Ymgyllewid i Gaelad Dynion I yn ei hwyn i gaelad hyn o'r rhaglennigau i gaeladau i gaeladau i gyflwng i gaeladau i FFINANCE ac i gaeladau i gaeladau i gaeladau i gaeladau i Gaeladau i I'm delighted to welcome our first witness, Sir Dieter Helm, Professor of Economic Policy at Oxford University. We very much appreciate you finding time in your busy schedule to join us this morning, and we will have until 10.30 for this session. Good morning, Professor Helm. I'm going to kick off with the first question. We've referred your views on natural capital before, but can you lay out exactly what is meant by natural capital and public goods, and how natural assets can be probably accounted for and embedded into our economies? The natural capital, in this case of Scotland, is the assets that nature bequeaths for free and will go on bequeathing for free, or not just the next generation, but for all generations to come. That distinguishes it from normal industry capital and also from human capital. These assets, as I say, are in perpetuity, so they have a special value, an open-ended value, which extends into the distant or far distant future. The objective in environmental terms is to ensure that this set of assets are maintained so that this generation and future generations have the same opportunity to exploit them. Some of those assets are non-renewable, oil and gas. The North Sea is a classic example. If one generation uses it, some compensation is needed for future generations, so they benefit from that natural bequeathment forever. However, the really important ones are the renewable natural capital and Scotland has abundant such assets. Public goods is an issue within this frame. A public good is not something that is just in the public interest, but a good that has a particular set of characteristics. It is non-excludable. If you benefit from it, so do I, or so can I. I cannot stop you enjoying it and you cannot stop me enjoying it. That is the exclusability bit and the rivalness bit. That is distinguished in normal market goods, which are excludable. If I go to the supermarket and buy something and eat it, you cannot, and they are always excludable, the supermarket can sell it to me and not to someone else. Those are simple distinctions, but they make a great deal of difference in thinking about what governments should do and what it is that private markets could do if they were appropriately regulated and organised. I want to add something that has been very clear over the past few weeks about the damage that has been done by the storms. We have had thousands of hectares of trees flattened, and some argue that those trees have been planted in the wrong place. They have been planted in good farmland or whatever. How do you suggest that we should properly account for natural capital when, potentially at the moment, we are seeing a bit of a land grab where big commercial companies to do a bit of greenwashing are buying land, some which is of very high value in terms of agricultural production and planting trees. Do we need to rapidly have a baseline and re-look at how we classify land to ensure that some of our best agricultural land is not turned into forestry? Is that part of what we need to do to assess our natural capital? If I were Scottish, I would be worrying very greatly about what is going on in the land market in Scotland at the moment, and I would be worrying very much about the narrow silo approach to Scotland's natural environment, which comes from an exclusive focus on carbon. Of course, I am deeply concerned about carbon, and carbon matters are a great deal, and the opportunities to secretrate carbon in Scotland are potentially enormous. However, almost every secretration of planting trees, for example, has impacts on other natural capitals at the same time, and land has competing uses. If we put all the eggs in the carbon basket and ignore the other natural capitals, we will end up planting the wrong trees in the wrong places and do natural capitals, potentially a lot of damage. There are competing uses between food production, biocrops, tree planting, etc. There always have been, and the way to sort these things out is to make sure that these markets all work on a level playing field. If you look at the land use in the UK as a whole, Scotland too, we have an enormously distorted agricultural sector, what I call the crazy economics of farming, which does not lead to farmers doing the right things in the right place. It leads to them doing the things that they are incentivised under the cap and the post cap to do, and that also is part and parcel of this mix. It is a hard ask, but we have to get the carbon bit right, the agricultural bit right, the biodiversity bit right and the water bit right. I understand why people say, well, that sounds all very complicated. Yes, but if you do not take into account all the natural capitals at the same time in making decisions, you could end up with some disastrous results. We call that once it was thought that Scotland was a very good place to plant very large numbers of coniferous forests for timber. There was a deep and significant market in timber and timber was needed, but if you focus just on timber and nothing else, as has been done for quite a lot of the 20th century, you end up with some of the extremely inappropriate types of trees planted in some of the wrong places with quite a lot of environmental damage. There is no way round the fact that you have to look at each and all of the dimensions of land use and not just look in one silo. Otherwise, you will end up with a land grab. I am not close to developing Scotland, but the tendency for financial institutions to simply buy big blocks of land to sell on those offsets might be quite sensible, but that seems to me to be a very dangerous possibility. What may well happen is that it will be a ffator complete, so it will be done before anyone thinks about the consequences and then you will be stuck with the land ownership that then results and have to be thinking about retrospective regulation. I would urge you to intervene now to think about what land ownership and land use should be in this carbon world before, as I say, it is a ffator complete. That is interesting, because my next point was, has the horse bolted because we have already got target set for tree planting, we have got target set for peatland and we are racing down that road. We have already looked at some of our routes to reaching net zero by 2045 based on trees, and generally that is going to be Sitka Spruce. Do you think that it is still possible to put the brakes on and do the work that you are talking about to ensure that we do get the right outcomes and that we do not have Sitka Spruce planted on agricultural land that would be better put to other use? What methods should we employ or how can we get government to slow down a bit and look at the long-term implications rather than grab the low-hanging fruit? I do not have the privilege of being a politician and being elected to make these kinds of decisions, but all I can say from the outside is that it is pretty crude to say that you want to plant a number of trees by a certain date without any regard to where, what sort of trees and some of the ancillary components of that. Now that does not mean that it is not a good case for planting a lot of trees, but again the right trees in the right place. What I would urge would be that you start with a baseline of what you have got and you shine the torch on how the proposals for people to do things change the ecosystems of Scotland and the natural capitals of Scotland, so at least what is going on can be seen. Of course there is an element of experiment in this, but from the outside the idea that all the emphasis or most of the emphasis should be on planting these spruces, assuming of course that the new disease does not wipe them out, is another issue about robustness in woodland planting when you choose a single species approach, but to look at that and see how that matches up against other alternative and dare I say cheaper ways of sequestrating carbon, because when you look at the economics of a carbon offset from growing trees and think about the time horizon involved, it is not obvious that this is the most straightforward way and you in Scotland have on a global scale peat of phenomenal interest and value in the carbon world and the biodiversity world, and my guess is that the carbon gains and the biodiversity gains and the water gains from addressing the peat as the priority would be greater than simply assuaging companies who can't or won't reduce their emissions by giving them an offset by planting another spruce plantation, but these calculations require that these considerations are a corner, a sound and careful shining of the torch on what's going on and hypothesising dare I say different possibilities for Scotland's future landscape and land use and if it's just allowed to happen and then we'll see what happens and then once it's happened we'll work out whether it's a good idea, well have a look at your timber annual spruce plantations at the moment and have a look at what Fraser Darling called the brown wet desert of lots of Scotland and you'll realise that waiting and seeing and finding out what might be the consequence is not a very sound environmental policy. Thank you for that. I've got a brief supplementary from Ariane before I move on to questions from Alasdair Allan. I'm just going to go a little bit in on the tree piece because I'm really curious, I really like what you're saying about stand back and take a look at what's really the priority, but I'm also on a committee that has housing in the name and I'm really curious about creating a future Scotland where we could actually build our housing from the timber that's grown here and I know at the moment that's not possible because we can't, the tree quality's not good enough and we have to do things like cross laminated timber, but so I just want to see where you what you think about that that you know can we be thinking about planting trees for those future generations just like they've done in you know Salisbury Cathedral when it was built they planted the trees for the beams of that cathedral to be replaced hundreds of years later can we be thinking along those lines with trees so I think there are two these two dimensions from the housing consideration the first is that if you are planting trees it's a good idea particularly if they are quote the right kind of trees to plant them right next to people not next to power lines and you want power companies to actually trim the trees to make sure that they don't actually fall on the wires so people can then have some resilience against storms etc but the point about natural capital is natural capital is for us now I often say nature doesn't care we care about nature and if you want the mental and physical health benefits and the air quality benefits that come from trees to accrue with a maximum advantage put them next to people green cities green belts around them if you put trees in remote places there'll be probably no physical and mental benefits because nobody will go there and so there's an issue a really profound issue which has come up I think in in clarity during the lockdowns that trees have a function in the built environment which is very important now a second point you make is about what happens to the trees at end of life and how can they substitute for amazingly carbon intensive stuff like steel and concrete and for all the talk about greening steel and greening concrete you know spend a couple of minutes looking at the economics of what that would cost and then think of the amount of embedded carbon that's going into the building construction right through the united kingdom these are really big tickets now okay so if you think about this world of buildings thinking of low carbon alternatives to steel and concrete is incredibly important this comes back to what happens to the trees at the end of life you know the lots of people go around and think we grow some trees we have some biocrops and then we'll burn them at the end and it's carbon neutral well it's not carbon neutral and burning at the end is putting carbon back whereas the whole into the atmosphere whereas the whole point of sequestration is to bury it just like the oil and gas and coal was buried from hundreds of millions of years ago so using timber in buildings is a really attractive option it seals up that carbon the alternatives let the trees rot on the ground and let the nature take some of the carbon back into the soils because you'll lose quite a lot in the process but you get a huge amount of biodiversity benefits by dead timber lying around but just be careful in this territory because if you plant a tree today we're talking about locking it up into timber in a quarter of a century's time or more and particularly if you're planting at some of the more biodiversity rich trees even further out those oak trees you were referring to in the example and southbury cathedral we're going to take a hundred years or more to reach an outcome now any private discount rate of three four five percent the value today of something in a hundred years time in conventional accounting and business terms is approximately zero whereas you want the house built tomorrow morning and if you want the house built tomorrow morning cement and steel are available so yes this is a route yes this is a long term sustainable option yes anyone planting timber and buying offsets should explain what's going to happen at the end of life to the trees but the scale of the opportunity is somewhat limited but on the other hand if it's imported timber it's still locking up carbon it's just not in your territorial account so from a global warming point of view great to use imported timber if you don't have any domestically and also think about the kinds of buildings but lots of people are putting up additional buildings in their gardens etc to benefit from work from home all sorts of other alternatives putting up timber frame buildings in those contexts is really a quick win as opposed to the longer term win which is big construction factories and so on from timber which is of course perfectly doable but it's further out in the horizon so yes we should look very hard at the building sector and its use of timber and yes we should look extremely hard at what people propose to do with the trees they're selling offsets for at the end of life. Thank you. I have a lot of sympathy with what you're saying about Sitka spruce and monocultures but I wonder if you could offer any views on where or how government should juggle these competing imperatives about for all the right reasons wanting to plant more trees but the dangers of only planting trees that can deliver in the short term. How would you advise juggling those two competing things? Well I mentioned Sitka spruce so they have a particular role but of course if you really wanted to secret right carbon quickly you might as well plant a lot of Scotland with eucalyptus trees they grow really quickly and they secret straight carbon really fast I'm told. My point is very simple nobody in their right minds thinks that you should have an open-ended position plant anything you like as long as the numbers add up to the total in the you know government's target for tree planting and irrespective of the location. In Scotland you have a long experience of the debates about the flow country. Think what a carbon disaster it would have been to allow that lot to be covered in fast growing timber. Think the damage to the peak and what all this tells you is you have to have a land use plan. You can't simply leave private landowners to decide where they're going to plant these big plantations. You have to think don't plant them on peat