PONE-D-20-40133

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

PLOS ONE

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Academic Editor

PLOS ONE

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2. Thank you for stating the following in the Competing Interests section:

"Mark Reed is Research Lead for IUCN UK Peatland Programme and sits on the Executive Board for the Peatland Code. Tom Curtis is a founding partner of 3Keel and helped develop Landscape Enterprise Networks. Matthew Hay is a Project Manager and Stephen Prior is co-founder of Forest Carbon Ltd. David Hill is founding owner of Environment Bank Ltd."

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Reviewers' comments:

Reviewer's Responses to Questions

Comments to the Author

1. Is the manuscript technically sound, and do the data support the conclusions?

The manuscript must describe a technically sound piece of scientific research with data that supports the conclusions. Experiments must have been conducted rigorously, with appropriate controls, replication, and sample sizes. The conclusions must be drawn appropriately based on the data presented.

Reviewer #1: Partly

Reviewer #2: Yes

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2. Has the statistical analysis been performed appropriately and rigorously?

Reviewer #1: N/A

Reviewer #2: N/A

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3. Have the authors made all data underlying the findings in their manuscript fully available?

The PLOS Data policy requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.

Reviewer #1: Yes

Reviewer #2: Yes

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4. Is the manuscript presented in an intelligible fashion and written in standard English?

PLOS ONE does not copyedit accepted manuscripts, so the language in submitted articles must be clear, correct, and unambiguous. Any typographical or grammatical errors should be corrected at revision, so please note any specific errors here.

Reviewer #1: Yes

Reviewer #2: Yes

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5. Review Comments to the Author

Please use the space provided to explain your answers to the questions above. You may also include additional comments for the author, including concerns about dual publication, research ethics, or publication ethics. (Please upload your review as an attachment if it exceeds 20,000 characters)

Reviewer #1: This paper presents an attempt to identify the possibilities and impediments to integrated ecosystem service markets through an exploration of the emergence and framing of a small set of UK ‘ecosystem services’ markets and EU peatland markets. There are some clear lessons from the evaluation and the attempt to explore unification options has promise. Yet the markets explored are limited geographically and institutionally, and the exploration itself has some substantial weaknesses that I feel need to be addressed to support the conclusions drawn. For these reasons, expanded below, I have recommended reject.

Major comments:

It is not clear what is considered a ‘market’ and therefore considered in-scope or out of scope and why. Although there are several discussions in the paper it does not seem to me that there is clarity around supply and demand issues. At first glance, particularly from the discussion in the introduction, it appears only two-sided markets consisting of private sellers and buyers are within scope. Later in the paper it becomes clear that there are a range of different ‘sellers’, some of which could not be considered private, whilst some ‘markets’ may have large components of public funding (i.e. public buyers). The inclusion of investment funds and bonds is also complicating, on the one hand they appear to represent a private ‘demand’ in the market, however since in at least some instances the finance must be repaid at a future point in time they seem to be more about credit supply and risk management in environmental markets rather than actual market participants on either the demand or supply side. This confusion about what the paper covers is reflected in the commentary in section 2 ‘debate emerged over whether the analysis was considering schemes, markets, or stakeholder engagement frameworks’. In a nutshell the paper requires greater clarity about the ‘market’ analysed.

This lack of clarity around what is considered a market means that it is unclear whether schemes such as The Countryside Stewardship Scheme should be included (publicly designed and funded agri-environment scheme), or some activities of not for profit nature conservation groups such as Wildlife Trusts (e.g. purchase and management of land for ecosystem services). More importantly, limiting the geographic scope of the paper to the UK and three markets focusing on peatland in Europe means that the potential for generalisation across landscape scale public good markets is limited. For example, the not-for-profit sector plays a much larger role in market formation and facilitation in the US (see for example The Nature Conservancy facilitates a number of landscape scale initiatives inclusive of markets) where there are a large number of different initiatives seeking landscape scale public good outcomes (at least in part) using markets. With respect to this point – the introduction should be altered to clarify that the exploration is limited to ‘ecosystem markets currently in operation or close to market in the UK, and peatland markets in Germany, Switzerland and the Netherlands’.

