Strategic Environmental Assessment (SEA) for the Agricultural Tenancies proposals Environmental Report

5. Assessment of proposals

Introduction

5.1 This chapter presents assessment findings and recommendations in relation to the current Agricultural Tenancies proposals. The chapter is structured to present:

• An outline of the proposals and its component parts.
• An assessment of the proposals under the four SEA themes identified through scoping.
• Consideration of cumulative effects; and
• The overall conclusions at this stage and recommendations for the next stage of plan-making.

Methodology

5.2 The assessment identifies and evaluates ‘likely significant effects’ on the baseline, drawing on the SEA framework identified through scoping (see Table 3.3) as a methodological framework.

5.3 Every effort is made to predict effects accurately; however, this is inherently challenging given the strategic nature of the proposals under consideration and understanding of the baseline (now and in the future under a ‘no plan’ scenario) that is inevitably limited. Given uncertainties there is a need to make assumptions, e.g., in relation to proposals implementation and aspects of the baseline that might be impacted. Assumptions are made cautiously and explained within the text (with the aim of striking a balance between comprehensiveness and conciseness). In many instances, given reasonable assumptions, it is not possible to predict ‘significant effects’, but it is possible to comment on merits (or otherwise) of the proposals in more general terms.

5.4 Finally, it is important to note that effects are predicted taking account of the criteria presented within Schedule 2 of the Environmental Assessment (Scotland) Act 2005. So, for example, account is taken of the probability, duration, frequency, and reversibility of effects as far as possible. Cumulative effects are also considered, i.e., the potential for the Strategy to impact an aspect of the baseline when implemented alongside other plans, programmes, and projects. These effect ‘characteristics’ are described within the assessment as appropriate.

Proposals outline and component parts

5.5 A description of the Agricultural Tenancies proposals and component parts are set out in the consultation document with which this Environmental Report accompanies.^[11]

5.6 The key elements of the proposals can be summarised as follows:

• Diversification (non-agricultural activities) – This proposal aims to provide tenant farmers with a greater opportunity to diversify their business, with a view to helping address climate change and biodiversity loss. In this context, diversification means allowing the land to be used for non-agricultural purposes.
• Schedule 5 (agricultural activities) – Schedule 5 of the Agricultural Holdings (Scotland) Act 1991 is currently an exhaustive list across three parts (I, II and III), which lacks flexibility. This proposal aims is to allow tenant farmers greater flexibility to conduct agricultural improvements and partake in integrated land management, focusing on sustainable and regenerative agriculture. This will include adding climate change mitigation and biodiversity enhancement items to Schedule 5 (such as tree planting, habitat creation and renewable energy) that are ancillary to agriculture, support food production. The aim is to add wider value to the land.
• Rules of Good Husbandry and Estate Management – The Rules of Good Husbandry and Estate Management place an obligation on all tenant farmers and landlords to practice good husbandry and estate management. The Rules are currently framed towards post war ‘efficient production’. This proposal aims to ensure that sustainable and regenerative agricultural practices are acknowledged alongside their current focus on efficient production.

Assessment findings

Biodiversity and geodiversity

5.7 The Diversification (non-agricultural activities) proposal will help address biodiversity los s by allowing tenants to pursue non-agricultural activities such as tree planting, habitat and peatland restoration, and other nature-based solutions. In doing so, it will support the maintenance and enhancement of priority habitats and species, including the recovery of degraded habitats and declining species, and improve ecological connectivity. Such enhancements across agricultural landholdings are likely to provide additional opportunities to access biodiversity, not only for tenants but the wider general public. This will help enhance understanding of biodiversity amongst tenants and the general public. It is noted that this proposal will also support other activities, such as renewable energy uses (e.g. wind, solar and biomass), which have the potential to lead to negative effects on biodiversity. However, it is also possible for such uses to enhance biodiversity if designed and managed appropriately, particularly if biodiversity net gain is effectively enacted.