is a very simple and straightforward mantra. Actually there might be some circumstances where you might but allowing landowners to decide the plant tree is on peat is not exactly consistent with addressing the urgency of the climate change problem and the carbon problem. In fact it will make emissions worse and you would know this in Scotland if you not only moved away from a territorial carbon production basis for measuring your carbon emissions but if you actually measured really very carefully what the emissions from that peat and those soils and that land actually are in Scotland. It's easy enough to measure the carbon coming out of a power station. It's a lot harder to measure the carbon coming out of a field when someone plows it up and it's a lot harder to measure the exact carbon emissions from a peat bog but you should use I think a precautionary principle about peat in particular but soils more generally too and you should apply that. I say you should you're the politician I'm only someone outside giving advice but you should think really hard about having urgently some land use planning within which a tree planting is set. You mentioned the land ownership and you'll be aware that land ownership has been a continuing matter of debate in Scotland for the last couple of centuries or the pattern of land ownership I should say. There are examples now in some parts of Scotland of I should say very well intentioned and benign individuals coming in and buying very very large amounts of land with their own ideas sometimes about what is good for the environment. Do you think that that pattern of land ownership is entirely helpful to trying to achieve the kind of outcomes that you're talking about and where the communities fit in to that debate when sometimes they have little say over what a land owner might do? Very sensitive to how important land ownership is in Scotland as a deep political, social and economic issue and there are two ways of thinking about this in this environmental context. The first is to say well you know anyone can own anything and we don't mind if a small number of individuals own most of Scotland but we say you might own it but you don't control it. In other words you can't do what you like on your land we have rules and regulations of land use planning which dictates what can be done here and what can be done there and that's you know what we do in planning normally you can't just build a house where you choose you have to get planning permission and that's widely accepted people may get aggrieved about particular planning decisions but I don't think anybody seriously thinks that we should allow a free-for-all for people to build wherever they like but we seem to think that you can have a free-for-all do what you like to the natural capital assets which are not just bequeath to the current citizens of Scotland but to all future generations of citizens so my starting point is if you're not prepared or you don't think or there are arguments against interfering on who can own what you should at least separate the control of what they do with the land from the ownership of the land and I'm aware of huge controversies in Scotland but also in England about what you can do whether you can hunt on your own land is at least in England the legal matter and so on and remember too that we shape the incentives of landowners by the crazy economics of the subsidies of agriculture and that I think is something which any government should be looking at extremely carefully about its environmental consequences but I would go slightly further you know I don't know any country in the world that doesn't have concern about foreign ownership of very very large tracks of land it's been an issue in England since nuts into the norman conquest about who can own what and where and when people propose very large scale change of land use over very large areas it would be amazing if there weren't social cultural and environmental consequences which go beyond the interests of the particular land and I'm sure they understand that and the fashion in Scotland for massive large scale rewind rewilding projects fits into this frame and you have to be very careful about rewilding rewilding is a conservation technique there is no such thing as the wild and there is no such thing as a universal idea that if you just abandon the land somehow that will be best for nature I'm afraid there isn't any part of this planet which man has not interfered with Scotland is a very managed landscape contrary to I think how quite a lot of people see it and that brown wet desert of Scotland was created by deliberate acts of choice about how farming, sheep farming and so on and clearances and so on would operate the deer population is a choice and rewilding projects which may in particular circumstances be the best conservation strategy nevertheless require huge amounts of intervention rewilding does not involve going around shifting deer good conservation does in certain circumstances and I think we should be very careful about sorting out what is in the private interests of people who own very large amounts of land and what's in the public interest whether you choose to do that by land reform in the deep sense that Scotland has in the past tried to address this issue or whether you do it by inserting what the public interest is and therefore by having an element of control over how land is used that's historically how it's been done and what I'm urging particularly in regards to the discussion about planting forest versus peatland just as an example is that that isn't something that can be left purely to private owners to decide what happens thank you we're now going to move on to the theme of public funding and ask garrion for our question thank you convener I've got a couple of questions and I really appreciate your responses earlier I'd appreciate hearing from you about the role that public funding can play in addressing the climate and nature emergencies including whether it's more effective when it stipulates what must be done or when it stipulates what outcomes must be achieved okay let me address the the first part of that question and then we might come to outputs etc so if you want to work out how to achieve a net zero target in Scotland by a particular date and if you want to achieve certain targets and respect to biodiversity etc the first thing to do is to stop doing perverse things okay so what what the first step is before you go any public money coming into the frame look at the private incentives to establish the baseline to which public money and public funds should be an addition to get stuff done and that's particularly in the public goods dimension so if you look at the carbon position in Scotland first of all it's a territorial carbon production target so if you achieve it you will not stop causing climate change and I tried to point that out when I was involved in the advisory work on the recovery in Scotland you know you can close down Grangemouth you can close down all the rest of any of energy intensive activities in in Scotland import the stuff instead and your carbon territory production will go down and I think that most people are certainly in England would say that what they want to do in achieving net zero is to ensure that they no longer cause climate change but only do that on a carbon production basis and if you distort the market so that there's a pressure on decarbonisation in Scotland but not on importers what you're doing is giving a pollution subsidy to people who export to Scotland and this is nonsense and it's not going to help against climate change but you know if you really want to get towards your targets as fast as possible go around and close down those businesses close down Grangemouth and import all those petrochemicals instead that'll make quite a big dent and do it really quickly and it'll be terrible for climate change not to say that you wouldn't want to do things about emissions from Grangemouth but that's a separate issue so first of all sort out what it is you're actually trying to achieve and Scotland has an opportunity here even within the overarching framework of at least publishing really clear carbon consumption accounts so that people can see where these substitutions being made now when we move on from that if you look across Scotland at the sectors that can contribute to the reduction of carbon think agriculture think heating think transport oh and think electricity and energy production too so within that space agriculture is a really big ticket story in the total territorial emissions properly measured in Scotland and of course on carbon consumption agriculture covers much of the land of Scotland and of course as I've said a lot of it remains as Alasda has phrased darling described it as a wet brown desert but peat is in particularly important but there are lots of other dimensions to management for the soils and so on and so forth so you want to sort those things out that the theoretical right answer is to have appropriate price of carbon and apply it to all the sectors I understand why people don't want to do that but subsidising agriculture to pollute while taxing the energy sector to reduce emissions is a fairly crazy policy but it's almost ubiquitous across most of Europe and indeed especially in the United States so you need to sort out this baseline now once you've done that you have to work out what the missing bits are that you would do on top rather than trying to compensate for the damage that the wrong policies are doing to encourage people to have more emissions than they need to have for an efficient Scottish economy and here is the public goods and in my mind the core to those are what I regard as the infrastructures and they are the physical infrastructures transport system the energy transmission distribution systems the water systems and especially the fibre networks those have very important public system characteristics and it's very important that policy shapes those being put in place we can make the taxpayer pay or you can make the customer pay but these are systems for everybody not marginal additional discrete added bits and then there's the natural infrastructure the natural systems the natural capital assets which we've been talking about so far and those are primary targets for thinking about public funding especially biodiversity because biodiversity is very very hard to turn into anything other than public and there are additional problems about how to measure it what it means what its component parts are but a policy that protects and enhances biodiversity is usually a policy that protects and enhances natural system but even in things like pete there's no reason why a carbon price would not be an appropriate way of adding some funds to the frame within which this stuff can be addressed thank you very comprehensive i have to say i'm very glad that it's being recorded because i'm going to watch that bit again to absorb it all i was intrigued by your proposal that public budgets could be set for river catchment areas and interested parties could bid for a portion of the budget to provide environmental outcomes i might be interested to hear if you have other ideas for innovative approaches to distributing funding and how you believe these would result in achieving greater environmental outcomes okay so let's let's take the documents okay so i'm a some people got a hopeless pragmatist in these things i want to be roughly right rather than where you are at the moment which is pretty much precisely wrong okay so i want to think about how public money might be used and i want to think about the frame within which that's set and i want to think about that in terms of the natural infrastructures of the economy the ecosystem and certainly south of the border and and please always bear in mind that my experience is more south of the border than north one way of carving up a land mass like the united kingdom is by river catchments and the reason for that is to do with geology and geography and you have some phenomenal river catchments in scotland thinking about the Tay the Spay etc now river catchments involve water abstraction we water um as part and parcel of our basic needs they involve our floods and flood defence they involve a great deal of integrated nature they are corridors and there are multiple parties at play so if you take any catchment there's forestry and forestry interests there are water companies there are flood defence organisations there are nature organizations interested in the biodiversity there are tourist organizations there are whiskey distillery organizations using the water and what really worried me south of the border is we designed a system for our river catchments in which the water companies are responsible for water and sewage but nothing else we have flood defence through the environment agency responsible flood defence but not the provision of water we have farmers completely independent of those activities and responsible for a great deal south of the border the pollution going to those rivers and then we have all sorts of local authorities and others interested in access and the use of nature and so on so i had in mind that you would take the system and have a system regulation or system operator for it in the same way we have for the national grid that's a system and we have a system operator function for that and by the way you should have them for your regional electricity companies as well that would lead to a lot better planning than the situation that at least in the south east of scotland you've experienced and then they would have a budget and that budget would include the public monies being spent already in the catchment turns out most of those are agriculture actually but then you could make much bigger gains by reallocating the agricultural budgets and virtually anything else you could do in most catchment certainly south of the border it would include the flood defence money and it would include thinking about the components of the water bills that water customers are paying especially where they are not metered and what you do is you say we want a catchment plan we want to view about what's going to happen to the spay we want to view about what's going to happen to the tents the catchment regulator the catchment operator the catchment planner doesn't start with i know the answer and i will impose its style and like upon you they say right we go through a process and ask people to imagine different possibilities of the catchment then you do a baseline natural capital survey digital data etc and exactly what the baseline is you look at the ways the money could be spent and you see which enhancements have the greatest net benefits to all the natural capitals taken into account simultaneously then you ask the private sector to bid to do those things so farmers can come forward and say you know what i could plant trees along the river bank and that would have the following benefit it would cost me the following my bid is for that money water companies would bid in and they might negatively bid in as they do in some areas of the south of england to pay farmers to keep cover crops in place to stop the silt and the pollution going into the rivers and the flood defence people might say you know we're not building any more concrete we'll pay people to do certain things about land management further down the river but the central point here is you have to see it as an integrated system not as a bit as a series of discrete bits which is how we currently do water agriculture and flood defence at the moment my guess is that we could do and i'm always scattered about this phrase but i think it's appropriate a lot more for quite a lot less and it seems to me that since the environmental challenges we