Exploration of supply and demand issues (e.g. as specified in row in Table 1) only very briefly explores prices (which the discussion in text makes clear are not market clearing prices which would emerge were supply and demand to intersect) and does not address broader supply and demand issues (with the exception of BIF – where the discussion simply states ‘no problem expected’). A paper wishing to explore landscape scale outcomes should in my view credibly identify in the relevant case study markets whether there are constraints from both a supply and demand perspective. This step would help to identify overall potential feasibility, particularly given that some landscape scale outcomes can only be achieved with substantial participation – i.e. supply of the ecosystem service. Furthermore, the results conclude “… engagement with suppliers (typically landowners and managers) was a challenge for all schemes …” but this appears in conflict with the conclusion in the data summary in Table 1 where no such issues were identified. Indeed, it would be useful to identify whether these schemes (or an integrated version of them) are able to adequately address the landscape scale problem or the supply and demand is inconsistent with the solution scale required.

The inclusion of national carbon markets into the discussion section is problematic from a language and practicality perspective. First, voluntary and compliance carbon markets were specifically excluded in section 2 yet seem to re-appear in Table 2 and in the discussion of types of ecosystem markets (because several case study schemes are categorized as such). Second, the basis for the conclusions in Table 2 and Section 4.1 are unclear. Early references to carbon markets (section 2) refer only to voluntary carbon markets. Noting the examples given in Table 2, the authors are indicating that there is a class of markets that are largely driven by carbon and operate anywhere within the boundaries of the relevant country. This should be made much more clear given the earlier language in the paper. Furthermore, there will likely be interaction with formal carbon markets which in effect set a floor price for this ecosystem service.

The discussion of regional ecosystem markets would benefit from reference to the economic theory around club goods which these types of investment coalitions appear to be consistent with. This appears relevant at several points in sections 4 and 5.

The paper presents a number of novel points which could be emphasised to further strengthen the paper:

• There is a unfortunately a conflict between pure public goods represented by carbon and (at least partly) spatially delineated public goods such as flood mitigation – so integration of regional markets could either strengthen pathways to carbon markets and therefore the market OR weaken regional markets via the potential for institutional rules to prevent or complicate ecosystem service ‘stacking’. I suggest more attention could be paid to this point.

• What are the challenges in moving from the facilitated, network style markets brokered by individuals towards a more anonymised trading approach? Is an anonymised trading approach incompatible with the market structures explored in the paper? (or are some of these markets essentially boutique?)

• Regional ecosystem markets are essentially parallel markets under any scenario in the paper (because they are geographically focused). This means that they would always remain separate – but what can be learnt across them that facilitates integration in other ways across the overlapping national or ecosystem specific markets and green finance schemes?

• Robust standards appear to make goods more ‘fungible’. Is there a role or a pathway that moves ecosystem goods along a continuum towards fungibility and market formation in the way that some of these markets are developing? It is also important to note that the ‘fungibility’ of carbon is due to agreed conversion of the green house gas forcing of a range of gases emitted to the atmosphere (e.g. methane particularly in a landscape scale setting).

Reviewer #2: Review of: Integrating ecosystem markets to co-ordinate landscape-scale public benefits from nature

General:

The manuscript is: 1) a review of several PES of varying types in UK and Europe, 2) an attempt to develop a typology of PES schemes, 3) an evaluation of advantages, disadvantages of different type of PES, and 4) evaluation of potential to further integrate ES markets.

In general, I think that the topic is important in the context of a growing and diverse array of mechanisms to focus on ES service outcomes of investment and payments directly for ES outcomes and relatively little literature that looks at and evaluates of the diversity in this growing sector. I think that the methods applied interviews, focus groups and secondary research are appropriate for the task at hand. I also believe that a refined and improved version would provide valuable insight and be read, valued and cited by the relevant research and policy community.

I do think that there are a number of writing and organisational issues in manuscript that would require improvement prior to the manuscript being published.

I also feel that some very general conclusions seem pretty overstated. For example the manuscript ends by concluding that

“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.”

some additional specific comments are embedded in the attached commented original manuscript

A more realistic conclusion that is backed by the evidence presented is that: we are currently seeing emergence of discussion and early small scale “niche market” implementation around the right support and design to integrate m.ultiple sources of private investment with public funding, but we remain a long way from being able to deliver the levels of funding needed to truly adequately address the twin challenges of climate change and biodiversity loss.”

