A new environmental market for nature-based solutions in Somerset has today achieved a key milestone with the announcement of the results of the first market round.

The Somerset Catchment Market is a transparent, fair, and efficient way to incentivise farmers to deliver new wetlands, cover crops and arable reversion projects that will reduce nutrient pollution.

The accredited phosphorus mitigation delivered by these Projects can be purchased by developers to meet their nutrient neutrality obligations.

In a market statement issued today, the market operator EnTrade confirmed that it had matched bids from developers with offers from farmers to supply nature-based projects that will generate sufficient on-going phosphorus mitigation to unlock over 200 new dwellings in Somerset.

Development unlocked by the market will include individual homes, small to medium housing developments, and multi-occupancy buildings such as care homes.  

The market supplied a total of 11.27 kg per annum of phosphorus mitigation for an average payment of approximately £50,000 per kilogram.

The market delivered a combination of on-going nutrient mitigation from wetlands and short-term mitigation from planting cover crops and arable reversion which will help create a mixed farmed landscape for wildlife.

Farmers who were successful in this market round will receive close to £740k for the use of their land, project establishment and maintenance over at least the next 80 years.  Funding for monitoring and compliance was also provided totalling approximately 7% of the amount paid to the farmers.

Guy Thompson, managing director of EnTrade said:

 “This outcome is the result of more than three years of hard work and collaboration to design a robust market that demonstrates the value of investment in nature.”

 A market settlement report was released today to provide transparency in how the market round operated.  The report provides an overview of the successful and unsuccessful offers and bids that were made.

David Young, Senior Fellow at the Broadway Initiative, and lead architect of the market said:

“The success of the first round of the Somerset Catchment Market shows what can be achieved when a market is built on the best available science, applies leading edge economics, and delivers the certainty required by regulators.”

 A key feature of the market is how the surplus from the market is shared. Instead of providing windfall gains to third parties, the market mechanism designed by Dr Luke Lindsay at the University of Exeter, returns any surplus to the buyers and suppliers.

Professor Brett Day, Professor of environmental economics at the University of Exeter said:

“The Lindsay Mechanism finds the most efficient combination bids and offers to maximise the overall surplus in the market round.  This surplus is then divided between successful buyers and suppliers in proportion to their contribution to the surplus.”

Mr Thompson added:

“We need to pay a fair price for nature.  We hope that the payments made for integrating nature recovery with agriculture will encourage more farmers to consider making offers in future market rounds”.

Oversight of the Somerset Catchment Market is provided by an Environmental Markets Board that ensures the markets deliver genuine, lasting, and additional environmental improvements, which are robustly verified and transparently documented.

Farmers are expected to commence establishing their nature-based projects within weeks.

A second market round is planned for Autumn 2023.

Amy Coulthard, operations director at EnTrade said:

“We are very keen to hear from Somerset farmers and landowners who are interested in earning money from creating new woodlands, wetlands and grasslands on their land and contributing to nutrient reduction in the catchment.”