Assessing the feasibility of carbon payments and Payments for Ecosystem Services to reduce livestock grazing pressure on saltmarshes

Saltmarshes provide important services including flood control, climate regulation, and provisioning services
when grazed by livestock for agriculture and conservation purposes. Grazing diminishes aboveground carbon,
creating a trade-off between these two services. Furthermore, saltmarshes are threatened by overgrazing. To
provide saltmarsh protection and ensure the continuing delivery of ecosystem services, there is a need to incentivise
land managers to stock environmentally sensible densities. We therefore investigated the possibility of
agri-environmental schemes and Payments for Ecosystem Services (PES) to compensate for lost livestock revenue
under reduced grazing regimes and provide carbon sequestration and other benefits. This is the first study to
consider the benefits arising from a potential carbon market to saltmarshes, although similar schemes exist for
peatland and woodland. We calculated the net economic benefit (costs of livestock production are removed from
revenue) to farmers obtained from a hectare of grazed saltmarsh under low (0.3 Livestock Units per hectare per
year), moderate (0.6), high (1.0) and very high (2.0) stocking densities accounting for livestock revenue, carbon
benefits, and agri-environmental subsidies. We repeated the procedure considering additional benefits transferred
from the literature in terms of provisioning, regulating and cultural ecosystem services provided by
protected saltmarshes. The net benefits were assessed for a range of market carbon prices and social costs of
carbon, e.g. the opportunity cost of carbon for society. Applying the model to Scottish saltmarshes we find that
the current range of market prices could prompt transitions from high to moderate regimes in areas where
livestock value is low, however break-even prices for transitions showed high spatial variability due to spatial
variability in livestock values. In some areas of the West Highlands, the break-even carbon price is negative,
indicating that the current agri-environmental schemes are able to more than compensate for the lost revenue
accruing to farmers by a reduced grazing density. However, in other areas, such as the Outer Hebrides, the breakeven
carbon price is positive. Private PES schemes or increased public subsidies should then be provided to
generate net benefits. It is reasonable to infer that a pure carbon market may have limited scope in incentivising
consumers to buy carbon services, especially in areas with limited local number of buyers and corporates of
small size. Under this circumstance, a premium carbon market offering bundled ecosystem services may help
reduce grazing pressure across a larger number of Scottish saltmarshes, thereby providing globally important
climate regulation services and at the same time protecting sensitive habitats.