face climate change yes biodiversity etc are not going to be cheap as some environmentalists imagine i think they're going to be really quite expensive and customers or voters individuals consumers citizens are in the end all going to pay one way or another it beholds us to use the public monies we have at the moment in a more efficient way now it's then a question of how much extra money should you allocate to these catchments to do the public goods bits okay and i think it's a sensible way to go about this to say well i want to know if this money was spent on the and not on the day what will be the difference what's the project what is the environmental benefits that are going to come from these things and you could even imagine catchments saying you know what you should give us more money and then less and then we'd have some contesting and some challenge and we'd really see what the benefits are all in the context which is relatively new that you can create digital baselines in considerable resolution detail of exactly what's currently going on and therefore you have the opportunity not just to say you know i like this you like that oh i think this is better and that's worse you say i'm going to map exactly what it would look like in that catchment if we put that forest in this particular place that's a huge advantage which was not available five years ago and is improving very fast and into the future digital mapping as part of land use planning and public money spending will be absolutely mainstream and normal thank you very much i'll now move to questions from rich on jenny sedita helm might be interested that actually the tweed on the tweed the tweed forum are doing a consultation on the catchment the tweed catchment management so that's something that we should possibly look at in this committee i apologize for going back to some of the questions that have possibly been already being asked but i'm very interested in market-based mechanisms and the intervention of scottish government with 50 million pound fund from the scottish national investment bank which is incentivising natural assets i want to really get your opinion on what risks might be associated with carbon trading and whether you believe that i think you've said this already that we should put our natural assets at the forefront as the priority rather than the other way around so i was going to say of course i don't like the words of course but of course you should put the natural assets at the front you know as i say i only advise you are privileged to make decisions but i humbly put it to you it's your duty to make sure that the future generations inherit a decent scotland and to live their lives as they choose so of course if you don't look to the natural assets you are in effect vulnerable to the possibility you're trashing the future opportunities to future citizens so of course you're going to do that now the market-based mechanisms there's a lot of hype talked about market mechanisms and there's a lot of criticisms which are not valid too no market exists in a kind of laissez faire wonderland all markets are regulated capitalism developed because the state powerfully could guarantee property rights and if you if you look at any market and particularly the ones that people think are most capitalist like you know stock exchanges and and and share trading and so on these are highly regulated right they set the rules who trade where they trade what they trade what information they use that's probably more regulated than virtually anything else like it but when i ask my students what they think the most capitalist market is they usually come up with those financial market so it's a nonsense to say it's either the state or the market and it would be um to me a big stretch to imagine that the state taking over many of these functions that are currently market functions will be right now a great idea um to hasten us towards net zero and um protecting the biodiversity so the question is how to regulate markets appropriately and focus on what they can do well and not try to get things to do things which are inherently not amenable to market so in the carbon world where most people have thought about this on the emissions side market mechanisms which are based upon setting a carbon price are inherently sensible the reason for that is a ton of carbon emitted anywhere is homogenous it's the same as any ton of carbon emitted anywhere else that's why earlier i emphasised carbon consumption not carbon production doesn't matter whether the steel was made in china or um as it used to be in scotland it's just carbon emissions and so if you want to address global warming you would ideally have a carbon price which would lead the market to sort out the cheapest ways of reducing emissions and actually if you thought about it peat would be a pretty good target for this but um power stations and so on for in that frame the problems come with the secretation side for market mechanisms and so-called carbon offsets i understand that you can now vote by a net zero lng tanker cargo sailing towards milford haven uh on the grounds that the relevant oil or gas company has planted a lot of trees in the united states this is not what we mean by appropriate um offsetting markets this is um an example of where instead of doing secretation and carbon emissions reductions we think that it's perfectly substitutable do one or the other the second thing to say about offsets is no two offsets on the ground are alike not like emissions where the emissions are the same wherever they happen if you plant the trees on a bit of the flow country in scotland that is not the same thing as planting the trees um on the banks of the river tweet uh and so there isn't the possibility of a clean open transparent liquid deep offsets market which is quite contrary to what carny and others have been advocating that could lead to some really difficult outcome doesn't mean that people shouldn't pay for the carbon offsets and that would be an extraordinarily or potentially an extraordinary revenue stream for our natural environment perhaps the biggest one on offer out there but what we can't have is simply people then trading them on uh as if they're like trading carbon emissions in a straightforward market way and i suspect that many landowners would be really rather worried if they did a deal with an esg complied company to help them with offsets and suddenly found that the offset was sold by a financial institution to Exxon mobile or Saudi Aramco or someone else and so one needs to think quite carefully about who are the trustees and guardians of these offsets and how exactly are the property rights around them constrained by regulation it's a detailed area and as a side i've thought a lot about how to do this including setting up trust funds investment trusts to put trustees in place over these areas while getting the revenues in as well and remember to in the offset market just because you do a deal with someone to plant a tree that doesn't mean that you've sequestrated that carbon today you need to know that it's going to be sequestrated maybe in 25 years time you need to make sure the capital maintenance is done you need to keep the deer and the gray squirrels out and you need to know what happens at the end of that life of that project again that's completely different from buying a ton of carbon emissions in respect of um well what was logannet or something like that going forward so i'm afraid market design is of the essence of how we regulate in order to ensure that the best profit seeking private incentives deliver the public outcomes that we're interested in and not just but they must as well deliver the private benefit i'm sorry it's a bit of a convoluted answer but this is not a this is not amenable to the kind of simple propositions which are floated at places like Glasgow it needs to be thought through otherwise there could be some really quite nasty unintended consequences a seddita i was tickled by a comment that made the scotsman which and you said it wasn't enough for big corporations to greenwash themselves by purchasing carbon offset credits in the same manner as an ability had purchased redemption from the church in medieval times and i think that basically summarises what you've just said my next question is really just about uh to get that public private balance and the equality um of of benefit for everybody you talked about you know the central belt not just planting trees in uh swathes of highland um you know land in trees but using um central belts as um you know part of that conversation i suppose this isn't about that specifically but how do we uh with regulation separate emission reduction and carbon sequestration and judge the success of both of those either separately or together okay so um the first the first thing to say is that um we need both and that was my point about the church indulgences okay you know i perfectly understand and i think there's a lot of substance in environmentally to look at horror offsetting and saying you know look we don't want um uh it is an excuse to carry on emissions given the timetable for the net zero targets we have to have you know uh bricks on the accelerators of both emissions reductions and sequestration okay that's the first thing to say the second thing you to say is by having a brick on the sequestration side if we do the land management properly the benefits are vastly beyond the benefits of the carbon reduction and if you think about just soil and you think about carbon in soil and think about what modern agriculture has done to our soils okay you know i'm not a scientist i'm an economist but my understanding is there are two kind of quite interesting stylised facts about soils the first is that soil has about three to four times the carbon of the atmosphere you have to let that sink in that's our primary carbon sink on this planet okay and of course Scottish soils are thin in particular places um but you know if you're a northeustin you're looking at the peat the carbon density is very very high that's the first thing the second thing is that the carbon in the soils is quite a good proxy for the biodiversity in the soils and that links to a third observation which is most biodiversity is beneath your feet like we all think about biodiversity is letting beavers back or having links is running around and are not against either of those in the right circumstances but these are trophy bits of biodiversity they might be important for control of the deer though i'm sure a rifle will be more effective um but um uh this is the the stuff on the top it's what's in the soils the basis of our system are invertebrate life and are what's constructed above it so multiple benefits come up on the um uh on the secretration side so we need to focus quite hard upon those now is it wrong to allow private sector companies to buy offsets no and is it wrong to or would it be a good idea to turn down that particular revenue stream and i think it will be a big mistake now to not have that private financial inflow coming in what i'm concerned about is how it comes in and what constitutes a proper offset and how that's managed going forward so that's why i like the idea but when people want to sell offsets they sell into a trust fund and many people could invest in these trust funds so i'm a company and supposedly i'm a reputable company whatever that means but let's say for example i'm ESG compliant et cetera and i'm doing all the right things but i have some emissions which you know stand up to inspection that they really are incredibly hard for me to deal with and i convince all and everyone including this trust fund that i have got a good reason for investing in an offset when i buy into that fund to get that offset i might undertake never to sell my offset until i have delivered my net zero target and only to sell it on to someone else who's also ESG compliant and has a proper net zero strategy and proper accounting so i think that there's a lot to be said for some companies and some local authorities and some public organisations being involved in quote trading carbon offsets but trading only to those who are acceptable and compliant companies and not allowing them simply to sell it on to ExxonMobil or whoever elsewhere and no criticism of ExxonMobil intended in my comment but just to make that point and it comes back to the earlier statement about market mechanisms regulation is of the s if you want a wild west of carbon offsets then don't expect Scotland's natural environment to be in a particularly good state going forward expect a land grab and expect the plantation of the fastest growing trees that sequestrate carbon at the fastest possible rate and don't worry about who ends up owning these things i think we do much better than that without uh ruling out bringing offsetting into the frame thank you okay and we've got a question from jenny thank you convener and thank you um sir deeter helm so this is very very helpful very informative um i'd like to um go ask a few more questions on the market mechanism you've you've talked about the importance of regulation and intervention now before it becomes a fatacom plea i was at a cop 26 fringe event where it was suggested that perhaps the market may be moving more quickly than the regulation legislation or government is so i'm interested to know what the risks and opportunities are for agriculture fisheries tenant farmers as well as land farmers with regards to the market-based mechanisms and private funding and how that helps us achieve the just transition but so there's a lot acting to your question and i'll do my best so farmers are best treated as businesses they are profit maximising they're trying to get the maximum yield from their land uh they of course care about the land going forward but they have a discount rate like any other business does as well and farmers um in my experience probably respond to incentives almost better than any other sector i know of farmers are extremely good at working out what they're going to be paid for how to get paid and changing their behaviour accordingly if someone comes along and wants to pay them very large and sums of money to produce biogases you can have thousands they can pay side farms completely turned into growing ryegrass and other materials for biogases and and this is the issue okay or one of the issues you'd be very careful when you create an incentive to do x because you've got a target within a particular frame say biofuels without thinking through what the other consequences are and those other consequences flow from what other incentives farmers have and farmers are private businesses they're not in the public good business per se unless someone offers to pay them to deliver public goods so if they look at their land going forward and they plan into the future they've got to take into account not just the fact that they may be paid to manage the carbon not just that they may be regulated over what they do which impacts upon the carbon but they have to look at what the future of food production itself looks like so i'm much taken by the scale of the technological revolution taking place in farming i'm not quite at the level of thinking that it's all indoor farming but if you go and look at the indoor vertical farming little pilot at the Hutton Institute in Dundee you'll see some of the ways these things are going basically farming is going to be in the frame of a massive digitalisation revolution which enables any farmer to know what's happening down to you know almost a square meter on the land in fantastic detail that's a complete revolution from the old model of a particular farmer who farmed an area for their life that she would know through almost instinct but feel a knowledge of what exactly was in each field