Integrating ecosystem markets to co-ordinate landscape-scale public benefits from nature

Ecosystem markets are proliferating around the world in response to increasing demand for climate change mitigation and provision of other public goods. However, this may lead to perverse outcomes, for example where public funding crowds out private investment or different schemes create trade-offs between the ecosystem services they each target. The integration of ecosystem markets could address some of these issues but to date there have been few attempts to do this, and there is limited understanding of either the opportunities or barriers to such integration. This paper reports on a comparative analysis of eleven ecosystem markets in operation or close to market in Europe, based on qualitative analysis of 25 interviews, scheme documentation and two focus groups. Our results indicate three distinct types of markets operating from the regional to national scale, with different modes of operation, funding and outcomes: regional ecosystem markets, national carbon markets and green finance. The typology provides new insights into the operation of ecosystem markets in practice, which may challenge traditionally held notions of Payment for Ecosystem Services. Regional ecosystem markets, in particular, represent a departure from traditional models, by using a risk-based funding model and aggregating both supply and demand to overcome issues of free-riding, ecosystem service trade-offs and land manager engagement. Central to all types of market were trusted intermediaries, brokers and platforms to aggregate supply and demand, build trust and lower transaction costs. The paper outlines six options for blending public and private funding for the provision of ecosystem services and proposes a framework for integrating national carbon markets and green finance with regional ecosystem markets. Such integration may significantly increase funding for regenerative agriculture and conservation across multiple habitats and services, whilst addressing issues of additionality and ecosystem service trade-offs between multiple schemes.

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Introduction
Worldwide, benefits from nature to society have been estimated to be worth more than the global gross domestic product 1 . When ecosystems become degraded, the cost of restoration can be prohibitive, and businesses and communities who rely most directly on these services are typically the first to suffer the consequences 2 . Neoclassical economics suggests that if property rights are clear and well defined (and if transaction costs are not too high), a social optimum can be attained via bargaining amongst ecosystem service providers and beneficiaries 3 . This sets the basis for the market to theoretically protect and sustain those services 4,5 . While this may work for some provisioning services over short time-horizons (e.g. food and fibre), markets often fail to reward those responsible for providing service (e.g. upstream farmers or forest managers whose work benefits those downstream) when benefits are hard to attribute a financial value to (e.g. mental health or spiritual benefits from nature) or when benefits mainly accrue to others in society (e.g. downstream flood protection) over longer time-horizons (e.g. climate change mitigation). As a result, many resource management decisions generate short-term private benefits to the owner or manager at the expense of longer-term public benefits, often leading to negative externalities (e.g. pollution or flooding).
In response to this, governments commonly pay resource managers to adopt more sustainable practices and carry out other work that can protect or enhance public benefits from nature. Businesses may also pay for these public benefits for a variety of reasons, including the need to mitigate risks to their business (e.g. from climate change), reduce costs (e.g. by delivering cleaner water), secure social licence to operate or contribute towards corporate sustainability goals 1,6,7,8 . This is increasingly being done via Payment for Ecosystem Service (PES) schemes, which offer monetary incentives to individuals or orgnanisations to adopt or alter behaviours, beyond what is legally mandated, to improve the provision of ecosystem services that would otherwise have been economically unviable to provide 9,10,11,12 .
However, there are a number practical challenges to the development and operation of PES schemes 13,14 . Challenges that may deter buyers (such as food processors and water companies) and investors in ecosystem services (such as insurance companies and impact investors) include: the complexity of demonstrating the additionality and permanence of benefits (i.e. proving that they would not have happenned without investment and the benefits will be long-term), costs of monitoring and verifying benefits, coordination between investors to avoid non-paying beneficiaries piggybacking on investments (i.e. benefiting from the investment of competitors without contributing themselves) or benefits for one investor cancelling out benefits for others (for example, tree planting creating habitat for predators of a species being protected by a neighbouring scheme) 15,16,17,18,19 .
There are also many potential barriers discouraging resource managers (for example, landowners, tenants and other businesses managing natural resources; the typical 'suppliers' whose actions shape ecosystem service delivery) from engaging in schemes. These include: poorly defined property rights, perceived (and real) risks of entering long-term contracts (including unknown impacts that managing for ecosystem services would have on land value), lack of clarity as to their eligibility for funding from public schemes after entering a privately i funded scheme, as well as more straightforward capacity issues relating to how they would implement and manage such schemes 3,13,20,21,22,23,24 .
There is also potential for private ecosystem markets to compete with publicly funded agrienvironment schemes, which are becoming increasingly PES-like in their design. For example, the latest Rural Development Programmes under the EU's Common Agricultural Policy pay more for environmental outcomes than ever before 25,26 and post-Brexit agricultural policies in the UK are increasingly focusing on "public money for public goods" 27 . Even if publicly funded schemes pay i Funded by private enterprise or investment lower amounts over shorter time-horizons than privately funded schemes, they may still displace private funding if they are perceived to be simpler or more familiar, and hence lower risk to resource managers 23 .
