Strategic Environmental Assessment (SEA) for the Small Landholdings and Land Use Tenancy Proposals Environmental Report

Non-Technical Summary

Overview of the Small Landholdings and Land Use Tenancy proposals

The Scottish Government’s Vision for Agriculture, published in March 2022, outlines its long-term vision to transform how farming and food production can be supported in Scotland to become a global leader in sustainable and regenerative agriculture. As outlined in the Agricultural Reform Route Map, the Scottish Government is committed to ensuring that tenant farmers, smallholders, crofters, new entrants and land managers are given equality of opportunity to allow them to play a key role in making the Vision for Agriculture a reality.

Small Landholdings proposals

The Programme for Government 2021- 2022 made the commitment to “begin to modernise small landholding legislation”. The Bute House agreement made the commitment to “explore providing small landholders with the same pre-emptive right to buy as crofters and 1991 Act tenant farmers, and the treatment of the land under their houses.”

These commitments have been informed by an extensive evidence gathering exercise. This originates from Section 124 of the Land Reform (Scotland) Act 2016 which specified that Scottish Minsters must undertake a review of legislation governing small landholdings including conducting a consultation with key stakeholders. This consultation occurred between October and November 2016.

Subsequent to this, small landholding proposals were consulted upon in the Small Landholdings Modernisation Consultation between October 2022 and January 2023, which set out proposals relating to primary legislation for the proposed Land Reform Bill 2023. The intention is to introduce legislation which mirrors the diversification framework available to other tenants of agricultural land to address issues around the declining numbers of small landholdings, stakeholder demand for small landholdings to develop in viable businesses and the lack of certainty in the current legislation.

This is in conjunction with the Programme for Government 2021-22’s commitment to “ensure tenant farmers and smallholders have the same access to climate change and mitigation measures” and the Bute House Agreement’s commitment to “continue to improve the rights of tenant farmers and small holders so they are not disadvantaged from actively participating in climate change mitigation and adaptation”.

Land Use Tenancy proposals

The aim of the Land Use Tenancy proposals are to provide a flexible form of land tenure tenancy which caters for integrated land management in a way that the current agricultural tenancies do not. It seeks to support a vibrant land tenure in Scotland, optimising Scotland’s land use. This is with a view to delivering a more hybrid land management approach in one tenancy which enables climate change issues and biodiversity loss to be addressed, whilst catering for a just transition. The Land Use Tenancy was consulted on in the Land Reform in a Net Zero Nation consultation 2022 between July and October 2022.

Further information on the Small Landholdings and Land Use Tenancy proposals and component parts are set out in the consultation document with which this Environmental Report accompanies.

Strategic Environmental Assessment of the Small Landholdings and Land Use Tenancy proposals

AECOM has been commissioned to undertake an independent Strategic Environmental Assessment (SEA) in support of the Small Landholdings and Land Use Tenancy proposals (“the proposals”) on behalf of The Scottish Government. SEA is a systematic process for evaluating the environmental consequences of proposed plans, strategies, or programmes to ensure environmental issues are fully integrated and addressed at the earliest appropriate stage of decision making, with a view to promoting sustainable development.

This Environmental Report, which is the main output of the SEA process, accompanies the Small Landholdings and Land Use Tenancy proposals for consultation between September and October 2023.

The key stages of the SEA for the Small Landholdings and Land Use Tenancy proposals are set out overleaf.

Issues/ themes scoped into the SEA

The SEA information in this Environmental Report has been presented through the following themes:

• Biodiversity and geodiversity
• Climate change
• Landscape and historic environment
• Soil and water quality

The selected SEA themes have been chosen with a view to effectively presenting the SEA information. These themes reflect the broader interlinkages (including with regards to the flows of ecosystem services) relating to the themes scoped in through the scoping process.

Preparing the Small Landholdings and Land Use Tenancy proposals

Stage 1 – SEA Scoping Report:

• Establish the context and baseline for the SEA
• Identify key sustainability issues for the Small Landholdings and Land Use Tenancy proposals
• Develop the SEA Framework

Stage 2:

• Develop and refine alternatives for elements of the Small Landholdings and Land Use Tenancy proposals
• Appraise the significant effects of these alternatives

Stage 3 – Environmental Report:

• Appraise the draft Small Landholdings and Land Use Tenancy proposals
• Prepare the SEA Environment Report for stakeholder engagement

Stage 4:

• Stakeholder engagement on the SEA Environmental Report

Stage 5 – SEA Statement:

• Update the Environment Report to reflect stakeholder comments
• Monitor the significant effects of the Small Landholdings and Land use Tenancy proposals
• Prepare the SEA Statement

Purpose of this Environmental Report

This Environmental Report accompanies the latest version of the Small Landholdings and Land Use Tenancy proposals and is the main output of the SEA process. Its purpose is to:

• Identify, describe, and evaluate the likely significant environmental effects of the proposals and alternative approaches; and
• Provide a perspective on the likely environmental performance of the proposals and key areas for monitoring during its implementation.