Specific

Intro – the first part of discussion in section 4 – highlighted in yellow for the authors – is introductory material – not discussion in the sense that it is general and speaks to why the topic treated is an issue – its not discussion of the specific study findings.

Move this text and using in re-write of intro.

Methods- I’m happy with this section. It provides brief but complete explanation of what was done and I think that the appropriate and adequate methods are chosen and adequately explained.

Results- The table in this section is a useful way to summarise a lot of relevant information and analysis. I read it carefully and referred to when reading discussion. The one thing that I did wonder about as the lumping together of what are two quite different public regulation driven markets – carbon and biodiversity offset. The former is easier to measure with better developed standardised protocols. The challenges of equivalence has made the latter more challenging to date.

I was less pleased with the page and a half of results reporting that followed in two blocks of dot pointed text. I felt like that information could be better organised into a set of subheaded sections and that in some cases themes re-emerged under different dot points rather than being discussed all at once. Not sure what exactly the right sub-heading would be but could include: source of demand public versus private, verification/validation, intermediaries and supply/demand coordination, co-benefits, additionality.

Discussion

Mostly good discussion – I did wonder about extent to which conclusions were specific to the particular schemes investigated as opposed to the class of schemes generally. For example an advantage of local scheme described

“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.”

I’m also aware that some green investors like Kilter Ltd investing for the Victorian Superannuation uses a similar model. Is this a chacteristic of local versus green investor?

Conclusion We are still talking about a scale that is small and niche, this doesn’t really come across in conclusions. The conclusions can also be a bit better articulated regarding what recommendations for role of government.

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Reviewer #1: No

Reviewer #2: Yes: jeffery d connor

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Submitted filename: PONE-D-20-40133-Original_Submission-Reviewer_Version-1.pdf

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

PONE-D-20-40133R1

Dear Dr. Reed,

We’re pleased to inform you that your manuscript has been judged scientifically suitable for publication and will be formally accepted for publication once it meets all outstanding technical requirements.

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Kind regards,

Neville Crossman, Ph.D.

Academic Editor

PLOS ONE

Additional Editor Comments (optional):

Reviewers' comments:

Reviewer's Responses to Questions

Comments to the Author

1. If the authors have adequately addressed your comments raised in a previous round of review and you feel that this manuscript is now acceptable for publication, you may indicate that here to bypass the “Comments to the Author” section, enter your conflict of interest statement in the “Confidential to Editor” section, and submit your "Accept" recommendation.

Reviewer #2: All comments have been addressed

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2. Is the manuscript technically sound, and do the data support the conclusions?

The manuscript must describe a technically sound piece of scientific research with data that supports the conclusions. Experiments must have been conducted rigorously, with appropriate controls, replication, and sample sizes. The conclusions must be drawn appropriately based on the data presented.

Reviewer #2: Yes

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3. Has the statistical analysis been performed appropriately and rigorously?

Reviewer #2: N/A

**********

4. Have the authors made all data underlying the findings in their manuscript fully available?

The PLOS Data policy requires authors to make all data underlying the findings described in their manuscript fully available without restriction, with rare exception (please refer to the Data Availability Statement in the manuscript PDF file). The data should be provided as part of the manuscript or its supporting information, or deposited to a public repository. For example, in addition to summary statistics, the data points behind means, medians and variance measures should be available. If there are restrictions on publicly sharing data—e.g. participant privacy or use of data from a third party—those must be specified.

Reviewer #2: Yes

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5. Is the manuscript presented in an intelligible fashion and written in standard English?

PLOS ONE does not copyedit accepted manuscripts, so the language in submitted articles must be clear, correct, and unambiguous. Any typographical or grammatical errors should be corrected at revision, so please note any specific errors here.

Reviewer #2: Yes

**********

6. Review Comments to the Author

Please use the space provided to explain your answers to the questions above. You may also include additional comments for the author, including concerns about dual publication, research ethics, or publication ethics. (Please upload your review as an attachment if it exceeds 20,000 characters)

Reviewer #2: I'm happy with the revisions, the authors have addressed my initial concerns and those of the other reviewer well. This is a very good contribution to the literature done thoroughly with appropriate methods and well written - ready to publish in Plos Oen

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Reviewer #2: Yes: jeffery d connor