corner now you can see it from a satellite this is transformation the second thing that's true is that robotics are changing greatly the way in which crops are managed you can see what's going to happen in the soft fruit industry in scotland you know down to you know enormous research going into how you desire a robot to pick a raspberry that seems to be quite an interesting problem and then you've got the genetic revolution thing and the genetics isn't just about animals there are all sorts of questions in all of these technologies but it's very much also about plots and the plant science the perfectly plausible going forward but if you're a farmer you might actually need less land produce your output in the future than you currently do i think the idea that you're going to need more land just because the demand for food goes up is one of those assumptions which has been true in the 20th century but there's no longer true going forward do you now confront lots of other opportunities you can be a carbon farmer you can be a wildlife farmer you can look to heteros rather different in scotland a lot of scotland than they are in the south of england you can look at being paid to do certain things which impact less on the environment but you can look at the other side too and realise you're going to be much more heavily regulated and in my own view hopefully taxed for the pollution that farming causes to the environment and you have to put this in a frame you know agriculture for the united kingdom produces about 10 11 percent of total emissions without properly measuring the soil and the peat emissions that's for 0.5 percent of GDP the agriculture is by far the largest relative polluter in carbon terms whereas it should actually be a net sequestrator so i would say the opportunities here to change farming practice to produce better outcomes are enormous and greater than any other sector of the economy and farmers looking forward over the next 25 years are going to face very different prices and very different incentives and they will in the same way as they have done historically respond to those changes of technology respond to those prices and think quite hard about how they're going to use their land going forward it's the public duty to shape those incentives at least a little less inefficiently than they have been for the last 70 years hard to think of a less appropriate set of incentives than the ones we've confronted farmers with since the second world war okay thank you very much for that and i have seen the vertical farming that's being worked on in in virgoori can i shift slightly to specifically tenant farmers who aren't if you could kind of respond in respect to them who perhaps the situation is if their if their tenancy agreement is cut and they can't get back in because of what the land owners are are looking to do with their land so the tenancy issue i mean at one level it's a sort of deep particularly scottish issue about ownership of land landlordism and all those kinds of things but but let me focus on the practicalities there are two here first of all if a tenant doesn't have security of tenure then it's very unlikely that the sorts of things particularly in the carbon secretion bit are going to make economic sense to those tenant farmers because the payback is usually beyond the length of the tenancy so if you have security of tenure and you think about how security work with the crofters acts and all those kinds of things that has that's absolutely crucial to the incentive structure but the thing that really worries me is the idea that what we might do and i've not really any knowledge of how this is working scotland but i have observed it elsewhere we might say you know i'm a really big investment financial institution what i'm going to do is see that the value of this land is to buy it up and flog off the carbon offsets from it and financialize that problem now that problem is if you want to take a big chunk of land buy it and plant it with trees basically you've got to clear off the tenants and this is a hypothetically sample of course okay and if i were a tenant farmer seeing the some of the direction of travel in the offset world and what some of the financial institutions are bringing to the table i would worry that my future as a tenant was quite close to zero and that leads to a public issue about whether you only want land managed by people who have full ownership and control rights or whether you want the land partly tenanted properly regulated land use terms so that particular individuals or particular financial institutions who buy out large chunks of scotland can't simply impose what may turn out to be a much more profitable route once landowners thought that sheep were more profitable than crofters and i can't help see an analogy between the idea that trees might be very much more profitable than small tenant farmers but that's the issue ultimately the Scottish Government to sort out what the property rights structure is and whether or not crofters and and and tenants have sufficient security of tenure to ensure that they can participate in this future world and the changes that go with it no reason why they should be any less good or bad than full ownership that's to be sorted out but again as i said earlier if you wait for the land grab to have happened it's going to be incredibly late to try to bring tenants back who's gone great thank you very much for that thank you can i ask the supplementary that you mentioned maybe carbon farmers a nature farmer a food farmer a cultural farmer a soil farmer or a tech farmer at the moment and traditionally farmers have been all of these things all together all at the same time and had to pay regard to them while some pay more regard to food production than nature and some other way around in the future do you see the the broad spectrum of responsibilities still being spread as they are just now with farmers taking responsibility in different degrees over all these different aspects of land management or do you see regional land use partnerships and the likes actually specifying areas which should focus on food production or focus on protecting crested nutes for example or or however how do you how do you see it all coming together to deliver what we we need in that is a recovery in in our biodiversity and ultimately climate change so farmers are the land managers they are there on the ground they make decisions given the incentives that surround them as to what they're going to do with that land and there's no no framework of kind of stylistic planning you can go around telling farmers you do x here y there you grow this crop here you grow that crop there we had a bit of that after the second world war but basically there are so many unintended consequences so much balancing to be done that someone has to exercise discretion and that's what ownership does but within the framework of the incentives that are put in place and a broad take on the land use management okay and that's why I think you can't get away from the idea that you have to take a broad view about land use in Scotland that doesn't mean prescribing particular bits but it should inform the incentive structure that's put in place now what i'm against uh or would be minded to be against is the idea that you can designate some areas for intensive food production and some areas for nature and this is kind of protected area we have some you know special bits over here but you know you trash that bit there in the most intensive way you possibly can this seems to me to be a kind of apartheid which is things to be scientifically nonsense it seems to be nonsense from the point of view of the land more generally you know in the end if you continue down some of the paths of really intensifying agricultural production you'll trash the land and again this is this question of ensuring that these assets are available not just for this generation but for future generations so i'm just as interested in what happens in a piece of intensive potato growing areas or um a barley production uh towards the east side of Scotland as i'm interested in what happens to the highland sheep management and uh what one has to do is focus carefully on the incentives if you put fertilizer onto the land which we were going to do for very long time to come it will have some unintended consequences it flows off into the rivers go down the tweed and look at the algae in the summer right so you need to incentivise people to use less of that and you also need to help farmers to use the technology to understand in detail the quality of the land to work out how to target these things and to target pesticides and so on so i really don't think there's a there's an apart out between food and nature food is produced by nature and these things should be thought of in parallel now that doesn't mean that you know every bit of land has to be used the same quite the contrary it's not possible to grow a whole variety of crops on the west coast which it is possible to grow on the east but in that process one wants a set of incentives polluter pays principle the provision of support through public goods to the r&d and some of the technical changes are out there which create a different set ultimately of prices and returns for farmers and then they can use the discretion that's available to choose what to do um and um i know that we'll leave the idea that farmers are natural ulcerists who will always do the best thing for nature nor do i believe that their their uh rapine capitalists are going to do a lot of damage for the short term they just respond like any other business the incentives in front of them and the regulatory framework they're set and the subsidy regimes in place and that's what it bluntly your job as politicians out and you'll get the results according to how well that framework's put in place thank you jim's going to come in with a question i said just on the back what you said we've for some time now the principle of public goods for public money has been suggested the way forward south of the border and we're now seeing some policies coming forward some don't view them as particularly a good move um in Scotland here it's still quite unclear the direction of travel that future rural support's going to take particularly with the replacement for cap is there anything that you see from the what has been introduced south of the border should be adopted up here and what should we avoid when it comes to future rural payments those are the first thing to say is that um as with all these revolutions you have a set of bold ambitions as to what's to be done with agriculture policy and actually it doesn't end up back with the status quo ex ante but it ends up much more evolutionary than than the uh applicants of the revolution put in place in the first instance what i mean by that is that when you look at the particularly the sf i the standard finance bit which is the big chunk it's not that different from pillar one of the cap and if you look at the uh greening components it's actually not that different from what the europeans are proposing to do to the cap so this idea that the the england is on a pedestal and it's completely different from what everyone else is doing the reality is a lot more nuance than that that's my first thing to say the second thing to say is that it is true that the big advance in england is to put the concept of public money for public goods on the face of the act and make it the abiding principle of what's going on forward it's a bit like a slogan like dig for victory after the second world war it's the motivating driver it forces people to try to say why we should give them taxpayers and citizens money to do things and what the benefit to us the public is going to be of that as opposed to their private interest the worst possible way of running an agricultural subsidies system is to pay people to own land what benefit is that to a citizen of Glasgow or Edinburgh or sterling to know that somebody who buys x thousand acres of scotland is going to be paid x thousand times a number per hectare because they own it you know it's just extraordinary we know what we got there because previous to be paid and to produce output and they did exactly what was said on the tin they produced the output and we ended up with butter mountains and milk lakes and goodness knows what else wine lakes they were much more interesting milk lakes to me all the way so you know this is a crazy way of doing things and that's why land price is one of the reasons why land prices so high in scotland if i if you buy an asset and i pay you you know 10 pound a hectare you'll capitalise out on the price because i've given you an annuity of 10 pound an acre going forward right so you know and that excludes young farmers coming into the system it excludes lots of parties it might want to buy their tenancy and so on and so forth that's crazy okay so we need to move away from that now my worry in england is that what we're actually doing is not identifying the public goods we're sort of saying tell you what look we'll send a consultant round they come up with a farm plan and if we like the farm plan we'll give you a subsidy and you know what the subsidy may just turn out to be something like what you were previously receiving under the pillar one payment for owning land that's crazy but that's that's the essence where it goes and what we have to do now and what the advantage we have in england over scotland and wiles and northerland is you're now forced to in the what i call the public domain explain why exactly money has been given to a farmer in terms of so why exactly is the public good we get from this and last week i heard on our farming radio for farming today program in the morning the secretary of state um um for a uh death for a say why i don't know why farmers are whinging is not enough money they're going to get paid for quite a lot of things they're going to do anyway what is the point of using public money to pay people to do things they would do anyway could i have a public subsidy please because i'm going to walk to the station i would have walked to the train station anyway that's not what public money is for and this is an example where in the ordinary course of events this is axe players money public funds not getting the benefits they could but if you've got a net zero target of the form you've got in scotland and you really have the biodiversity targets you have in mind you don't have the luxury to waste money in ways that aren't going to build towards those targets you know i'd put it to you that every penny that's available and i think it's going to be very expensive so i think the consumers are going to have to pick up the tap for this and the taxpayers every penny is actually advancing you towards your target it's not perverse and it's not wasted the advantage of having the terms public money for public goods which i personally put a huge effort into pushing is that at least it frames that discussion and enables citizens to ask questions of agriculture which in the past they may not have done and perhaps it would have been okay in the past but not with the climate and the biodiversity targets we now have thank you and gym would like to come in at the back of that yeah deeter you are a fantastic witness i have been engrossed with everything that you've been saying here but as somebody who's been farming if i was still farming i'd be sitting outside going oh my god i hope he doesn't develop the policy or we are not going to be getting a penny now i may be completely misrepresenting what you're saying there but there are a couple of points i would like to raise with you and the other thing that i've got out of this conversation is that what we can talk in silos and it sounds great until you start