The integration of different private ecosystem markets could address some of these issues by actively managing synergies and trade-offs. However, to date there have been few attempts to do this, and there is limited understanding of either the opportunities or barriers to integration of private markets. There is also limited analysis of interactions between public and private schemes, or how these might be better "blended". While much has been written about international voluntary and compliance carbon markets in recent years 28,29,30 , much less is known about the national and subnational ecosystem markets that have proliferated in recent years, and how they operate or interact with each other.
This paper therefore uses a comparative analysis of existing private ecosystem markets in operation or close to market at national and sub-national scales in the UK and elsewhere in Europe, to explore governance issues associated with integrating different types of ecosystem markets. Specifically, it aims to:  Develop a typology of ecosystem markets by comparing ecosystem markets currently in operation or close to market in the UK, Germany, Switzerland and the Netherlands;  Question some of the operating assumptions of ecosystem markets and offer insights that could enable the cost-effective operation of schemes that minimise trade-offs and integrate benefits across a wide range of land uses at landscape scales; and  Propose an approach that could be used to integrate multiple ecosystem markets, operating over multiple land uses and habitats, including the integration of private markets currently focusing on different systems, habitats and/or ecosystem services and the blending of public and private schemes designed to deliver public goods.
The analysis includes all known private schemes operating or close to market in the UK, where the development of ecosystem markets has been a policy priority since the launch of the Woodland Carbon Code in 2011 and the 2011 Natural Environment White Paper (which included a Payment for Ecosystem Service Action Plan 31 ). It also includes all known privately funded schemes targeting peatland restoration in Europe, where innovative funding mechanisms have proliferated in recent years, providing insights into the operation of ecosystem markets internationally for this habitat.

Methods
We conducted a comparative analysis of: 1) all known private ecosystem markets operating (or near to market) across dairy, arable, forestry and peatland systems in the UK (Table 1); and 2) all four private peatland ecosystem markets known to be operating in Europe ( Table 1). Schemes that were deemed out of scope included non-UK schemes (other than European peatland schemes), schemes at concept or early development stages, and single transaction bilateral arrangements that were not part of a longer-term scheme sourcing multiple projects for multiple buyers or investors. For this reason, voluntary and compliance carbon markets were not included in the analysis.
Research was conducted in four phases, as shown in Figure 1. For more detailed methods, see Gosal et al. 32 and Olesen et al. 33 .
Phase 1: Scoping: A narrative literature review was conducted to identify all private ecosystem markets currently operating or near to market in the UK (in any agro-ecosystem) and all private ecosystem markets operating in peatlands in Europe. Unlike systematic reviews or meta-analyses, a narrative literature review is an expert-based "best-evidence synthesis" of key literature 34 , which is better suited to reviews that aim to provide a broad overview via expert synthesis, where it is difficult to identify specific outcome measures 35 . This literature also served to identify interview topics and questions for Phase 2. To ensure all relevant schemes were identified (including those close to market, which were not in the public domain) and refine the parameters of the analysis, scoping interviews were conducted for the UK comparative analysis and the two case studies, and a focus group was conducted with seven participants (including researchers, consultants and EU policy stakeholders) for the European comparative analysis of peatland schemes. During this phase debate emerged over whether the analysis was considering schemes, markets or stakeholder engagement frameworks. Some were formalised as schemes with clear governance structures and rules of engagement, while others (especially those close to market) were more loosely conceived, but operated as a market with buyers and sellers. Phase 3: Analysis. Qualitative data from interview and focus group discussions were analysed thematically alongside documentation from each scheme. Interviews were recorded, transcribed and anonymised in line with ethical approval from the Newcastle University. The thematic analysis approach outlined by Braun and Clarke 36 was used to undertake in-depth analysis of the interview and focus group transcripts in three stages: initial coding of ideas, views and concepts into minor themes; review and refinement of minor themes to identify major themes; evaluation of themes in relation to the objectives of the study to draw in relevant insights to the comparative analysis 37 .
Theoretical saturation was considered to be achieved when no new themes were identified from transcripts.