The Environmental Report is the third document to be produced as part of the SEA process for the Small Landholdings and Land Use Tenancy proposals. The first document was the Screening Report prepared in February 2023^[1], and the second was the Scoping Report prepared in February 2023^[2], which included information about the baseline and the ‘framework’ against which the proposals have been assessed.

Structure of this Environmental Report

In line with the provisions of the Environmental Assessment (Scotland) Act 2005, this Environmental Report presents:

• Chapter 3 presents an overview of the scoping process for the SEA (Stage 1).
• Chapter 4 presents an assessment of a number of alternative approaches relating to the broad principles underpinning the Small Landholding and Land Use Tenancy proposals. These have been assessed as reasonable alternatives (Stage 2).
• Chapter 5 presents an assessment of the current proposals, in terms of their likely significant environmental effects (Stage 3).
• Chapter 6 presents proposals for monitoring the significant environmental effects of the proposals, and opportunities for enhancements (linked to Stage 5).
• Chapter 7 subsequently sets out the next steps for the Small Landholdings and Land Use Tenancy proposals and accompanying SEA process.

Consultation on this Environmental Report alongside the Small Landholdings and Land Use Tenancy proposals comprises Stage 4.

Assessment of reasonable alternatives

As outlined above, Chapter 4 of the Environmental Report presents an assessment of ‘reasonable alternatives’, which is a key element of the SEA process to meet the requirements of the Environmental Assessment (Scotland) Act 2005.

In developing options to assess through the SEA process, the SEA team engaged plan-makers to understand where the focus of alternatives assessment should be. To aid in these discussions, a workshop was undertaken in June 2023 with plan-makers to discuss reasonable alternatives in the context of the proposals.

The purpose of this workshop was to discuss what options can be assessed as reasonable alternatives for the Small Landholdings and Land Use Tenancy proposals, in conjunction with the objectives, issues, challenges and opportunities associated with the proposals.

The options formulated through the workshop relate to key components of the proposals, and are set out below:

• Diversification:
  • Option D1: A limited approach whereby minimal changes are made to the current legislation relating to land use on small landholdings.
  • Option D2: Changes to legislation which would provide flexibility to allow for other types of land use management approaches beyond cultivation, including activities which mitigate climate change and enhance biodiversity.
• Right to buy:
  • Option RB1: Do not introduce a right to buy for small landholders.
  • Option RB2: Introduce a right to buy clause for small landholders.
• Land Use Tenancy:
  • Option LT1: Limited changes, whereby legislative changes are limited to the existing agricultural tenancy framework.
  • Option LT2: Voluntary creation of a Land Use Tenancy, allowing tenant and landlords to enter into a new tenancy agreement allowing for greater flexibility about how to manage their holdings. This is with a view to both parties being aware of and agreeing to their new responsibilities.

Chapter 4 of the Environmental Report presents details of the options assessed and the reasoning behind their choice as reasonable alternatives. This is accompanied by an assessment of the options against the SEA Framework developed during scoping. Infographics presenting summary appraisal findings for each set of options are also set out in Chapter 4 and reproduced overleaf.

Presented in relation to the four SEA topics, the infographics show the relative performance of each option against each other. A green ‘outer ring’ highlights the best performing option (ranking 1st), whilst a red ‘inner ring’ represents the option which performs less well (ranking 2nd). Where options are ranked equally, or it is not possible to differentiate between the options, an equals sign is used within both diagrams.

Assessment of options relating to diversification

Option D1 – Minimal changes to current legislation

Ranked 2^nd:

• Biodiversity and geodiversity
• Climate change
• Landscape and historic environment
• Soil and water quality

Option D2 – Changes to legislation which would provide flexibility to allow for other types of land use management approaches beyond cultivation, including activities which mitigate climate change and enhance biodiversity

Ranked 1^st:

• Biodiversity and geodiversity
• Climate change
• Landscape and historic environment
• Soil and water quality

Assessment of options relating to right to buy

Option RB1 – Do not introduce a right to buy for small landholders

Ranked 2^nd:

• Biodiversity and geodiversity
• Climate change
• Soil and water quality

Option RB2 – Introduce a right to buy clause for small landholders

Ranked 1^st:

• Biodiversity and geodiversity
• Climate change
• Soil and water quality

Assessment of options relating to Land Use Tenancy

Option LT1 – Limited changes to the existing tenancy framework

Ranked 2^nd:

• Biodiversity and geodiversity
• Climate change
• Landscape and historic environment
• Soil and water quality

Option LT2 – Voluntary creation of a Land Use Tenancy

Ranked 1^st:

• Biodiversity and geodiversity
• Climate change
• Landscape and historic environment
• Soil and water quality

Assessment of proposals

Chapter 5 of the Environmental Report presents the assessment findings and recommendations in relation to the current Small Landholdings and Land Use Tenancy proposals.