to bring in what the unintended consequences are you have given us so much to think about i really have thoroughly enjoyed this session but one of the things that i have in my head and correct me if i'm wrong food costs either through the public purse through subsidy either in land degradation and environmental damage or the consumer pays for it through their purse when they go and buy it in the shops now the subsidy system at the moment that was introduced after the second world war it used to be that household income was about 30 percent in food now it's about eight and a half percent so the public value in subsidy is it could be argued in the fact that food is cheap however there is the counter to that that we can buy food from Australia or America or wherever and if we can bring it in a lot cheaper is the the price out of the pocket to the consumer still going to be met by bringing in cheap food from elsewhere and it's that hold that i got now that's a huge question it's a short statement but it's a huge question how do you square that okay so let me unpack um uh these uh these questions and let me premise it by um a remark you know it sometimes said um you know you know i'm an academic commenting on these things well my farm my family were all farmers or in horticulture so i've grown up and i do have an understanding some understanding of the practicalities that face people who actually have to do these things on the front line and i hope that i am that hopeless pragmatist and not just trying to think through principles so if i was a farmer looking forward okay i struggle to think that i would as a farmer believe that the system we've got and where we've got to is going to be sustained for much longer anywhere you know most farmers can see what has happened and they have responded to the incentives that are in front you know i'm working on example in the south of england at the moment on chichester harbour it's going to be biologically dead 10 years time and half the pollution comes off the farmland nobody can imagine that's a sustainable position to go forward okay different in different circumstances so i look at my farm and i say so should i just say gosh this is awful i'm going to be um uh asked to do all this stuff and uh my business model and my profits are going to collapse uh you know so should i say this is a cornucopia of opportunities to do farming better and to increase the productivity and the profits of what i do so first of all i look out the window and see the technology come i mean farming productivity has an appalling record over the last 10 20 30 years and the opportunities the technologies of a bring to do my job better are great and my personal view is that the technical change is going to dwarf all the rest of the stuff we've talked about from a farming business model perspective not every farm is going to have a maths graduate preferably from Oxford rather than Cambridge um running uh the farm but this is going to be a much more high tech job in the bigger farming areas and look at a huge market in carbon and now going to have an opportunity to benefit from secretration practices yes i'm going to have to reduce my emissions yes things like red diesel are indefensible subsidies to diesel in a world in which we're um trying to decarbonise those can't be done but there are all sorts of other technologies coming along including actually hydrogen um in the farming sector and then when we turn to uh what foods i grow you know if we had proper carbon border prices if we had carbon consumption and not carbon production of the target if we paid at the border at the docks for the destruction of that rainforest in the amazon to grow beef to compete with scottish beef um i would see that my market's going to get bigger not smaller because all that agricultural trade you talk about has potentially very very big carbon components and that would be extremely important what i don't want to do is find myself faced with a whole variety of environmental costs lumped upon me and the guys in brazil moving off from the expansion of soil to clear the rainforest for the cattle just picking up my market that's not acceptable the sheep's different not true that sheep in new zealand are once they've actually been delivered in the uk necessarily more carbon intensive than sheep produced in the uplands in parts of the uk so different different in different cases but the carbon border adjustment having proper carbon pricing gives british farmers scottish farmers a much better frame and there were some discussions at Glasgow carbon border adjustments the EU of course is pushing ahead with this and should do on this side and my final bit is about cheap food it is a complete myth that the common agricultural policy produces cheap food it does not it has customs barriers all around it to keep the price of food up in the EU and protect it from particular kinds of import the sea bam and the carbon border adjustment is an aside so the question of the price of food is very influenced by the policy and the cost of food production to the farmer in the uk is influenced by the amount of capital they have involved in the farm and that includes the farm land price if land prices go up in scotland the rate of return goes down for any crop that's sold so i think that if i was a farmer in scotland yes i'd find this unnerving because the world is changing underneath me but i would have found joined the EU pretty unnerving too but the conicopia of opportunities in front of me mean that this is a possibility for a really thriving agricultural sector going forward and not a threat to its livelihood as some of the less informed lobbyists try to present it to us okay i'm aware of time so i'll leave it there we now move on to final questions as we're running out of time from Beatrice thanks convener and thank you professor helm it's been a really fascinating informative session this morning i've actually got two questions that are slightly different but i'm going to ask them in the hope that you have to respond to them we've talked about competing needs carbon sequestration and offset so how can the circle be squared regarding the natural capital and renewable energy an example would be building wind farms on peatland which may or may not be degraded and my final question is really if you could say a bit more about fiscal measures like taxes and levies that can be used to respond to the climate emergency okay so the second one is i don't know the old questions are easy but the second one is at least does a straightforward answer you need a price of carbon okay you're not going to get to net zero unless you have a carbon price and the carbon price should be the same in all sectors of the economy start low do it very gradual takes time for people to adapt but if not having a carbon price is precisely the wrong answer almost any incremental carbon price is roughly right and better now there's other whether that feeds through into the price of fertiliser pesticides and all sorts of other things how that works is important but in the end it's carbon you're trying to deal with and therefore it's carbon you should price polluters should pay an efficient economy is where the pollution costs are internalised in the economy not to have a carbon price is to distort the economy and it's to distort trade as well not to have a carbon border price on the wind farms versus peat bogs okay so um this is quite complex so in theory both often have value and the wind farm if it was going to a peat bog should have to pay for all the carbon emitted from the peat bog as a result of their activities my guess is that would rule out virtually any wind farm on a peat bog in practice the peat is so precious and such a global asset that the contribution of individual wind turbines to global warming is not sufficient to offset the value of those peat bogs remember wind is a disaggregated decentralized very low energy intensive way of generating electricity not say shouldn't do it not say it isn't desirable to have wind but given the amount of land in Scotland and given the amount of coastal waters around the united kingdom if our efforts of climate change end up with us offering peat bogs with wind farms then we might as well just admit defeat now give up that will be a tragedy of an outcome with no net benefit to global warming and the concentration of carbon the atmosphere which we should be addressing so before you do that think hard and remember when you put a wind farm on fragile soils you create roads fly over the top of any established wind farm and recently I recently looked at the wind farms in Croatia and you can see all the chalk exposed and once those roads are there people will use them and they will reveal the surface of delicate soils etc so just be careful with my argument there are so many sites you could choose but if I could add a plea right again please leave the peat alone or at least try to improve that peat rather than just expose more of it that will be world leadership as well as good for Scotland thank you thank you and finally Karen thank you thank you convener and I just want to thank you sir Helm for the comprehensive answers you've given today I found it absolutely fascinating and my question has shifted every time you've answered and really I'll come in as a mopping up sweeping up so to speak and I just think you know I have so many questions around this but what I've felt really throughout it all is a very top-down approach we talk about you know the private sector the public sector we do talk about people managing the land but you know we're looking at what an environmental you know sensitive time we talk a lot about you know the green economy the I'd like to take you up to see for a little bit as well you know have a coastal community constituency and the blue economy but we also have a well-being economy to be thinking of as well and our good food nation and all of this combined and I would just you know I was a I was a councillor before I was in this position here and you spoke about you know politicians making these decisions and I saw a lot of really good localised community action particularly in times you know the storm damage we've had recently Covid-19 etc so we've spoke about public ownership you know for public good what about local ownership for for local good what are your views on being a very localised view I mean it's the farmers the fishermen that see the changes you know in an environment before anybody else and that you know might know the best way to manage these things but what's your views on that on ownership locally okay so the first thing to say is you can't avoid some top-down stuff okay net zero is a top-down target okay so it's unavoidable you have to decide where you're going that's why we have parliaments that's why we have governments okay but none of this is going to be delivered without the citizens doing the stuff with due respect to all of you around the table you're not going yourselves to do much to change the natural environment of Scotland it's your constituents that are going to do that so in my little book on net zero I suggest that it would be a good idea to encourage all citizens to write their own personal carbon diary not with a guy eye to precision but just for everyone to sit down every for one day or two days and write down all things they're doing and have a guess at how much carbon's involved in it and work out roughly what it would mean in 240 or 250 to write that carbon diary with no carbon in it think about your breakfast cereal think about the water in the loo think about the the travel to work think about the clothes think about the shoes think about the flights think about all the electronic goods think about your power consumption and it's us citizens who ultimately buy the stuff it's us citizens not companies that are ultimately the polluters and we have to change our ways and it's not to say that we have to have hair shirts and all this stuff our prime ministers keynote but it's us that are going to be on the recipient end of all of this lot and we have to rewrite that carbon diary now if we do that as communities bottom up there is a huge amount of change we can make villages can plant their own community woodland they can have the kids involved in back yard biodiversity communities can buy out big landed estates there are a huge number of ways in which all the multiple dimensions of how we as citizens participate society that we can make these changes and you in scotland are a long way ahead of this you've had community buyout schemes i suspect some have worked better than others i've looked at quite a few in the outer hebrides and walk around and had a look and see what people are doing with these opportunities the community thing is crucial but when you have community buyouts you have to work out how continuity is going to work most community projects i've seen have immense enthusiasm by people to get them going that's the easy bit it's what happens 10 15 20 years down the track and that's why relative and it relates to the point i'm made about trusts owning the carbon offsets et cetera you know the form of trust the regulation of those trusts the way in which they set up and drive these frameworks so that individuals can not only create these are initiatives but make them happen and of course local governments brushling that frame too so i don't want to come over as a top-down stylist in this frame i'm not there are top-down things that have to be done but in the end your question is absolutely aposite the bottom-up community citizens line of this is important and remember we're the people who are going to have to pay we're the people who are going to have to vote for people who are going to force us to pay and we're the people who are going to have to change our ways ultimately because it's us that will drive the electric car rather than the petrol car not some committee and so i'm very sympathetic to your question thank you very much and that brings us to the end of this session so thank you very much professor for your thought provoking and i'm pleased we ended on that optimistic call for action so once again thank you for giving us your valuable time your contributions very much appreciated i will now suspend the session till 1045 to allow for a change over in panellas thank you welcome back everybody and i welcome to our meeting our second panel we've got ian dickie the director of economics for the environment elly mctag at the chief exec of scottish national investment bank joe pike the chief executive of the scottish wildlife trust and dr pat snowden the head of economics and woodland carbon code from scottish forestry again we have approximately 90 minutes for this evidence session and i'll kick off can i ask to what extent that your overall conventional economic thinking has changed in relation to climate and nature emergencies and also how the concept of natural capital now plays a part in your thinking of the the way forward and what opportunities it brings to the rural sector and if i could kick off with ian dickie please thank you very much for the question so i think yeah conventional economics has become much more aware of environmental economics thinking that ffx specializes in in the last five to ten years and we're now seeing that applied in how rural economies and the environment are managed the natural capital framework i'd say is very relevant particularly at a larger scale and your thinking as a national government and it's the right framework to think about the long-term management of assets so professor helm was talking about in managing soil as an asset and that's what natural capital thinking helps you do it's not necessarily the right framework to communicate policy at a local level but the principles in natural capital