated 'new' carbon being sequestered through the establishment of woodland or restoration of peatland rather than being based on existing stock. However, there has been some general mention about possibly introducing a mechanism to enable land owners (and land managers?) to trigger carbon credits for existing (soil) carbon stocks in peatlands and woodlands. This is unlikely to happen but raises distinct concerns about the practicalities associated with allocating the payment and liabilities between a landowner and any previous or current tenant as it is realistically impossible to establish to what extent any involvement from the landowner and historic activity from the land manager (farmer or crofter) may have enhanced, reduced or maintained carbon stocks. Although a detailed review would be required, it can be assumed that historic allocation of carbon credits would not be possible without extensive use of and reliance on pure estimates, and without risking significant friction and distrust within the tenanted sector which could (further) stifle existing and potential relationships. Whilst the group does not have a final opinion on this matter as it has not been able to reflect on this topic in detail, the following questions highlight that a historic carbon credit allocation would be highly difficult and probably legally challenging:
• How would carbon and any resulting credits be treated within the context of mineral rights, and how would a positive, negative or indifferent impact from a tenant's activity be captured and reflected?
• Would the payment be split between both parties, and if so, how would it be allocated?
• If carbon credits were to be awarded for historic carbon capture and accumulation, would this have to trigger a carbon tax for cases where poor soil management led to carbon losses? If so, how would this be allocated between a landowner and tenant?
• Would carbon accumulation have to be counted as a tenant improvement where it is deemed that this is a direct result from the tenant's land management activity?
• The above questions are also relevant within the context of current and future carbon trading with regards to how the benefits are fairly distributed to those responsible for delivering the necessary management
• Greater recognition needs to be given to the importance of continued grazed animal activity (including wild herbivores as well as livestock) on peatlands at appropriate stocking densities to prevent a build-up of roughage and/or rank growth along with potential natural regeneration occurring, as this can help to reduce issues associated with a deteriorating bog vegetation and the impact on wildlife relying on this habitat, and the drying out of the peatlands. There are examples where environmental bodies have intentionally reintroduced livestock onto peatlands to ensure that the vegetation is maintained in a suitable condition both for peatland health and for the biodiversity supported by the habitat, and the benefits of integrating targeted agricultural activity as a peatland management tool should be better promoted and reflected in policy and funding programmes going forward. The HUCG notes the promising work that is ongoing through NatureScot's POBAS (Piloting an Outcomes Based Approach in Scotland) project where outcome score cards are currently being piloted specifically for peatlands. In addition, the biodiversity audit approach being proposed as a baseline requirement for future agricultural support would also offer a distinct opportunity to facilitate the requirement to assess the condition and management of permanent habitats on the farm (peatlands potentially being one such habitat).
• Where there is an existing agricultural land use which is adjusted to facilitate peatland improvements, or where agriculture is (re)introduced to help maintain peatlands in suitable condition, the direct benefits arising from targeted agricultural land use as the pathway to achieve LULUCF-related benefits need to be recognised in some form within the agricultural emissions inventory both at individual farm level carbon accounting but also within the national inventory
• The HUCG recommends that a review should be carried out of peatland management guidance, especially in relation to grazing pressures, to better reflect the true grazing and poaching impacts and benefits from different groups of farmed animals. This includes the guidance on peatland grazing available through NatureScot's 'Peatland Action' initiative^[7]. The proposed changes include:
• Consideration should be given to approaching and defining optimum peatland grazing pressures on the basis of habitat condition using a tool such as the previously mentioned peatland outcome score cards. This gives more flexibility to the land manager to decide how an optimum habitat condition can be achieved.
• In the unlikely case where a flexible and outcome based approach to habitat management using score cards is insufficient or unpractical, stocking densities should be defined using 'total liveweight per hectare' instead of 'livestock units per hectare'. Given that the current system counts a cow as one livestock unit, and considering that adult liveweights of different breeds can range from 450kg to 750kg and beyond, there are distinct limitations and disadvantages associated with the use of such a rudimentary tool that treats the environmental impact of two cows as equal even though one animal may be fifty to seventy per cent heavier than the other. Although typical upland and hill cows are likely to be of medium and smaller size, their weights can still vary quite significantly.

The above is an important change from a business viability point of view as restricted stocking densities on the basis of livestock units per hectare causes a distinct disadvantage for enterprises that use smaller cows because the lesser total weight they are allowed to carry per hectare means that they are restricted to much lower levels of outputs in terms of total kilogram of calves produced per hectare. Crucially, this approach does not encourage the keeping of smaller cows despite many studies finding a smaller cow to have a better environmental and climate impact.