5.8 The Schedule 5 (agricultural activities) proposal creates opportunities to achieve biodiversity enhancements by opening up eligibility for sustainable and regenerative activities, such as tree planting, habitat creation and renewable energy. By providing representative examples that illustrate biodiversity enhancing practices, this proposal provides sufficient information to effectively guide tenant farmers. Notably, these examples form an open-ended list, and therefore activities outside of this list will still be permitted providing that they are sustainable and regenerative. Similar outcomes will be achieved through this proposal as those outlined above under the Diversification proposal given that it also provides tenants with greater flexibility.

5.9 Both the Diversification and Schedule 5 proposals support fair compensation for environmental enhancements. By compensating tenants for activities like tree planting and habitat restoration, these proposals would significantly benefit biodiversity and geodiversity by providing direct incentives. Similar outcomes will be achieved through this proposal as those outlined above under the Diversification proposal. The provision of fair compensation under this proposal is also likely to promote tenant engagement, including through participation in habitat improvement projects.

5.10 The Rules of Good Husbandry and Estate Management proposal would enable on-the-ground delivery of positive biodiversity and geodiversity outcomes by acknowledging sustainable and regenerative agricultural practices. Formally acknowledging such practices would align good husbandry obligations with national and international biodiversity ambitions. This proposal allows tenants to help support the recovery of declining species populations, enhance protected areas, and engage directly in habitat restoration activities through a holistic approach to tenancy management.

5.11 Overall, all three proposals perform well under the biodiversity and geodiversity SEA theme. Whilst there is some concern regarding the potential of non-agricultural uses such as renewable energy provision to harm biodiversity, it is recognised that proposals are unlikely to support activities that have a negative impact on biodiversity and geodiversity. In light of this, major positive significant effects are considered likely under this SEA theme.

Climate change

5.12 The Diversification (non-agricultural activities) proposal contributes to climate change mitigation by allowing tenants to pursue non-agricultural activities such as tree planting and peatland restoration which support biological carbon sequestration (the natural process of removing carbon dioxide from the atmosphere and storing it in trees/ soils). This proposal also supports activities such as wetland and floodplain restoration, which will contribute to climate change adaptation by increasing the resilience of agricultural land to the impacts of extreme weather events, such as floods and droughts. In addition to these nature-based climate solutions, this proposal supports renewable energy uses (e.g. wind, solar and biomass), further contributing to climate change mitigation and supporting Scotland’s goal to reach net zero emissions by 2045.

5.13 The Schedule 5 (agricultural activities) proposal contributes to climate change mitigation by supporting a wide array of nature-based carbon sequestration activities through the open-ended list of examples. This provides adaptability and flexibility to Schedule 5 as activities that support climate change mitigation and adaptation evolve. By providing representative examples that illustrate such activities, this proposal provides sufficient information to effectively guide tenant farmers.

5.14 Both the Diversification and Schedule 5 proposals support fair compensation for environmental enhancements, which would significantly benefit climate change mitigation and adaptation. By compensating tenants for taking land out of production for nature restoration and climate-positive practices, these proposals encourage tree planting, peatland restoration, wetland creation, and other activities that sequester carbon, reduce emissions, and increase climate resilience.

5.15 The Rule of Good Husbandry and Estate Management proposal would create clear pathways to deliver climate change solutions through tenancy management. Embedding sustainable and regenerative agricultural practices such as cover cropping, no-till, and composting would contribute to climate change mitigation by increasing carbon sequestration in soils. In addition, activities such as integrating buffer strips, hedgerows, wetlands, and mixed crop-livestock systems could support ecological resilience and support adaptation to the effects of climate change.

5.16 Overall, given that all three proposals perform very well under the climate change SEA theme, major positive significant effects are anticipated relating to both mitigation of and adaptation to climate change. Unlike with the biodiversity and geodiversity SEA theme, the impetus on both nature-based climate solutions and renewable energy uses will benefit the climate change SEA theme.

Landscape and historic environment

5.17 The Diversification (non-agricultural activities) proposal, by allowing tenants to pursue non-agricultural activities such as tree planting and habitat restoration, has the potential to reinforce and enhance landscape character and enhance the special qualities of landscapes, including those associated with nationally designated landscapes such as National Scenic Areas. However, activities such as tree planting may negatively impact on the special qualities of local landscapes that are traditionally characterised by agricultural uses by creating new features that are not typically associated with the landscape. This proposal could also result in mixed effects on the historic environment. Whilst it may support the conservation of traditional agricultural landscape features, such as hedgerows and stone walls, moving land away from agricultural use may risk the loss of traditional practices and has the potential to affect the setting of the historic environment. Nevertheless, it is recognised that diversification may provide a greater level of income for tenants, which could allow for resources to be used to restore or better reveal the significance of heritage features within the landscape.