should be part of the thinking and the other thing i'd say is that applying these things brings lots of new opportunities as well as risks and those were discussed in the previous session okay thank you and can i now ask ellie mcdager please thank you for the question i think in the last 10 years we've seen a massive shift in investment practices across the world actually and that's accelerated considerably in the last few years which is a real benefit to to rural economy and investing in natural capital the focus on on esg principles and and positive impacts of investing as well as profit from investing are ever more prominent and demands from investors are looking for that when impact and income generated from investment so i think we've seen it a lot in forestry i think there's lots to come in in peatland regeneration and other natural capital investments but there's really positive steps towards that coming through with the change and also just increased awareness of the climate change and ultimately when people look to net zero and offsetting i think that's a real opportunity for natural capital and to increase investment into natural capital thank you and before i move on to the next two can you also consider we had some comments from deeter helm in the previous session about getting natural capital right and assessing it and baselining it ensuring that we don't plant tens of thousands of hectares of sick as proofs if that's ultimately in the long term not the best investment and potentially we need to do all that planning before we bring forward policies so can i ask joepite what regards to the scotch wildlife trust and i'll ask dr snowden the same question do we need to pause right now even though we're in a climate emergency and look to make sure that we are considering a long term best investment to get the best from our natural capital so joe initially thank you i think the the urgency of the situation suggests that we probably shouldn't be just pressing the pause button but i think there are mechanisms in place and processes that we can continue to drive forward that will bring together the range of voices needed to help avoid the unintended consequences that deeter was talking about this morning so regional land use partnerships for example i think are a really important potential mechanism to embed the principles of natural capital and as ian says that it's not necessarily the language that you would use to to engage a wider public but it's such an important fundamental concept so i think those are already happening and i think they need support to make them work so no you know sort of advocacy of pauses there i think you know we see discussions about baselining in terms of the future of agricultural payments because you know there is a huge imperative to more move forward in that area and i think it's about making sure that this is a really inclusive discussion that we have and you know making sure that those voices can can help surface the risks of unintended consequences to help us avoid them thank you just on that when you say not to pause we're already seeing potentially extortionate prices for agricultural land which would normally be passed on to the next generation of farmers on new entrants or whatever and being snapped up for planting and we also heard about when farmers potentially being put on peatland so whilst you say we shouldn't pause do we need to do more work to ensure that we don't go too far down the road and we do see 25,000 hectares of inappropriate planting of sickest fruits and so on so whilst we it's maybe pauses not the right word do we need to go back and make sure we're doing the right thing so dr snowden where are you with the scottish forestry and ensuring that this often use phrase right tree in the right place does far more than that we look at the long-term consequences of actions we're taking just now yeah thank you convener for the question i mean forestry is a long-term business and about the planning stage it's all practice to set out with them plans for the future and the right tree in the right place you know it's intended to take a strategic approach to guide local authorities in this as well but also if you look at the activities say of forestry in land scotland where in the state forest in scotland they they plan their woodlands over many decades ahead so these things are all in intended to ensure a resilience and balance the network of woodlands in the long term so that there are a lot of checks and balances in the system at the moment i know professor helmer referred back to the you know the days of the flow country in the 1980s but a lot has changed in forestry since then and we have the UK forestry standard which is applied to all projects that we fund which looks right across the range of benefits that woodlands provide on the first question i would totally agree that natural capital is a fundamental change actually in how economists look at nature and i think that's a really good thing it's mainstreaming nature and economic thinking and i think that is really needed if the economy is going to work for nature and i'm not against it thank you now move on to questions from allister allen thank you convener we had as you i hope heard very interesting contribution there from professor helms i'll unashamedly pick up on on some of the themes that he raised i suppose my first question would really be perhaps a really mc taggart and it's how do you or what do you make of some of the the ideas of a green economy and different you know viewing capital in the natural environment in a different way not in terms of whether they're right or wrong because i think there's a growing consensus about that but how we make that real in the eyes of investors and agriculture and government and everyone else what's the next step in ensuring that those ideas actually take hold nice thank you mr allen i think the important thing to to sort of note is we there is public sector investment and private sector investment and we do need private sector investment to to achieve this and and sometimes it gets a lot of criticism and having come from that in my my recent past before i joined the bank a year and a half ago and there is a lot of private sector capital that wants to do purposeful impact investing and get more than just money from its investments but also get those social impacts and potentially offsets i think the opportunity is real i think there needs to be some clever thinking around what that looks like and how you balance off the financial return and the positive impacts for the environment and the local area in terms of of how you do that you know forestry has done a good job of that now obviously and as the previous commentary has commented in the 80s and 90s the type of planting was very different to what it is now but that shows the evolution and the learning journey and i think we will have that as we look into peatland restoration and other uses of land and typically you know the the use of land is appropriate for the land i know that when we've been looking into some of this it's you know is this arable land is this sheep rearing land is it is it land that can be used for anything else therefore it's more appropriate for tree planting and i think there's a lot of work that i'm sure that the forestry teams are already doing with local authorities on sort of identifying the right land for the right use and for the right return on natural capital and tying that all in together with either previous panel discussed a lot about carbon credits and carbon trading and carbon offset that is a real opportunity not just for forestry but for peatland regeneration and also other uses of natural capital and in some instances you'll be able to on it you know in a single farm you could have some winter vines and some lease revenue from that you can have some forestry that is going to provide sustainable building materials in the future we have to start planting now to ensure we have those sustainable materials in the future alongside traditional farming of rearing cattle and crops etc so i think there's a mixed use there on an individual farm basis which most of the big farms are very much across i'm looking to to maximise and from an investment perspective it's about aggregating and making sure that the investment propositions are sufficiently large because a lot of the private capital that comes into these is from your big institutional investors your pension funds your institutional and unity investors who typically are looking for a certain scale of their investment and may not have one million to invest maybe looking to invest 50 or 60 or more or 100 sometimes 250 million in the project so you know it's about bringing them together and capturing that that bigger investment opportunity to access those large pots of capital thank you and when i asked professor helm about land ownership the the interest of the fly he came back with was that just because somebody owns something doesn't mean that they shouldn't be constrained in what they do with it now i'm not asking you to comment on the big political issues of land ownership but i'm curious to know whether in investment and the attitude that the investment bank would would take in rural scotland it would have how would have that advice in mind about ensuring that there was some kind of monitoring and an on-going contact with land owners to see how how investment was carried out contact with land owners but it's also contact with other bits of the public sector from last week we recently came across an investment opportunity and there was an element of concern around peat on it and i directed my team to get in touch with nature spot to check what they were thinking we also regularly contact sepa and for our forestry colleagues to ensure that whatever the bank invests in doesn't cut across those larger objectives as in terms of what the land should be used for because that that wouldn't be a good use of our of our capital to cut across those ambitions thank you and finally convener could I ask joe pite again based on the interesting conversations we've had with professor helm about the concept of rewilding and how you understand that and where communities fit in when we when we are handling that concept thank you i think the perhaps of the discussion about rewilding it's about restoring natural processes in order that our natural environment can recover and support communities to be more resilient support our well-being and you know ultimately underpin our economy so i think it's really important we don't pit the economy against nature the economy is embedded in nature and therefore the the rewilding story which inspires huge numbers of people and also puts fear into large numbers of people it's really important that we have that discussion inclusively and it the language matters less than you know the aim to restore nature and ensure that nature recovers all the benefits of the people of scotland and and our economy because that's it's not an option not to do that okay thanks gem you've got a supplementary yes i have thank you convener and this one is directed to ailey mc taggart literally about your role in terms of of what is going to be funded now de ter heland talks about the possibility of a trust fund which is based around the investments being made in land in scotland done through a trust fund with environmental and sequestration as a prerequisite to what it is that the the fund funds if that makes sense do you see the national investment bank as being the vehicle so that any private funds that are going to come into land in scotland come through you and are then distributed in a one-stop shop in order to achieve the environmental desires rather than it being a as he called it a wild west free for all thank you mr ferley for the question i think we have a part to play and we very much are already in conversations around funds around natural capital with ferris i am other public sector partners such as nature scotland and others and there's already been a great amount of work done on that before the bank came into being a year in a bit of coke but the idea that we would funnel everything i i don't think that is necessarily that the grand idea i think we have a part to play and we have some public capital we absolutely have the ambition to use that public capital to raise and crowd in other private capital alongside to deliver the missions of the bank the one we'd be addressing here would primarily be net zero but also our place mission touches on natural capital and the environment and communities in terms of the wild west i think it's important to recognise that the private capital is an important part to play and and some of the the previous questions around you know land use designated land use requirements of land owners etc which are dealt with at a policy level can help control some of that investment and ensure you don't end up with a wild west situation where perfectly good arable land is used for tree planting etc so there's policy levels and and designations there that can help but we have to identify and we have to recognise that public capital isn't enough to deliver this we do need private capital so we need to make sure that it's an attractive enough proposition for private capital to come in the majority of private capital that comes in is backed up by pension funds or annuity plans or life insurance policy money a lot of that institutional capital ultimately ends up in a pensioners pocket it's being invested to ensure that the pension company can can pay out the pension in the future and so you have to deliver that commercial return for that money to be interested in it and the great thing that i touched on on my first answer is that in the last 10 years i've just seen so much advancement in terms of that purposeful investment or impact invest in and so many investors are looking to do more with their money rather than just protect that pension return that they're trying to build they also want to generate environmental social benefits with their investments as well and and that is something that we need to try and capture and maximise for investment in scotland and i think we've got a very important part to play and i would like to lead in in some of the initial funds that are set up from this but i think if they then spawn future funds then that is one of the things the bank has been set up to do which is to to lead the way into an investment proposition establish it normalise it and let the private capital set in step in at that point that's very much a well trodden path for development banks and to work in that way so we come in at the earlier stage in the higher risk stages and then move on to the next thing once things are normalised thank you i'll move on to questions from arianne thank you convener and actually i just want to kind of continue this theme but i'll direct my questions to joe pike and ian dickie so i'd like to hear your thoughts on how public funding can help to mobilise sources of private funding and whether there are good opportunities to do so within the rural economy so that's for joe and ian joe would you like to go in first no thank you for that thank you for that really important question um i think it is really clear to us in all of the conversations that we've had with a really wide range of stakeholders over the last few years really but particularly through the scots conservation finance project which brought together different parties including you know an expert finance group people with an interest in in nature conservation people with an interest in enterprise and and so on that the role that the governments can play in the early stages of developing this kind of embryonic new way of looking at how we finance or how we close the finance gap to ensure