Phase 4: Triangulation:
Finally, preliminary findings from interviews and review of scheme documentation were triangulated via individual written feedback from interviewees (with those providing extensive inputs offered co-authorship), with the addition of a focus group for the UK schemes. In the focus group, findings from the interview phase were presented to participants for discussion in plenary, before breaking into two parallel groups to discuss options for integration between the three main private schemes in operation in the UK, and between public and private schemes. The focus group was attended by 12 participants including researchers, consultants, businesses, the third sector, an intermediary/broker and policy stakeholders from regulatory bodies and Government departments in Scotland and England. Table 1 describes and then compares each of the schemes reviewed in terms of their approach to: validation and verification of outcomes; additionality and leakage; permanence; supply and demand issues; interaction with public funding; and scheme governance. These are discussed further in the Supplementary Material, Gosal et al. 32 and Olesen et al. 33 . The Blue Impact Fund has been structured to fill a gap in the market, providing tailored finance and support to businesses that otherwise wouldn't be able to access the same level of support. The BIF will also work with businesses to create portfolio level synergies and work with our pipeline to maximise impact. ii Legal agreements between Environment Bank and the landowner provider

Results
The comparative analysis identified a number of points of commonality between the schemes that were reviewed (see Supplementary Material and Table 1). Common characteristics and challenges across all schemes are:  Participation in all schemes was voluntary for both buyers and sellers, and the level of payment for interventions was primarily determined by project costs, with negotiation between buyers and sellers possible in some schemes. None based their prices on the price per tonne on the voluntary carbon market, which would typically have been too low to cover project costs. One of the ways that the four peatland schemes justified higher prices (compared to international carbon market prices) was by highlighting additional non-carbon benefits such as water quality benefits of restoration or biodiversity. The marketing of cobenefits was common across all the schemes reviewed, but verification and quantification of co-benefits were limited in nearly all schemes (MF being the exception).  Most schemes used intermediaries to engage with project developers (e.g. landowners and tenants), or the scheme itself performed this function (e.g. BIF) and LENs used supply aggregators to aggregate sufficient density of supply within a single landscape. However, engagement with suppliers (typically landowners and managers) was a challenge for all schemes except BIF which had created a £90M project portfolio prior to entering its investment phase.  On the demand side, sensitivities around the willingness of businesses to share financial data were identified as a challenge to the establishment of co-procurement arrangements between buyers in schemes where this was possible. As well as this, additionality was an issue for buyers in some schemes where businesses were reluctant to pay for interventions that landowners/tenants should already be doing to comply with regulation and/or that could be paid for by public finance.  Across the schemes, consideration of the wider social distribution of ecosystem services was limited, although there was recognition of its importance for buyers with Corporate Social Responsibility goals.  Permanence was addressed primarily via contractual arrangements in the schemes reviewed, although Conservation Burdens (Scotland) and Covenants (England and Wales) were sometimes proposed by schemes as potential future options to provide additional assurances to buyers in some UK schemes, and BIF provided follow-on funding opportunities to enhance permanence.
In addition to these common characteristics and challenges, the comparative analysis identified a number of important differences between the schemes that were reviewed (see Supplementary  Material and Table 1), for example:  The four peatland schemes and WCC tended to validate and verify outcomes using site visits by independent certification bodies, HB was developing a third-party accreditation system and BIF accredited projects to relevant industry standards. However, validation mechanisms had not yet been developed for NCB and NCPF, and LENs and NIS provided validation in the form of evidence that interventions had been carried out, without requiring independent verification of ecosystem service outcomes.  Additionality was only assessed formally by the four peatland schemes, WCC and HB, typically via legal (e.g. projects go beyond what would be required by law), financial (e.g. projects would not be possible without carbon finance) and other additionality tests (e.g. application of biodiversity metrics in HB receptor sites). None of the other schemes applied formal additionality tests, relying instead on trusted intermediaries to manage additionality informally as part of the project design process (e.g. LENs) or identifying businesses that had been unable to fund sustainability initiatives via other means (e.g. BIF).  The peatland schemes and WCC tended to focus on selling (often fungible) climate mitigation benefits via market registries (e.g., the UK Land Carbon Registry run by IHS Markit). While co-benefits, such as biodiversity benefits were used to market these schemes, only MF quantified and "stacked" these benefits as part of a package of ecosystem services for buyers. In contrast, other schemes were designed to sell or finance a wider range of (mainly non-fungible) ecosystem services, including water quality, soil function, biodiversity and animal welfare benefits, in addition to climate mitigation to buyers.  Investments in the peatland schemes, WCC and HB tended not to be geographically linked to the locations or interests of buyers, who they sourced nationally, and some of these schemes ruled out international investment to avoid double-counting against national emission reduction targets. LENs, NIS, BIF, NCB and NCPF were able to accept funding from national and international buyers (e.g., overseas impact investors). However, LENs and NIS tended to focus on sourcing funding from regional stakeholders, on the basis that this is a scale at which synergies and benefit integration are easier to achieve.  Schemes relied to varying extents on public funding, both in terms of scheme operation and project financing. The peatland schemes and WCC were significantly more reliant on public funding for project financing and in many cases scheme operation than the other schemes reviewed.  Payment mechanisms varied significantly across schemes (and in some cases between interventions within schemes) with the use of different legal agreements, payment structures and investment aggregation platforms (ranging from intermediaries acting as demand aggregators to crowdfunding platforms).