It should also be noted that whilst guidance on optimum overall stocking densities per year is both useful and helpful, it may be beneficial to also include upper annual and seasonal limits, within the bounds of acceptable grazing density fluctuations throughout the year, to ensure that there is no risk of temporary over-stocking occurring

• As previously stated, the HUCG recognises the importance of prioritising the restoration of degraded peatlands so net carbon losses can be halted or at the very least significantly reduced. Having said that, the group wishes to stress that there is also a need to put in place a meaningful peatland management scheme or programme to ensure that the peatland vegetation is maintained in a healthy condition and actively growing state to enable further atmospheric carbon drawdown. Such a scheme would need to be made available, preferably on a non-competitive basis, both on (previously) degraded but also on healthy peatlands. Current initiatives including the Peatland Action and Peatland Code include a multi-annual requirement to carry out suitable peatland management and maintenance, but there is little financial incentive available for managing peatlands out with the context of a restoration project. In order to encourage uptake of best practice peatland management across all peatland areas in Scotland, funding should be made available as income support on the basis that there is a direct cost to the business from peatland management actions along with the transaction costs involved in the planning and application process including ongoing liabilities, inspections etc.. Careful consideration would need to be given to outlining payment levels in such a way that they cover any income shortfall arising from targeted peatland management and encourage widespread uptake but without providing an attractive additional source of net income. The latter is necessary to ensure that there is no incentive for landowners to remove a tenant
• Consideration should be given to introducing a peatland management scheme on a voluntary basis initially before embedding the requirements of such a scheme within regulations to ensure that all peatlands are eventually protected. Such a regulated approach would need to ensure that it can capture different types of land managers and land management requirements including businesses farming or crofting without claiming agricultural support payments, as well as a requirement to maintain deer at appropriate levels to prevent (further) damage to fragile peatlands. Those businesses enrolling on a voluntary basis would benefit from funding in return for early participation to deliver public benefits. Such an approach would have to be carefully designed in order to ensure that it does not negatively impact on the tenanted and wider agricultural sector.
• The HUCG proposes that future public spending towards peatlands could be channeled through both an agricultural and a non-agricultural peatland management scheme. These schemes could be designed to encapsule the following:
• Where an applicant wishes to integrate peatland management with agricultural activity, they could access a support programme which is bolted onto an agricultural main support scheme. Given that future agricultural policy is likely going to require recipients to fulfil various requirements with regards to minimum agricultural activity alongside the delivery of environmental and climate outcomes, this would ensure that any applicant to a peatland management scheme is already fulfilling these wider public benefits. For situations where there is no agricultural activity taking place (on the peatland), land managers would be able to access a separate peatland management scheme.
• Peatland management should form the main aspect of the scheme but participation should trigger access to capital grant funding towards peatland restoration works; this would require peatland restoration initiatives to become embedded within the main management scheme which may be challenging within the context of private investment, but it should nonetheless be considered in order to ensure that adequate management is being carried out through a long-term commitment, thereby increasing the public benefit return on initial capital spend
• Ongoing management and maintenance requirements need to focus on environmental outcomes but need to be designed in such a way that can embed peatland management within wider deer and sporting interests where this is feasible. Having said that, deer management would undoubtedly have to feature strongly within both the agricultural and non-agricultural scheme to ensure that there is no (further) damage caused as a result of their presence. This should include a specific requirement to manage deer populations at a level that can be sustained on fragile peatland habitats during the winter months without causing overgrazing, trampling or poaching damage. Maintaining deer populations at a 'winter level' means that there is surplus grazing available during the summer months when many peatlands are capable of supporting some livestock grazing, in some instances by cattle. This is where agricultural activity should play an important role. Further recommendations relating to deer management are listed in a separate dedicated chapter within this report
• Better targeting grazing pressures will undoubtedly form a key element of any peatland management scheme and, where possible, the outlining of a suitable grazing strategy should be based on the previously mentioned outcome-based peatland score card system that are currently being trialed as part of NatureScot's POBAS pilot. If for whatever reason this is not practical or feasible, then a management scheme should be designed in such a way that required a herbivore impact assessment to identify whether current grazing pressures are appropriate to maintain the upland vegetation and soils in good condition for climate and biodiversity benefits. The HUCG notes that such an assessment template already exists but that it requires some training and support to ensure accuracy of the assessment and validity of the results.
• Consideration would need to be given to designing any management scheme in such a way that enables active crofters to participate and be able to adequately target management on common grazings