that we set nature on the road to recovery Governments play an absolutely critical role in providing a range of support but investment readiness funding is really really critical so we've seen that south of the border there is an investment readiness fund that has been run by by by deaf or natural england and others i think that has provided much needed support and it's enabled innovation but i think there are lessons being learned from that that we could take on board in scotland and i think one of those really important lessons that we're hearing is that actually support more support is needed at an earlier stage of the process so it's already been referred to today that we need to scale up i think that's really important but in an order for that to happen we need investment readiness support in scotland for the really really early stage conversations that will help stop sort of building a pipeline and then obviously there's huge huge opportunities and imperatives as well in terms of reforming subsidies in the agricultural space and i think those two are not necessarily mutually exclusive either thank you and Ian do you have any thoughts on that thank you yes well i agree with that and i'd say well yeah the public money can help ensure the delivery of public goods through these investments and maintain standards and on the investment readiness side i'd say that it can help support maybe some new governance structures that might be needed to ensure investments happen in the interest of local communities so i think it's interesting that the community buyout process was mentioned in the session with Professor Helm and that effectively allowed a new governance structure and with these investments if we have the investments coming from institutions that are external to Scotland and then the returns going back out of Scotland that's not desirable approach and that's not in the best interest of local communities but there often isn't a kind of organisation that's able to represent the interests of local communities in the investment process and looking at that elsewhere in the UK i've been involved in some green investment plans in England and they're looking to create an institution that can represent community interests in how investments are made and then also in being a receipt of some of the profits of that investment and good investments will welcome a party like that representing local community interests because they'll be in the investment for the long term and it will help them to secure the long term management of their investments Thank you. I'd like to turn to Ailey and ask you about some of the SNP, the Scottish National Investment Bank's direction. One of the three missions of the Scottish National Investment Bank is supporting a just transition to net zero in 2045 through rebalancing the economy towards leadership in sustainable technology services and industries and we heard this morning that agriculture should be a key sector for investment given the need for a just transition for farmers and innovative new technologies and practices and I wonder Ailey if SNP, I don't know if that's the correct way to pronounce that, but if SNP is currently supporting agricultural projects or if it does have plans to do so in the future Thank you, Ms Burgess. I'm happy to comment. We're just a year and a bit old. We had our first birthday just over a week ago and we've got 10 investments out into the investment universe already, which is fantastic. We've got a number of agricultural linked investments in the pipeline that we're considering and everything. We've looked at vertical farming and other things and different ways to use fish farming and other projects. We're also looking at supply chain projects in shortening the carbon footprint of food and prognose. I know that the previous panel spoke a little bit about carbon footprint. I caught a little bit on is New Zealand lamb a lower carbon footprint than the Scottish lamb etc. How to do that is something that the world has to get their head around and there's a lot of thought and progress being put into how one identifies that carbon footprint for an individual thing that you're buying off the supermarket shelf. We're very keen to invest in that. It's a very important part of the Scottish economy and we're looking for opportunities and we're seeing a lot of opportunities which is really encouraging. Nothing closed as yet, but I'm confident if I came back to speak to you this time next year that we would have made some investments into this space. If you could give us a little bit of time to get a little bit further on our journey, that would be fantastic. Thank you very much for that response. I've got a final question which I would like to direct to Pat Snowden, but also Ailey, I'd like you to come in on it afterwards. This committee will soon have the opportunity to scrutinise the budget bill considering how it will impact on our rural sectors. What should our committee look out for in relation to climate and nature when scrutinising this and future budgets? Maybe we can start with Pat and then come to Ailey. Thank you for the question. We have a Scottish Forestry strategy in Scottish Forestry, which looks at the sector going forwards and has an implementation plan setting out various things that we aim to deliver. A number of indicators then, which we measured progress against, which include fairly obvious ones like carbon sequestration, but also biodiversity objectives, leisure objectives, economic objectives. Forestry is quite a far-reaching activity in terms of the things that it delivers, so I would recommend that you look across these different indicators that we measure and see the progress that we've made against them. Also, consider the plans going forward, because some things take time with the trees, you have to wait for them to grow and deliver, but some of the actions that are already taken will deliver benefits in the future. That is particularly the case when you are looking at carbon. Thank you, Ms Bridges. In terms of budgets and public investment, the banks can set up a slightly different institution to some of the policy teams and enterprise and development agencies that Scotland has had for a long time. When we invest, we are very much expecting to get our money back. The way the bank has been set up is to get our money back and recycle that capital and create, hopefully, a perpetual fund for Scotland similar to some of the sovereign wealth funds that you might see in other countries. That ambition is built into our DNA as the bank. We are looking for a return on our investments to get our capital back and get the mission impacts that will support the missions that one of us should have already touched on. When I look at public sector budgeting and what the bank can do, I think that the conversations that we need to have—we already have them a lot with policy teams and that will develop as we go—is what needs grant funding, what needs what I would call one-way public investment versus what can a development bank or the private sector fund. It is really about identifying commercially investable propositions and putting commercial investment into them and whether the bank leads on that and brings additional private capital in is ideal. That leaves a smaller pot of things that need that grant funding or start-up funding or other support. It is more one-way in nature. It is about making sure that we are putting the right money into the right projects. If there is a commercial return available and additional impacts on environmental or net zero, we capture that and put the right money into it rather than using budget that could be better spent elsewhere. That is something that we are conscious of working closely with the policy teams on. I want to touch on the big ideas and the big visions in all the rest of it, but there is some concern that market-based mechanisms such as carbon credits fuel the attractiveness of purchasing land for carbon offsetting and has got the potential risk to local communities and other land users. In the 30 September, a Scottish Parliament held a chamber debate on community wealth and the emergence of green layers, where the impact of carbon markets on land and land ownership was discussed. Particularly Ely and Pat, how do we avoid greenwashing by major companies coming into Scotland and buying up that natural capital without any great benefit to the people who live here? Ely, start out with yourself. We touched a little earlier on the designation of land. Greenbelt has been in existence for decades and has protected the place of land around cities that we do not have of constant urban sprawl. There are ways to protect and designate land and to work with investors to use the right land for the right thing. It is about intelligent use of land. I touched on it earlier, not using arable land for forestry, for example, but looking to use alternative land that is not suitable for crops. Sorry, Ely. There is something that can come there. Sorry, Jim. I am going to interrupt you very quickly on that point. Given what you have just said, do you believe that we should have land grades as the prerequisite for what is going to be planted? Are you suggesting that good-quality arable land should not be used for tree planting? Are you going for specific grading of land for specific investments? I mean above my P grade, and it is too executive of the bankers and policy teams that would perhaps be better versed in answering that sort of designation. I know that when we look at investing in forestry, we look at the type of land that they are looking for and it would make sense to plant trees necessarily on arable land as an investor in terms of how the Government wants to manage its land and work with landowners to use the land for the best appropriate use. I think that that is something that policy, Government policy and regulation, if needed, can drive, as I mentioned. Greenbelt is a form of regulation that has been around for decades. I am not prescribing it myself because there are many other people who are better advised on that in terms of what that could look like, but it is something that investors take into account. Most investors are very conscious of what their money does. There has been a lot of debate on greenwashing, and most of the big institutional investors are very conscious of trying not to do that. Some people will. There is no perfect solution here. However, if you look at rewilding and peatland regeneration, are there other ways we can use that to create those carbon offsets in trading and really get that benefit out of regenerating our peat and offsetting carbon versus cannibalising farmland or other areas on tracts of land? There are a number of areas that interact and manage that in the country and work with private landowners to ensure that the best thing happens for the country as a whole. One of the other panellists is touched on community benefit funds and investments and trusts, and those are all fantastic ways to ensure that the community benefits from some of that investment as well. Typically, some of the larger private sector investors welcome that community connection with their investment. We have seen that in some of the green energy work that has already happened in the country. That does come back to the earlier point that I raised with you that Dieter Helm mentioned about having a trust fund kind of an organisation that makes those kind of investment decisions. I get what you are saying that you do not have the expertise to deal in that. However, it does raise the question that what is it that we are trying to achieve? We want to achieve net zero, we want to achieve return for investors and we want to be able to keep people on the land. It seems to me that there needs to be some kind of mechanism for us to be able to bring all of that together. I am sorry, but that is just a statement that is not a question to yourself. Can I maybe come in in the back of that? It is a question for really. I know you are saying that it is maybe above your pay grade or whatever, but is there a level of ethical decision that the National Investment Bank should be looking at in the same way that there may be an economic argument to cut down rainforests in Brazil and create cattle lots? In the long term, should the Scottish National Investment Bank be looking at investments into forestry planting, which absolutely there is a private sector money there to be invested, but we are seeing land right now in Scotland being overpriced and agricultural farmers being priced out of the market because of the astronomical prices that private investors are willing to pay to plant trees. We are seeing, as Jim touched on, land classified as 3.2, which would normally be for agricultural production, now being assumed as being suitable for planting trees. Is that not something that you should consider when you decide on the investments that you might make? Can I ask you that question, but also the same question to Ian Dickie? We take a huge number of factors into account when we are considering our investments. The primary one for today, and this applies to all development banks including us, we were initially set up under the EU state aid rules. We had to have those permissions before we could launch last year. Obviously, those things are changing with substance control changes post Brexit, but one of the fundamental factors of development banks is that you don't invest where the private sector is investing because that's not a good use of your money. When we invested in our recent investment in the Gresham Forestry Fund, that was a different type of forestry fund in recent years. Forestry funds have been later life forestry investments that are focused on harvesting. The Gresham fund was focused on planting and midland creation. It was struggling to raise money from the private sector because it didn't have a longer horizon for its return on investment. It was a new type of forestry investment that hadn't been done before. When they approached us, we spoke to them and said, look, have you spoke with the private sector? There's a lot of investment available for forestry, and they said, no, it's because we're looking to plant a longer horizon for that investment to come through than Gresham's previous forestry investments. We did a lot of work with them to ensure that our capital was required to establish and cornerstone that fund. It's now increasingly attractive to other investors now that we've cornerstoneed it. That is a key role that development banks play everywhere that you see the EIB play at. There's a number of other development banks across Europe in the world that do that, and we're following that model in those investments. We're very careful about how we invest in land grades. Obviously, some of the designations that you talk about are a regulation in terms of land use and the pricing of agricultural land versus planting land. I don't know off the top of my head the economics of that, but particularly for the fund that we've invested in, it's looking at land that isn't typically going to be able to be used for other forms of agriculture, and it's the lower quality land that is more suited to forestry. That was something that we discussed with them in detail at the time of the investment. Can I ask Ian Dickie for his comments before moving to Jenny for her set of questions? I thought that the questions revealed quite an interesting problem about the information that you have to make those decisions. As was pointed out, if investments are made only for the purpose of carbon markets or carbon sequestration, you're getting land use that you don't think is in the wider interest of Scotland. Similarly, if you only make those decisions based on land grades for agriculture, you'll ignore some environmental