Discussion
There is a well-known and significant gap between the public funding currently available and the funds that are needed to address the twin challenges of climate change and biodiversity decline 40 .
In the UK alone, it has been estimated that it will cost £1.8M to meet Achai biodiversity targets 41 , and the cost of reaching net zero GHG emissions by 2050 has been estimated at between £50-70 billion 42 . However, there are significant challenges in delivering emission reductions in the land use sector, where it is estimated that it may cost £247 million to deliver net zero targets from peatlands, woodland and agriculture 43 . This gap is likely to increase as Governments around the world respond to the economic impacts of the COVID pandemic of 2019-20. In the UK land use sector, this is compounded by post-Brexit agricultural policies, which will lead to an overall reduction in public funding for the sector by 2027 as support moves away from direct payments. The upfront costs of many nature-based solutions are prohibitive for owners and managers in the land use and marine sector, and it can be many years before monetizable benefits accrue, further exacerbating the funding gap.
At the same time, members of the UK Investment Association managed £8.5 trillion in 2020 44 and the global bond market was worth $21 trillion in 2019 45 . Within this community is a small but growing group of impact investors who are willing to accept lower than market-rate returns on investment and higher levels of risk 46 . There is also growing recognition in the corporate sector of increasing risks to business from the environment, with climate risks now commonly featuring on company risk registers. Although only 13 percent of US company directors ranked climate change as one of their top five risks for 2020 47 , risk assessments over longer time horizons identify multiple risks from climate change, notably risks from extreme weather to infrastructure and supply chains, and "transition risk" as regulation and consumer preferences shift towards a low carbon economy, amplifying other more traditional risks e.g. being left behind by low carbon technology accelerations and resource scarcity 48 .
As a result, demand from the corporate sector is now growing rapidly for ecosystem markets, and there has been a recent proliferation of new schemes and markets, as shown in Table 1. These markets are being stimulated by Government investment, with the goal of using public funding to leverage private investment in natural capital. For example, in the UK, an Investment Readiness Fund was launched in 2021 to support the development of natural environment projects that can generate revenue from ecosystem services and attract repayable investment. The three-year £10 million programme will provide grants which project developers can use to build capacity and consortia to develop projects to an investible level 49 . The UK will issue its first green government bond in 2021, setting an example to other governments on issuing green bonds in the year that the UK hosts the 26 th Conference of the Parties to the UN Framework Convention on Climate Change. The UK follows the example of Poland's sovereign green bond (in 2016) and Germany's inaugural green Bund (in 2020).
In this section, we will discuss some of the key differences between the schemes and markets included in the comparative analysis and explore the potential to integrate different types of ecosystem markets. In doing so, we explore the governance issues associated with private market integration and the blending of private and public funding for public goods.

Types of ecosystem market
Based on the comparative analysis in Table 1 and Supplementary Material, three different types of scheme emerged, based on their modes and geographical scales of operation, funding and outcomes ( Table 2): 1. National carbon markets, primarily sold verified, validated, additional and (often) fungible climate mitigation benefits (sometimes marketed as offsets), typically to national buyers within a single country, with permanence provided by legislation of long-term contracts and significant Government funding for projects and/or scheme operation; 2. Regional ecosystem markets enabled buyers to manage environmental risks to their business by investing in a wider range of non-fungible ecosystem service outcomes (including water quality, soil function, biodiversity and animal welfare benefits), in addition to climate mitigation, typically to regional buyers, with varying levels of validation, verification, additionality and permanence and limited Government funding required for projects and/or scheme operation; and 3. Green finance provided risk-adjusted returns on investment for national and international investors (potentially including members of the public via crowdfunding) who were willing to accept lower than market rate returns, and financed the widest range of (sometimes fungible) ecosystem service outcomes, with verification of outcomes (and in one case additionality) using industry or Government agreed metrics and standards, permanence via long-term contracts or follow-on funding and limited Government funding required for projects and/or scheme operation.
Although not included in our sample of UK-based schemes that are operational (or close to market) and peatland schemes in Europe, green finance mechanisms can also include loan-based schemes and insurance products. For example, Scottish Natural Heritage, Scottish Environmental Protection Agency, Scottish Wildlife Trust, RSPB, British Ecological Society and British Marine are developing a scheme based on loans with Lloyds Bank, in which commercial bank loans are be made to groups that can implement biosecurity measures to prevent the arrival or spread of invasive species or help eradicate them. Loans would be repaid from future savings on the costs of managing invasive species 50 . For example, Willis Towers Watson have a Global Ecosystem Resilience Facility uses the prospect of reduced premiums to encourage investment in projects that reduce climate-related and other environmental risks to clients (e.g., coral reef protection and restoration to protect coastal businesses from storm surges), reducing risks and so making premiums more affordable 51 . Corporate Social Responsibility (CSR) schemes are not included in the typology, as this is one of a range of motives for investing in ecosystem markets, and CSR can motivate investment in all three types of scheme identified above.
