The UK Government’s 25-Year Environmental Plan highlights the importance of sustainable agriculture in addressing environmental challenges and restoring ecosystems. Yet, the transition to sustainable farming practices is often hindered by financial constraints, as these methods can generate less income for farmers, particularly in the first few years. Combining public funding schemes, like the Sustainable Farming Incentives (SFI), with private funding mechanisms, such as the Woodland Carbon Code (WCC), could provide a solution. However, the uptake of these combined mechanisms remains low.

As part of my masters thesis and with support from Surrey Wildlife Trust (SWT), I explored these challenges. SWT, known for their work on nature-based solutions, collaborate with farmers to support ecosystem services through land management, supported by government grants and voluntary natural capital markets. My research aimed to identify the barriers to combining funding schemes and provide actionable insights to help overcome them.

To begin, I conducted an economic analysis on a case study farm in Surrey, that SWT put me in touch with. This analysis calculated the Net Present Value of the farm business under different funding scenarios, allowing me to outline the financial feasibility of integrating SFI and WCC. The specific SFI schemes used in the analysis were recommendations of the SWT. While combining SFI and WCC proved profitable in the case study farm, I found this might not be the case for all farms, underscoring the variability of financial outcomes.

I built on these results by interviewing a range of farmers and agricultural consultants to get a broader understanding of the barriers to combining public and private funding mechanisms. These included:

• Profitability challenges: For many farms, especially smaller ones, the financial returns of combining SFI and WCC may not justify the effort.
• Scepticism towards carbon markets: Farmers expressed uncertainty about the reliability of voluntary carbon markets, which hindered their willingness to participate.
• Administrative complexity: The bureaucracy involved in navigating and applying for multiple funding schemes was a significant deterrent.
• Site-specificity requiring expert advice: Farms generally require tailored advice to implement combined funding mechanisms effectively, often necessitating expert support incurring extra cost.

Combining public and private funding mechanisms in agriculture is crucial to farm businesses accessing the additional cashflows needed to transition to more sustainable systems. This is particularly vital for farms reliant on direct payments that are at risk of business failure if they do not find additional funding streams. Therefore, it is essential to overcome these barriers, so that sustainable agricultural practices can become more widespread.

I hope this research can support SWT’s Nature-Based Solutions team in helping farmers navigate these challenges and integrate sustainable practices into their operations. By bridging the gap between public subsidies and private markets, hopefully sustainable agriculture can become more accessible and mainstream in the UK.