5.18 The Schedule 5 (agricultural activities) proposal, by developing an open-ended list of example sustainable and regenerative activities, supports a wide array of landscape enhancements and heritage conservation activities as practices evolve. By providing representative examples that illustrate landscape and heritage enhancing practices, this proposal provides sufficient information to effectively guide tenant farmers. However, as noted under the Diversification proposal, it is recognised that activities such as tree planting may negatively impact the special qualities of local landscapes. It is also noted that renewable energy uses also have the potential to impact on landscape character and negatively impact the setting of important heritage assets.

5.19 Both the Diversification and Schedule 5 proposals support fair compensation for environmental enhancements, which could act as a catalyst to deliver landscape and historic environment benefits. By incentivising nature restoration and the conservation of rural heritage assets, these proposals promote activities that preserve scenic beauty and conserve traditional agricultural structures and practices.

5.20 The Rule of Good Husbandry and Estate Management proposal would increase opportunities to realise landscape and heritage improvements through tenancy management reforms. Integrating habitat restoration and regenerative principles into the Reform could enhance scenic qualities, whilst expanded obligations could require proactive conservation of rural heritage assets. Educational components could also improve public awareness of historic agricultural practices.

5.21 Overall, whilst the benefits under all three proposals with respect to the landscape and historic environment SEA theme are recognised, uncertainty is noted at this stage. This is because activities such as tree planting could alter landscapes that are historically characterised by arable and agricultural land use. In addition, renewable energy uses have the potential to impact on landscape character, as well as negatively impact the setting of important heritage assets and historic areas.

Soil and water quality

5.22 The diversification (non-agricultural activities) proposal will maintain and enhance soil and water quality by enabling regenerative agriculture techniques which support regulating ecosystem services. This includes, potentially, through facilitating participation in environmental markets. Specifically, this would allow tenants easier access to emerging carbon, water quality and biodiversity markets that provide payments for practices like cover cropping, riparian buffers and habitat restoration. However, proving additionality (i.e. that the benefits delivered are additional/ new to what is being currently provided) and stacking of ecosystem services (i.e. where multiple ecosystem services or benefits are being claimed by one intervention) would need to be addressed to ensure the integrity of these environmental markets is upheld.

5.23 The Schedule 5 (agricultural activities) proposal supports a wide array of soil-enhancing and water-protecting activities both now and in the future as practices evolve. By providing representative examples that illustrate practices which improve soil and water quality, this proposal provides sufficient information to effectively guide tenant farmers. Notably, the open-ended list of examples provide clarity on activities allowed today, with the principles accommodating adding new practices over time.

5.24 Both the Diversification and Schedule 5 proposals support fair compensation for environmental enhancements, which could incentivise tenants to utilise practices which improve soil conditions and reduce nutrient runoff, improving water quality. By more effectively compensating activities such as cover cropping or riparian buffers, these proposals enable tenant participation in schemes that pay farmers for implementing practices that could improve soil and water quality. In doing so, this may result in avenues which support the uptake of regenerative approaches and leverages environmental markets to improve soil and water outcomes.

5.25 The Rule of Good Husbandry and Estate Management proposal would create opportunities to deliver significant soil and water quality improvements through tenancy management reforms. Formally integrating regenerative practices, such as cover cropping, conservation tillage, riparian buffers, and wetlands, would provide pathways to actively enhance soil health while reducing runoff and erosion.

5.26 Overall, all three proposals perform well under the soil and water SEA theme by supporting activities which contribute towards improved soil and water quality. Due to this, major positive significant effects are anticipated.

Cumulative effects

5.27 A range of positive cumulative effects across the SEA themes are anticipated as a result of the in-combination effects of Agricultural Tenancies proposals and other plans and strategies. In this respect, the proposals (and framework they sit within) complement and reinforce the objectives and actions of Scotland’s Environmental Strategy, Climate Change Plan, National Strategy for Economic Transformation, NPF4 and other key plans and strategies nationally. No significant negative cumulative effects are anticipated in terms of the implementation of the proposals.