The typology in Table 2 provides an evidence-based distinction between the key types of ecosystem markets operating in the UK and Europe on the basis of their modes of operation, funding and outcomes. This may provide useful clarity for decision-makers in policy and practice who wish to expand the role of private investment (ranging from crowdfunding to green investment funds) in conservation and regenerative agriculture. For example, a practitioner may be able to use the typology to identify relevant existing schemes or develop new schemes that target the types of ecosystem services, project developers or investors they are most interested in. Alternatively, a policy-maker targeting climate change mitigation from the land use sector might prioritise the promotion of national carbon markets, whereas a Local Authority seeking to reduce flood risk might prioritise paying for or attracting private investment in natural flood management via LENs and/or investment in sustainable urban drainage systems via green bonds or other green finance mechanisms. A decision-maker interested in providing additional income streams for farmers might focus on a peatland scheme or LENs, and if they wanted to exclude overseas investment to ensure investments counted towards national net zero targets, they might focus on national carbon markets and regional ecosystem markets, rather than green bonds which tend to attract international impact investors. The typology also provides new academic insights into the operation of ecosystem markets in practice, which may challenge traditionally held notions of PES. In particular, regional ecosystem markets do not conform to a number of assumptions underpinning PES and financial markets, in which payments would normally be conditional on, or linked to, ecosystem service outcomes or returns on investment. For this reason, the next section considers the operation of this type of ecosystem market in greater depth.

Understanding the success of regional ecosystem markets
The emergence and successful early operation of the regional ecosystem market model is particularly noteworthy, given how differently this model operates compared to national carbon markets and green finance ( Table 2). What constitutes a PES and how to define it is subject to much debate 52 , but generally there is agreement on PES involving individuals or organisations ('buyers') paying other individuals or organisations who manage natural resources ('sellers') to deliver clearly defined benefits or "ecosystem services" from nature 14 . While this definition of PES relaxes Wunder et al.'s 9,10 original stipulation that transactions must be voluntary (they rarely are in publicly funded PES schemes), the conditionality of payments on the delivery of well-defined, agreed outcomes remains central to PES, and is widely assumed to be necessary to engender the necessary buyer confidence to underpin a functional ecosystem market 52 . Therefore, the limited provisions for validation, verification and additionality in the regional ecosystem markets reviewed in this research may either be used to question whether these are indeed PES schemes, or to question how important conditionality is to the success of a PES scheme. Moreover, unlike green finance schemes, regional ecosystem markets are not designed to provide returns on investment. As such, it may at first glance seem surprising that the LENs scheme in particular had attracted significant levels of private sector investment and was proliferating across UK landscapes with new international LENs propositions being developed at the time of the analysis. Although prices across the schemes reviewed were dictated primarily by the costs of delivering projects and so varied from project to project, national carbon markets tended to calculate the cost of projects per tonne of carbon as a reference point to guide buyers. In contrast, LENs buyers had no way of knowing the likely climate benefits, let alone the price of these per tonne of carbon. Instead, they took a more risk-based approach to negotiating prices between buyers and sellers on the basis of risks to assets, supply chains or reputational risks, which could be reduced or avoided by paying for interventions in the landscape. In addition to providing a different reference point for buyers in the negotiation, the focus on risk often brought more senior executives responsible for risk management to the negotiation table with access to different budgets, compared to the sustainability and corporate responsibility officers typically involved in decisions around carbon offsetting. In addition, the metrics typically used to assess risk tended to be less precise than those used to assess offsetting, which may explain the willingness to work with trusted intermediaries to deliver risk reduction outcomes without the controls on verification, validation and additionality of projects that were seen in national carbon markets.
