Agenda item

LNP Manager presents a suggestion for an innovative financial facility to unblock barriers to leveraging private money for nature recovery.

The Board is asked to provide feedback on the concept, consider alternative approaches to addressing the problem, and suggest ways to capitalise such a fund.

The Board considered a report which presented one potential method of operationalising the Oxfordshire Nature Finance Strategy by establishing a revolving fund for nature, or an Oxfordshire Nature Fund. The Board was asked to discuss the proposal and any alternative ways of addressing the issue, suggest potential third parties that might wish to be involved in the exploration of the concept, suggest potential third parties who might be willing to capitalise such a fund and to support the further exploration of the concept.

Matt Whitney, Local Nature Partnership Manager introduced the report and answered questions from the Board. He commented that following the endorsement of the Nature Finance Strategy by the Board and the Future Oxfordshire Partnership, an online launch of the strategy was planned as soon as the LNP’s website was ready and it would also be launched at the Oxfordshire Green Finance Conference scheduled for 11 January 2024.

The Strategy needed to be operationalised and the report referred to a number of supply side barriers to the delivery projects. The proposed Oxfordshire Nature Fund was a way to address these. This was in the wider context of increasing demand for such products from all sectors of the economy including private corporations and local authorities. A lack of supply of BNG units could lead to significant delays in housing delivery.

The proposal included the provision of loan or grant options to farmers and landowners who wished to explore entering the carbon credit and biodiversity credit markets to cover feasibility work including ecological baseline assessments to establish what they could provide which could then potentially be repaid when any final credit units were sold.

In discussion, members of the Board supported further exploration of the concept as set out within the report with a number of comments made.

·           There were potential risks and a need for caution around repayable finance when there was significant uncertainty around the actual size of the market and number of potential paying customers.

·           There were technical challenges around farmers generating revenue from carbon and biodiversity services which remained uncertain despite the number of entrants wishing to enter and offer products in the repayable finance space.

·           There was a need to support farmers and landowners to work together so that they could collectively bargain and navigate the market. Capacity to navigate and negotiate had been key factors for early entrants to the market to date.  The Board was informed that the need for the encouragement of collaboration by the LNP was fully recognised.

·           There was a need for collaboration and to avoid duplication within the space. Consideration of successful Landscape Recovery proposals to DEFRA and the green financing of Areas of Outstanding Natural Beauty could be useful in order to learn any transferable financing lessons.

·           It would be necessary for any fund scheme to set clear parameters and to not drift into too many other natural capital markets and initiatives.

·           ‘Patient lending’ could be a solution, but this underlined the importance of scale and coming together at a county level to the administrative challenge of supporting and managing the fund. 

·           It was important to be able to communicate the proposals in a way that was clear and understandable to all.

·           There were signs that following the recent modest decline in house prices that developers were beginning to raise more viability challenges.

Action: The Board supported the further exploration of the Oxfordshire Nature Fund concept as set out in the report.