issues that mean that you might not get the right decision. What you need to do is join that information up. That's what we did in the study and the tweet that's referenced in the papers for this meeting, is combine a series of rich data sets that were already in place, but they weren't integrated and they weren't linked to socioeconomic information. You've got various purposes being talked about in this meeting, continuing agricultural production, new carbon markets and green investments, net positive for biodiversity, maintaining a community interest. If you have a different set of information on all those and other issues and they're not interconnected, then it's very hard to make decisions that serve the best combined purpose for Scotland, but it is possible to join that data up and an economic activity that comes as a result, so recognising agricultural production value and the tourism value and the value to local communities, for example, in terms of public health. Thank you, that's very useful. Rachel Hamilton. Can I ask Pat Snowden how the woodland carbon code measures reduction in emissions? Yes, thank you for the question, but it's the fundamental thing that it does. The estimates are based on tree growth models, which, for us to search, are a search agency that has developed since the 1960s. Those models were expanded to look at the whole biomass of the tree in order to estimate the carbon content for different species, different yield classes under different management regimes. They're the same carbon models that are used in the UK's greenhouse gas inventory. At the same time, we also take account of emissions from soil on planting, depending on how the trees are planted and what type of soil has been planted on. The models also account for any emissions associated with planting activities, harvesting activities and things like that. It's a comprehensive carbon model that looks at all the, not just the sequestration, but also any emissions associated with forestry activities. Projects can put in their plans for a plant in their woodland, including their species and yield classes, etc. The model will provide estimates for them over time at five-year intervals of how much net carbon sequestration will take place for that project. The model is available on our website and is used by all projects that are being established. Dr Snowden, do you believe that private investors are put off by the return on investment on hardwood planting, such as oaks and beaches, which take a lot longer to return that investment than sickle spruce? Obviously, species such as sickle spruce grow more quickly. They are well suited to the climatic conditions in this country. The commercial perspective is a more attractive timeline in many cases. The hardwood market is not as developed but there are opportunities in hardwood. People are trying to take advantage of that, but the softwood investment has been the dominant model in the commercial sector. Your recommendation is that corporate companies that are looking to offset carbon who do not reduce their emissions are encouraged to invest in hardwoods rather than sickle spruces, and to look at the reduction in their emissions on top of the carbon offsetting that they are doing? We have a statement at the front of our website saying that companies should follow an emissions mitigation hierarchy. The first thing that they should do is reduce their emissions and offsetting should be the last thing that they do. The wood and carbon code is there to provide confidence that, when they do get to the offsetting stage, it has been done in the right way. We have based a code around international standards such as the gold standard and FERA, which are the world's two leading standards. We do not make specific recommendations to companies in under the wood and carbon code about softwood or hardwood production. The one important thing I would say about timber production in relation to the wood and carbon code is that it significantly reduces the amount of carbon credits that can be claimed. Broadly speaking, you can only claim about a third of the number of credits you have a commercial woodland under the code compared to a woodland that is left there permanently. There is a trade-off between carbon because, on harvest, you are taking carbon out of the woodland. That will, to some extent, deter commercial investment in wood and carbon code woodlands. It explains why the majority of projects, roughly three quarters of projects under the wood and carbon code to date that have been validated, are mixed, broadly and generally mixed woodlands. We know that Government intervention incentivises natural assets and drives up the value of carbon pricing. That has created a gold rush to buy land to offset carbon credits. How does the Scottish National Investment Bank measure the value to the public taxpayer in reducing emissions and sequestrating carbon? Thank you, Ms Hamilton. It is a good question that the value of investment versus carbon reduction is something that impact investors have been looking to quantify for a long time. We will look into, as I have said before, the designated use of the land and ensure that our investment and ethical investment policy and very detailed discussions on those in our first stage investment committee process before we make any investment to determine that our capital is deployed in the most responsible manner possible. It is a growing field of investment and what we need to be careful is that we take advantage of it in Scotland because that money is needed to regenerate, to re-wild, to ensure that we have sustainable building materials in the future and to ensure that we are, as a country, hitting net zero as well. Again, it comes back to what I am seeing as a bit of a theme of this discussion—what land is right for what purpose. I think that that is a combination of us. Whenever we do investments, we speak with the policy teams within the Scottish Government and sometimes within the UK Government as well to ensure that the investments that we are making are not cutting across any policy or causing those issues and that we are live to those issues by having those discussions regularly interacting with ministers such as yourselves on a regular basis. There is not one single solution that I can give for that other than that we are very aware, very conscious of what our investment does and looking to primarily deliver our emissions. That is why we were set up as a development bank investing where others do not invest so that we encourage that investment in the future. It is a very tricky space to manage and to touch on the previous point in terms of reducing first is absolutely there, but reducing emissions takes time. Providing investors with opportunities to offset while they are reducing their emissions and while the countries and the world are moving away from a dependency in oil and gas is really important and an opportunity for us in Scotland to gather that investment in to help us to do that as a country as a whole. There is not one single aim spot here and I think that Mr Fairlie mentioned something earlier that tied up the need to look at this in the round and every investment that you are doing and that is why we work very closely with the policy teams. Finally to Aileen McTaggart, your aim with SNP is to sustain 200 jobs and create 500 additional jobs. Do you know how many jobs have been created through the £50 million investment so far? I don't, but I can follow up with committee on that. It is changing daily that the £50 million investment hasn't been fully invested yet, it's drawn over time as they purchase land and invest and the £200 million was a total over the time, but I'll follow up with the answer on that today. It is very early days because we just have investment, the funds are just being set up and so we are working towards that. During COP, I attended a couple of fringe events and one was on the global biodiversity strategy and it talked about protecting, restoring and enhancing biodiversity. I'd like to direct my question to Joe Pipe, because I was interested in the Scottish Wildlife Trust's funding opportunities outlined and just wondered how that route map was progressing and how much interest you've received in that. When the route map was published last year, which we published jointly with the Scottish Environment Protection Agency with input from a huge variety of stakeholders, it was really encouraging to see a massive amount of interest, including from some of our international stakeholders who told us that they felt it added new to the discussion, as well as obviously trying to bring together some of the things that were already happening across a range of innovative levies, innovative loans, innovative investment opportunities. There were nine pathways within the document that was created and each of those is owned by different stakeholders. The Scottish Wildlife Trust and CEPA provided that space for the conversations to come together and those pathways to be defined. I can sort of home in on a couple of them. For example, the Nature Climate Bond was an innovation that took place as a direct result of the billion pound challenge that we ran, but it built on an existing model that has been developed by Abundance Investment, which is working with a number of local authorities south of the border to deliver climate-related impacts, things like LED lighting and carbon reduction strategies. They provide an opportunity for ordinary citizens to engage in the process through a crowdfunding investment platform. What we looked at through the billion pound challenge was how to bring nature into that picture in order to tackle the nature and climate crisis together, which I think is enormously important. Ian was talking before about the importance of being joined up. That policy coherence is really important, but quite often it is harder to see the monetisable elements of the nature parts of the picture than it is to see the carbon reduction strategies. The fundamental idea is that, if you bundle them together, take sustainable urban drainage systems, which the Scottish Wildlife Trust was engaged in a few years ago in Cumbanol, for example, with Scottish Water. You are investing in the creation of habitat for wildlife, a series of ponds in this case, which is providing economic benefits through improved water filtration, lower pollution costs and so on. It can obviously help flooding impacts as well. Looking at how you bring these two things together, rather than kicking the can down the road with the things that are a bit harder to finance, how can you understand that the two have to be part of the picture from the word go? I spoke to Edinburgh City Council the other day and it is leading on that, but it would be replicable across other local authorities in Scotland. It has just been built into the climate strategy for 2050 that has just been approved by councillors and it is going to a committee in the new year. Obviously, there has been a bit of a hiatus due to the pandemic. That is one really good example where it does not happen overnight, but there is massive potential there. Across a whole range of the other pathways, I would highlight a couple of others. For example, the natural capital pioneer fund, which is a concept that has been developed by a company called Conservation Capital, is in urgent need of an investment readiness facility. That is ready to go. Conservation Capital is already engaged in all sorts of things worldwide, but Neil Burnie, who heads them up, is based in Scotland. This is an opportunity in Scotland that is ready to go if we can, as a nation, put in place this investment readiness support. There are investors lined up to match public funding, if you like. The one final one that I will mention is the invasive species pathway, which I think is a really important opportunity that, at the moment, is not going anywhere because it is not at a stage where there is sufficient resource to make it of interest to the commercial players. The idea was inspired by conversations through the Billing Pound challenge with people who had been involved in the early stages of climate finance maybe 15 years ago. One of the penny-dropping moments for them was the idea to finance renewable energy sources or ground source heat pumps. That would be to put in place finance whereby you take out a loan, you buy a new low-carbon heating system, and you pay back the loan based on the savings that that generates for you. That seems really obvious to us all now, but we do not apply that kind of thinking to invasive non-native species, which on the one hand costs the Scottish economy an enormous amount of money every year. I cannot remember how much. I think that a report that is over a decade old said that it is something like £20 million every single year. That will be probably bigger now and will get worse with climate change, but the science is telling us with invasive non-native species that we should be moving from this constant management, which is costly in itself and does not get to the root of the problem, to prevention. If we can apply the same thinking, Lloyd Spank will be really interested in that, but it is another example of where you need that early public funding to put in place some resource to just move it forward to the next stage before it becomes properly of interest to commercial players. There are lots of things happening across the other six pathways. I will not go into those just now. River Woods is a project that the Scottish Wildlife Trust is leading on, which is developing blended finance principles. You heard Professor Helm earlier talking about the importance of river catchments and riverbank woodlands. How do you have to provide any further information on any of the other mechanisms? I am aware of the roadied endrum ponticum that there is investment going into. The key word was roadied endrum. Sorry, I do not know. We lost connection there just for a minute. I am going to ask Jenny Tate to ask her question again. Sorry, I was commenting there, Joe, on roadied endrum ponticum. I know that there is investment to clear that to avoid the on-going work to clearing. I suppose that my next question, given what Joe has just been talking about, is to Ailey at the bank about how we are ensuring that private funds achieve the right outcomes and how the bank is supporting that. Are the right outcomes for climate and nature, if that makes sense? For the bank, we are unique in that we will only invest where we get an outcome that is commercial investment, so we can recycle our capital and create that perpetual fund, but it also addresses one of our emissions. Increasingly, we see our net zero emission as a bit of a common a lot of general or crucial investment in net zero. One of the investments that I am proud of is our investment in the mid-market rent fund to provide affordable housing for key workers and others close to town on the PFP fund. In making that investment, we encourage the fund to manage to improve the energy efficiency of the buildings and drive that net zero agenda there that has two positive outcomes. One is that the people that live in there, for whatever properties have lower bills for the long term, and obviously the better outcome is for the planet as well in terms of more energy efficient building. All of those things that we take into account and everything that we do, as I have mentioned a few times, increasingly a lot of private sector investors are looking to do that. You have seen that at West announced billions to invest in sustainable finance. You have just heard Joe mention Lloyds, and there are all the big institutional investors such as Alliance and Legal in general, and all the big pension fund strikes like Lothian, all of them in Scotland, as well as bigger ones Royal Mail