This focus on risk management may also explain the broader range of interests captured by regional ecosystem markets, including for example, asset risks from flooding, supply chain risks arising from issues with water quality, soil function or animal welfare, reputational risks arising from threats to biodiversity, and the wider risks to assets, supply chains and reputation arising from climate change. This diversity of interests then drove demand for multiple ecosystem services, which had to be managed in space and time to avoid trade-offs where the delivery of one service (e.g. carbon via conifer plantation) compromised the delivery of another (e.g. biodiversity). However, this diversity of outcomes also increased the likelihood that companies who did not invest in a scheme may benefit from the investments of their competitors (the free-rider effect). The LENs scheme addressed the challenge of avoiding both trade-offs and free-riders by identifying multiple risks across landscapes used by a number of beneficiary organisations who could manage risks by working together at landscape scales. This increased the number of co-investors to reduce the freerider effect whilst ensuring interventions worked together without generating trade-offs at the landscape scale through the identification of multiple interests across the investor community prior to constructing the landscape scale interventions to deliver against those interests. Aggregating demand for ecosystem services in this way also increased the overall amount of funding (by stacking payments for multiple benefits) and led to perceptions of long-term resilience in funding, as the risks of any individual investor withdrawing funding were reduced with an increased number and diversity of investors. The successful aggregation of demand was in part due to the proactive role of trusted business-to-business brokers, compared to the national carbon markets, which tended to be managed by organisations with very different cultures and language (typically Non-Governmental Organisations, research institutes or Government agencies), who played a more passive role in engaging with investors.
On the supply side, the limited requirements around verification, validation and additionality had the benefit of reducing red tape for land managers who wished to engage with regional ecosystem markets. Indeed, evidence from interviews with farmers working in the LENs scheme in Cumbria have shown widespread satisfaction with the scheme compared to the complexity of public agrienvironment schemes 53 . Although farmers still commented on the additional reporting burden, and had other criticisms of the scheme, engagement with the scheme was strong. The two most important drivers for farmer engagement with the scheme, according to a subsequent Delphi survey, were: i) additional, stable income for easily planned and reported, and flexible activities that were compatible with existing management; and ii) improving environmental outcomes and animal health 54 . In addition to the relative simplicity of the regional ecosystem market model, trusted intermediaries were employed to actively recruit farmers, further reducing barriers to entry. These intermediaries aggregated suppliers of services, and so increased market potential (availability of saleable benefits) while reducing transaction costs (of contracting with multiple landowners/tenants).
In contrast, national carbon markets were less proactive in recruiting land managers to develop projects. Neumann 55 conducted a Social Network Analysis of PC and MF, showing little or no engagement with land management representatives in the two governance networks. Instead, decision-making was primarily taken by scheme co-ordinators in consultation with a small number of key researchers who acted as knowledge brokers, providing access to necessary evidence. There was limited active involvement from members of the policy community, although interviews showed that "weak ties" in the network to these more peripheral actors had played an important strategic role in gaining political support and funding for the two schemes. The role of the most engaged researchers in both networks was multifaceted, acting as trusted intermediaries to members of the policy community as well as providing access to evidence to inform scheme development and management. However, both networks were highly dependent on the knowledge, experience and trust that had been accumulated by a small number of scheme co-ordinators and managers, making the ongoing success of both schemes vulnerable to the impact of staff turnover (indeed, the Peatland Code Manager was replaced soon after the research was conducted). In the case of the Peatland Code, the Director had similarly strong networks, providing a degree of resilience to the management of the network. In the case of MF, despite stronger reliance on a single scheme coordinator and additional scheme coordinators in the other participating federal states, a larger number of researchers and practitioners played pivotal roles in the network, which may provide this scheme with more resilience to changes in staffing, compared to the Peatland Code. Despite the relatively informal governance arrangement of MF, compared to the two formal governance structures in the Peatland Code, the day-to-day operation of both schemes was similarly dependent on a small number of active members who regularly exchanged knowledge with others, and who were trusted by their network.
More complex and formalised governance structures may be necessary to ensure accountability and transparency as new regional ecosystem markets develop and seek integration with national carbon markets. However, the successful operation of these schemes needs to mitigate the risk of losing key trusted individuals from the network, if these individuals provide access to expertise, political capital, funding and experience from across their networks. Equally, scheme resilience and delivery of outcomes may be strongly influenced by a small number of key players, which may limit the rate at which new schemes can successfully proliferate, based on their individual capacity.

Scheme integration
The main reasons for integrating national and regional ecosystem markets that emerged from the stakeholder workshop (see phase 4 in Methods) were to increase levels of investment and drive more multifunctional outcomes from landscapes. National carbon markets have the potential to bring in new investors to regional ecosystem markets from beyond the region, and regional ecosystem markets have the potential to extend the range of habitats, land uses and interventions that can be funded, beyond those currently covered by national carbon markets. There is a danger that single habitat/service schemes, such as woodland carbon schemes may drive certain outcomes (e.g. climate change mitigation) at the expense of others (e.g. biodiversity), but by integrating national carbon markets and regional ecosystem markets, it may be possible to aggregate demand across multiple habitats and land uses for multiple ecosystem services, and so design schemes that reduce the likelihood of ecosystem service trade-offs.