Conclusion and recommendations

5.28 Three of the four SEA themes considered through the appraisal are considered likely to lead to major positive significant effects – these are biodiversity and geodiversity, climate change, and soil and water. The proposals support activities which maintain and enhance biodiversity, contribute to climate change mitigation and adaptation, and improve soil and water quality through enabling the facilitation of a range of regenerative activities including nature-based solutions. With respect to climate change, renewable energy use also plays a key role.

5.29 Uncertainty is noted with respect to the landscape and historic environment SEA theme because activities such as tree planting could alter landscapes that are historically characterised by arable and agricultural land uses. In addition, renewable energy uses have the potential to impact the special qualities of valued landscapes as well as negatively impact the setting of important heritage assets and historic areas. In light of this, it is recommended that the proposals clarify that activities, particularly non-agricultural activities, must give due consideration to the local landscape and historic context, with activities only being supported where they maintain or enhance local landscape character and/ or the setting and significance of the historic environment.

5.30 Furthermore, there are a number of actions the Scottish Government can take to alleviate this uncertainty and support and encourage agricultural tenants to undertake diversification on their land. For instance, detailed guidelines and case studies for both landowners and tenants can play a key role in demonstrating the landscape and heritage benefits that can be delivered through diversification and alleviate concerns about a changing baseline. These guidelines could profile land use options tenants could consider, for instance in terms of regenerative agricultural practices like cover cropping and riparian buffers. Guidance should include specific examples which provide advice on how the landscape features may differ to conventional approaches. This will help support clarity for tenants and landowners whilst helping to alleviate concerns. For example, cover cropping differs from the bare fallow fields of conventional agriculture by planting cereals, legumes and brassicas between crop cycles to protect soil. When strategically planted and terminated, cover crops increase organic matter, fix nitrogen, and break pest cycles. Additionally, riparian buffers establish vegetation strips along waterways rather than cropland directly adjacent to streams. The buffers filter agricultural runoff, stabilize banks, and create wildlife corridors. Showcasing these and similar practices through guidelines and highlighting the benefits can provide visual and peer reviewed evidence of how biodiversity, climate soil and water benefits can be delivered through multiple land management routes. This guidance could be delivered as part of the implementation of changes to Schedule 5 of the 1991 Act.

5.31 In addition, to address perceived uncertainties around the risks of moving to different land use practices, a piloting phase could be undertaken, focusing on demonstrator projects that provide a roadmap for agricultural tenants, how diversification can be achieved and evidence of successful implementation within a similar context. The demonstrator projects could be based on key themes relating to diversification options for instance:

• Nature enhancement and restoration
• Net zero technologies
• Eco tourism
• Regenerative agriculture

5.32 Monitoring at the landholding level will also be a key element to demonstrate to tenants and landowners alike how diversified land uses not only contribute to national biodiversity and climate targets, but also deliver productivity benefits. Monitoring can be a complex and detailed process but will be critical to ensure diversification away from traditional intensive agriculture is delivering on objectives. As such, the Scottish Government should endeavour to develop robust monitoring guidance to help landowners and tenants understand how to track habitat, soil, carbon sequestration, and other environmental improvements over time. Possibilities for monitoring could include aspects such as assessing soil organic matter content annually, monitoring species diversity and habitat surveys every three years, or undertaking soil analysis every five years to measure carbon sequestration rates and progress. From a wider landscape or national perspective, a complete biodiversity inventory mapping habitat connectivity every ten years could examine the full impact of the system.

5.33 Finally, given the cultural importance of the agriculture sector, tight margins and established practices, agricultural tenants should continually be encouraged and supported to deliver land use changes. Offering ongoing incentives could motivate adoption of diversification in line with climate and conservation goals and alleviate any perceived risk. Incentives could include initiatives such as tax reductions, cost-shares, low-interest loans and guidance and support to help landowners and tenants access environmental markets relating to biodiversity, carbon, soil and agriculture and other ecosystem services.