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

• Diversification (non-cultivated activities) – The aim of this proposal is to allow small landholders greater opportunity to diversify their business. Currently, small landholdings may only be used for cultivated purposes. This proposals seek to remove the barriers that landholders face when undertaking non-cultivated activities, with a view to supporting integrated land management.
• Right to Buy – This proposal aims to ensure that small landholders and landlords have a fair right to buy opportunity, including a right to buy their holding in the same way as crofters and tenant farmers.
• Land Use Tenancy – This proposal aims to provide a flexible form of land tenure tenancy which caters for integrated land management in a way that the current agricultural tenancies do not.

The key significant effects and uncertainties identified through the assessment are summarised in the figure overleaf.

Cumulative effects

A range of positive cumulative effects across the SEA themes are anticipated as a result of the in-combination effects of Small Landholdings and Land Use Tenancy 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 negative cumulative effects are anticipated in terms of the implementation of the proposals.

Key significant effects and uncertainties

Biodiversity and geodiversity:

• The small landholdings proposals will help address biodiversity loss and support nature restoration by allowing and encouraging small landholders to pursue non-agricultural activities such as tree planting, habitat and peatland restoration, and other nature-based solutions. This will be supported by the Land Use Tenancy proposals, which will introduce greater flexibility in the way land can be used, including a greater focus on activities contributing towards biodiversity recovery and nature restoration.

Climate change:

• The small landholdings proposals contribute to climate change mitigation by encouraging small landholders 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 will be supported by the Land Use Tenancy proposal, which introduces greater flexibility in the way land can be used, including a greater focus on activities contributing towards the transition to net zero.
• The small landholdings proposals will facilitate and encourage activities which will contribute to climate change adaptation, such as wetland and floodplain restoration, by increasing the resilience of agricultural land to the impacts of extreme weather events such as floods and droughts. This will be supported by the Land Use Tenancy proposal, which introduces greater flexibility in the way land can be used, including a greater focus on activities contributing to climate adaptation.

Landscape and historic environment:

• Through facilitating and encouraging non-agricultural activities such as tree planting and habitat restoration, the proposals have the potential to reinforce and enhance landscape character and enhance the special qualities of landscapes.
• There are however, some uncertainties relating to the impact of the proposals on landscape character and the fabric and setting of the historic environment. In this respect, activities such as tree planting could alter landscapes that are historically characterised by arable and agricultural land use, and inappropriate planting could lead to impacts on archaeological assets. In addition, renewable energy provision supported by the proposals has 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:

• The proposals will maintain and enhance soil and water quality and availability by encouraging regenerative agricultural techniques which support regulating and provisioning ecosystem services.

All SEA Themes:

• Enhancement of the role of small landholders in environmental conservation and restoration activities.

Conclusions and recommendations

Three of the four SEA themes considered through the assessment 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. Nevertheless, it is recognised that the Right to Buy Proposal does not guarantee positive outcomes.

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.

Furthermore, there are a number of actions the Scottish Government can take to alleviate this uncertainty and support and encourage small landholders and tenants to undertake diversification on their land. For instance, detailed guidelines and case studies for small landholders 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 landholders 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 small landholders 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 the Land Use Tenancy.

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

Monitoring at the landholding level will also be a key element to demonstrate 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 small landholders 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.

Finally, given the cultural importance of the agriculture sector, tight margins and established practices, small landholders and 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 small landholders and tenants access environmental markets relating to biodiversity, carbon, soil and agriculture and other ecosystem services.

Proposed SEA monitoring programme

Schedule 2 of the Environmental Assessment (Scotland) Act highlights that the Environmental Report should include “a description of the measures envisaged concerning monitoring.” In response to this, Chapter 6 of this Environmental Report presents a proposed draft monitoring programme for measuring the proposals’ implementation. It draws on the identified potential significant effects identified through the assessment of the various components of the proposals, and also suggests where monitoring is required to help ensure that the potential benefits of the proposals are effectively achieved through implementation. This will enable appropriate interventions to be undertaken if monitoring highlights negative or underperforming trends relating to the proposals’ implementation.

Next steps

This Environmental Report is being consulted on alongside the wider consultation on the SEA for the Agricultural Tenancies and Small Landholdings & Land Use Tenancies.

Following the completion of the consultation period in October, comments will be reviewed and analysed. The final proposals will then be developed prior to Royal Assent. Any changes arising to the proposals will need to be assessed as part of the SEA process.

Part 3 of the Environmental Assessment (Scotland) Act 2005 requires that a ‘statement’ be made available to accompany the proposals, as soon as possible after their adoption. The purpose of the SEA Adoption Statement is to outline how the SEA process has influenced and informed the proposals’ development process and demonstrate how consultation on the SEA has been taken into account.

To meet these requirements, an SEA Adoption Statement will be published with the adopted proposals. The SEA Adoption Statement will set out: the reasons for choosing the preferred proposals in light of other reasonable alternatives; how environmental considerations were integrated into the proposals’ development process; how consultation responses were taken into account; and the measures decided for monitoring the significant effects of the proposals.