However, there are a number of governance and technical (e.g., additionality) challenges involved in integrating ecosystem markets. Integrating schemes could generate unwelcome levels of complexity, compared to retaining the status quo of separate schemes, given that these schemes are already operational without integration. There is also a danger that the "commercial force" of carbon markets (as one private sector stakeholder put it) might disrupt regional ecosystem markets that are not currently tapping into this market, leading to a significant refocussing of attention on a single ecosystem service.
The need for schemes to deliver additional outcomes that would not otherwise have been delivered (or legally required) poses a more significant challenge to the integration of national carbon markets and regional ecosystem markets. As described in Section 3.2, regional ecosystem markets were less likely to include formal additionality tests, relying instead on quality assurance of work undertaken to deliver outcomes. However, if income streams for climate mitigation via a national carbon market are integrated with funding for a wider range of ecosystem services via a regional ecosystem market for a package of linked interventions on the same parcel of land, it may be difficult to ensure additionality tests are met. For example, if payments for water quality improvements are stacked on top of carbon payments for a peatland restoration project, it may be difficult to prove that the restoration would not have happened without the carbon finance. One solution to this is for national ecosystem markets to apply financial additionality tests (e.g. the Peatland Code and Woodland Carbon Code require a minimum of 15% carbon finance to be additional). In the case of the Woodland Carbon Code, projects can be de-registered if they integrate additional funding that was not declared prior to validation. Alternatively, although complex and currently untested, it may be possible to apportion credits to different budget contributions within a single project, limiting carbon credits to the proportion of the project funded by carbon finance. The simplest solution however, currently being pursued by UK schemes, would be to spatially separate the delivery of ecosystem services from different schemes, for example integrating peatland restoration and woodland creation in different locations upstream from farmbased projects managing soil carbon or planting hedgerows.
The importance of intermediaries and brokers in achieving integration cannot be understated. In addition to working as supply and demand aggregators (see previous section), they also play an important role in identifying interventions and projects that could deliver monetizable benefits, demonstrating cash flows, evaluating risks and calculating potential return on investment, before presenting opportunities to investors, where relevant accrediting projects to standards (like those developed for national carbon markets) to increase investor confidence 56 . Evidence from the comparative analysis suggested that communication and trust between scheme actors may be as important as the development of formal governance structures. For two of the peatland schemes analysed (PC and MF), there was evidence that researchers may play a more important role than has been previously appreciated 55 , as trusted knowledge brokers and advocates rather than simply as providers of knowledge and evidence (c.f. Pielke 57 ). Financial brokers have the capacity to work across all three types of ecosystem market, and initiatives like the Broadway Initiative, Green Finance Institute and SRUC's Thriving Natural Capital Challenge Centre in the UK are already connecting many private schemes and working with Government to create an enabling policy environment.
Building this discussion, Figure 2 proposes three ways in which transactions between buyers and sellers could be managed to integrate both national carbon markets and regional ecosystem markets. In Option 1, a regional ecosystem market procures climate mitigation benefits from a scheme that is also supplying national carbon markets or green finance markets, either directly via a demand aggregator or intermediary (A), or with the demand aggregator procuring ecosystem services as part of a package of benefits arranged by a supply aggregator/intermediary (B). In Option 2, the carbon or green finance scheme acts as the supply aggregator, providing multiple functions from its own scheme with options (C) to source interventions from other supply side entities. The scheme may also supply additional climate mitigation benefits into national markets (D). In Option 3, the carbon or green finance scheme provides both demand and supply aggregation functions. Although this is the simplest integration option, it creates a conflict of interest because the same body is negotiating on behalf of both supply and demand side parties to the transaction. An important principle in integrating carbon, or any additional function into a multifunctional landscape trade, is that different income streams should be put together simultaneously to make a trading proposition, and that the full range of ecosystem services to be provided should be agreed prior to the proposition being agreed and implemented. Once implemented, there is typically little incentive for future buyers to pay for outcomes, since those outcomes are already being delivered, and the additionality tests of national carbon markets would not be met, since activities on the ground would demonstrably not be dependent on the additional payment.
Finally, the research highlighted a number of potential areas of conflict between public funding for natural capital and privately funded ecosystem markets. These included the potential for public funds to outcompete private funds (e.g., where public schemes offer more attractive terms including shorter contract lengths and simpler or more familiar application processes), that would otherwise have enabled the market to deliver the public good. Participants noted that when private funds were cancelled out in this way, they did not tend to be redeployed elsewhere in the environment. There was also considerable uncertainty over future public schemes as the UK develops and trials post-Brexit policy over a relatively long time-frame, which could freeze the market, with potential sellers withholding projects until they know whether they will get a better price under existing private schemes versus future public schemes. A lack of integration between public and private schemes may also impact supply of projects to the private sector where those supplying projects consider the terms of public funding preferable to those available from private schemes. However, as summarised in Table 3, it may be possible for grant payments under future public schemes to be designed to incentivise co-investment with privately funded PES schemes. The options described in Table 3 show how public funding might be designed in future to incentivise participation in privately funded PES schemes, rather than funding obligations that could have been provided more costeffectively through a privately funded approach. Several of these approaches may work best in combination.

