Incomes & credit
FINANCIAL INCENTIVES
There are a variety of business models that may support the farmer or landowner in the transition process towards rewetting drained peatland, restoring peatland or maintaining their natural functioning. While there are crops or commodities that can be produced on peatlands (e.g. paludicrops, livestock products, biomass), the management of peatlands and the income they generate may not allow sustainable practices to be implemented in accordance with the aim of profitability.
Therefore, farmers and landowners may want to tap into additional financial arrangements linked to rewetting or restoring peatlands by capitalising on the environmental services (e.g. related to carbon sequestration, water protection/flood control, biodiversity gains etc.) generated by their practices. These can come in the form of payments for ecosystem services (PES), which are based on the results of a certain type of management, Carbon credits, e.g. paid for every ton of carbon that is sequestered by the rewetted peatland, and/or Blue credits based on the capacity for water purification, storage, and retention.
If only the incomes generated by crops and commodities are considered in a business model, conventional farming provides the highest income (Figure 1). If we include PES and carbon & blue credits however, it becomes clear that paludiculture becomes much more profitable and even outvalues conventional agricultural practices (Figure 1). This highlights the importance for development of more complete PES schemes and carbon & blue credits.
Figure 1: Monetary value of ecosystem services for different land use options (Liu et al., 2023).
Carbon and blue credits for REWETTED peatlands
A Carbon credit is a unit of measurement that represents the removal of one ton of carbon dioxide equivalent (tCO2eq) from the atmosphere (see https://www.goldstandard.org/resources/faqs). Buying such credits enables a buyer to offset [1] their greenhouse gas (GHG) emissions [2], while enabling a seller to finance the changes needed to reduce GHG emissions.
The voluntary carbon market functions outside but in parallel with the compliance (i.e. mandatory) market. It operates not because of government obligations but because of Corporate Social Responsibility (CSR) and/or as a response to market pressure and public opinion.
Therefore, in the voluntary market, the trading of Carbon Credits is not related to an allowance to emit but more to a voluntary action to support and promote a project which reduces global emissions. The voluntary trading schemes ultimately depend on parties (private or public) that want to reduce their carbon footprint, even though they are not required to. Such parties may want to reduce their net carbon emission by paying others to take carbon out of the air. The amount of carbon emissions saved is again measured as Carbon Credits. Find out more
Payments for EcoSystem Services (PES)
Payments for Ecosystem Services (PES) in agriculture compensate farmers for actions that contribute to the restoration or functioning of ecosystems, which society benefits from (e.g. preservation of water quality, carbon storage, air purification and biodiversity). These benefits are called "Ecosystem Services". Farmers' actions are called environmental services.
PES are therefore economic measures aimed at restoring or maintaining a system of economic signals that steers farmers towards more virtuous behaviour from an environmental point of view. PES involve on the one hand funders, in principle direct beneficiaries of benefits such as companies, individuals, sometimes represented by associations or public actors, and the suppliers of services (e.g. farmers, landowners). Suppliers of an environmental service receive a payment in return for this service conditional on the achievement of service delivery.
Learn more about examples for results-based payments here
applications & business models
Products derived from rewetted peatlands can be have a wide array of application. For more information click below.
[1] Carbon offset: A reduction in emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere. Offsets are measured in tonnes of carbon dioxide-equivalent (CO2eq).
[2] Greenhouse gasses are all gases that contribute to the greenhouse effect of the earth or global warming. Well known GHG gasses emitted by human activities are CO2, CH4 and N2O.
Testimonies of farmers
Restoring peatlands: an Irish farmer's account of the difficulties of re-flooding degraded peatlands.
A sheep farmer from County Galway describes the difficulties he faces in restoring degraded bogs on his farm. The transition to a peatland-friendly business model needs to be accompanied by financial incentives for farmers to implement it.
Restoring peatlands: an Irish farmer's story of receiving financial incentives to re-flood his drained plots.
A sheep farmer in County Donegal participating in the Pearl Mussel Programme testifies to the success of re-flooding his peatlands thanks to the financial incentive scheme he received.