Establishing fund-matching / co-investment as a default principle
An extension of 'trigger funds' in that it establishes a wider default that public funds should only be issued on the basis that a level of private sector funds are already in place for a package of naturebased solutions.
 'Signalling' to build confidence within the marketplaceavoiding both demand and supply side players being caught in an 'opportunity cost dilemma'.
 Risk that public-benefit oriented projects, where there is little private sector demand, will be disadvantaged.

Using a transparent cost-benefit matrix to target public sector funds
Public funds would be adjusted according to a matrix of public benefit versus private finance potential. Stepped, or differential, rates of funding would need to be guided by a transparent set of tests.
 Creates 'smarter' funding, 'stepping up' funds for more difficult, or publicgood oriented schemes or locations.  Provides a 'safety net' to fund valuable projects for which there is no private market  Adds complexity, and requires a defensible and widely applicable set of tests.

Creating integrated systems for public-private implementation
This is an organisational task; to enable public and private funding mechanisms to interact. It means overcoming mismatches in organisation scales, timelines, terminology, definitions, and metrics. Integration could happen in various ways but is scale dependent; a funding synergy in East Anglia won't be the same as one in Cumbria. Our recommendation is that public funding shapes itself around emerging private sector markets.
 System integration (or at least alignment) will be critical to avoiding public sector funds neutralising potential private sector investment.
 Depending on the level of integration, it could increase bureaucracy, and reduce the agility of private sector delivery.

Conclusions
This paper has provided an empirical basis for a new typology of ecosystem markets based on schemes currently operating or under development in the UK and in European peatlands. Each have distinct operational scales of investment and delivery, modes of funding and governance models. Of particular interest are emerging regional ecosystem markets, which are stimulating and meeting demand for ecosystem services by framing demand in relation to business risks and aggregating both demand side interests and the supply of services, overcoming free-rider effects and minimising trade-offs between ecosystem services across a landscape. Contrary to assumptions underpinning traditional PES schemes, taking this approach may lead to strong and resilient demand for ecosystem services in the absence of tight coupling between payments and provision of benefits. However, integration of these regional ecosystem markets with national carbon markets and green finance mechanisms may provide an expanded range of investors and land uses from which a much wider range of services can be provided.
The integration of private schemes may also make it possible to co-ordinate more effectively with public funding for ecosystem services, prioritising public funding towards landscapes and services not paid for by the market, and increasing the diversity and amount of funding for sustainable land management interventions. While the options for integrating private ecosystem markets proposed here are currently theoretical, there are now attempts to apply these integrative governance models in practice. Achieving integration between schemes is increasingly important as private ecosystem markets proliferate around the world. However, as separate schemes proliferate, so does the likelihood of competition and trade-offs between services provided by different schemes. The need to manage these trade-offs and ensure private investment contributes to multifunctional landscapes is therefore a key driver for considering how schemes can more effectively integrate with each other.
As publicly funded schemes also become more PES-like in many countries, there is a risk of perverse outcomes if public funding pays for services that would otherwise have been provided by the market. However, by designing future public schemes to complement private ecosystem services, it may be possible to avoid these markets being crowded out, and even use public funding to leverage private investment, for example via carbon trigger funds ( Table 3). As Government budgets come under increasing pressure, stimulating ecosystem markets could help fill the funding gap, contributing to a green post-COVID economic recovery, and increasing the likelihood that ambitious climate and biodiversity targets are met. However, to unlock this private finance, mechanisms need to be developed to ensure public and private funding can be successfully blended in future nature-based projects. Robust standards (akin to those developed for peatland restoration in Europe) are needed to govern the development of new markets in a wider range of land uses and habitats, to provide investor confidence and ensure outcomes are delivered. Public funding may also be used to help these new markets develop investment pipelines with projects that are ready for investment with the associated staff and governance mechanisms to channel investment scale capital into nature-based solutions. In some contexts regulation may be considered, for example the integration of Net Biodiversity Gain in the planning system, requiring developers to make (typically offsite) provisions to compensate for biodiversity losses and provide additional biodiveristy gains. Government funding could also help unlock supply by employing facilitators to explain opportunities to owners and managers of land and marine assets, simplifying and democratising access to private finance. In conclusion, much still needs to be done to stimulate and integrate ecosystem markets, but with the right support and design, it may be possible to integrate multiple sources of private investment with public funding to deliver the levels of funding needed to address the twin challenges of climate change and biodiversity loss.