Frequently asked questions

A Catchment Market is an on-line marketplace where Nature-based Projects can be sold, and credits for the Environmental Services delivered by these Projects can be bought.

Nature-based Projects are habitat creation, restoration or improvement projects that deliver Environmental Services.  Examples of Nature-based Projects include creating wetlands, planting new woodlands, and reversion of arable farmland to grassland.

Environmental Services include biodiversity and water quality improvements, natural flood management, carbon sequestration and other outcomes delivered by Nature-based Projects.

Multiple Environmental Services can be delivered from a single Nature-based Project, for example a wetland may deliver biodiversity improvements as well as reducing Nitrogen and Phosphorus flows into rivers and streams.

Environmental Credits are a form of intangible property in the form of tradeable certificates that represent the Environmental Services delivered by a Nature-based Project.  

In the Solent Market, the term ‘Environmental Credits’ refers to credits for nutrient mitigation, and biodiversity gain (Biodiversity Units).

A Solent Nutrient Reduction Market Standard is being developed to quantify the nutrient reduction  delivered by different types of Nature-based Project.   Biodiversity Gain will be quantified using Biodiversity Metric 3.1  Nutrient Reduction Credits and Biodiversity Units will be issued by the Catchment Market Operator once it has verified that a Project has been implemented to the agreed Project Specification. 

Project Suppliers

Landholders who are willing to deliver Nature-based Projects on their land are referred to as Project Suppliers.

Project Suppliers within Eligible Areas of the Test & Itchen Catchment can participate in the market if they are willing to:

• contract with the Market Operator to deliver a Nature-based Project to the required Project Specification (Nature-based Project Agreement);
• enter into a legally binding agreement with the Local Planning Authority (Landholder Agreement) covering the future use and management of the Project Land; and
• demonstrate that they have legal ownership of the Project Land or control of that land for the duration of the Landholder Agreement which, for woodlands and wetlands, will be for between 80 and 125 years.

Project Suppliers participate in the market by making a bid (the minimum payment that they want to receive to deliver the project).

More information about the market process for landholders is available here.

Credit Buyers

Environmental Credits are typically bought by organisations that have regulatory obligations or voluntary commitments to reduce their environmental impacts. These organisations are referred to as Credit Buyers.

Developers with nutrient neutrality obligations will be Credit Buyers in the Solent Nutrient Market.  Developers may also be Credit Buyers for the biodiversity gain delivered by the Nature-based Projects.

The Market Operator (MO) is the organisation that establishes and operates the Market.

The Market Operator:

• Calls for Expressions of Interest in supplying projects and buying credits
• Reviews Project proposals and estimates the Environmental Credits that will be delivered
• Registers Projects that meet the required Project Specifications for sale in the Market
• Accredits Projects for the Environmental Services that will be delivered.
• Registers the Credit Requirements of Credit Buyers
• Manages the market bidding and settlement processes
• Enters into Environmental Credit Supply Agreements with Credit Buyers, and Nature-based Project Agreements with landholders

EnTrade is the Market Operator for the Solent Catchment Market.

Nutrient Neutrality is a way for developers to ensure that new developments do not result in an increase in nutrients impacting on internationally protected wildlife sites.

There is an estimated need to mitigate approximately 5000 kilograms of Total Nitrogen per year in the Test and Itchen.  Source

Nutrient neutrality is intended to prevent additional nutrient loads from housing and other development worsening the condition of protected sites. Other measures will be needed to improve the condition of these sites.

The primary causes of nutrient pollution are wastewater and agriculture, and government are already working to reduce nutrient pollution levels in the short and long term. For example from 2020 to 2025, water companies are investing £2.5 billion in measures that reduce nutrient pollution. 

The Sustainable Farming Incentive will pay farmers for actions that generate significant environmental and climate benefits, and animal health and welfare outcomes alongside food production.

A fair application of the polluter pays principle in agriculture would involve ensuring that when we buy food, we pay a price that enables it to be produced without impacting on the environment.

Reducing nutrient pollution requires changes to existing land use and management practices. Modern regulation involves working with farmers and other landholders to achieve these higher environmental standards.

Incentives, including through markets, are an important tool to assist landholders to make the changes required to reduce the flows of nutrients from their land. While many landholders will respond to these incentives, enforcement of standards also needs to be part of the regulator’s toolkit.

The Solent Catchment Market will supply both Nitrogen and Phosphorus mitigation.

Nitrogen mitigation is required for development in both the Test and Itchen catchments. Projects that can mitigate additional nitrogen entering the Solent can be located in Eligible Areas of either catchment. 

In the Itchen catchment Phosphorus mitigation is also required.  Projects that mitigate phosphorus entering the River Itchen must be from Eligible Areas in the Itchen catchment.

Exeter University has created an innovative market settlement process that can manage complex projects (such as projects that are part-wetland and part-woodland) and the environmental services these projects deliver.  We would like to see projects come through the market that can integrate different types of habitats with agriculture and other land-uses.  Access to project development support is available to help optimise the project design.

The market is encouraging projects to come forward in the Itchen Sub-Catchment that deliver nitrogen and phosphorous mitigation.

We are particularly keen to see the development of wetland projects and interceptor woodlands that can prevent Phosphorus attached to soil particles entering rivers and streams in the Itchen Sub-Catchment.

Well-designed wetlands can both trap sediment (mitigating phosphates) and create habitats that can biologically treat nitrates.

Once the Nature-based Project Agreement for a grassland project has finished (eg after 5 years) then the farmer has no further obligations under the Solent Catchment Market and can do what they want with that land.

An Eligible Area is an area of the Test and Itchen catchment where Nature-based Projects will reduce the nutrients flowing into the protected sites before a new development is occupied (adding to the nutrient load).

An Eligible Area Map is available here.  Projects proposed in these areas will be able to participate in the market, subject to confirmation of key site characteristics.

Other areas of the catchment may also be eligible if hydrogeological evidence is provided that demonstrates that a Project in these areas will reduce the nutrients flowing into the protected sites before a development is occupied.

We are looking for farmers and landholders to develop and maintain long-term woodlands and wetlands, and short-term grassland projects.

More information about eligible project types is available here

It will depend on the Project type and location as to what planning or other permissions will be required.

It is the Project Supplier’s responsibility to find out what permits and permissions will be necessary. 

Through the project development phase, advice will be available to Project Suppliers about the permits and permissions that may be required, that are relevant for their project type.

Note - planning permission or other consents do not need to be secured before participating in the market. 

More information is available here

The payments made to Project Suppliers who are successful in a Market Round will depend on the number of buyers for different types of Environmental Service.  

If there are no buyers for a particular Environmental Service delivered by a Project, Project Suppliers retain the rights to these services.

Yes, a landholder retains the rights to Environmental Services for which there are no buyers in a Market Round.

Whether a landholder can sell these Environmental Credits at a later date will depend on the type of credit involved and any rules imposed on their sale by regulators.

Arcadian’s role in the pilot is to lead engagement with landholders and support the development of projects that meet the criteria to participate in the market.

Arcadian is not involved in the operation of the market itself or the market settlement process. The settlement process has been designed by the University of Exeter and will be operated independently to ensure developer and landholder payments are fair.

Landholders that are interested in participating in the market should participate in the Expression of Interest process.  Information about the EOI is available on the Solent Catchment Market  website.  Access to project development expertise is available.

The Catchment Market provides farmers with a way of earning money from nature recovery projects on their land.   Many of these projects can be integrated with existing agricultural practices. 

The Solent Catchment Market Team is available to speak with you about how to integrate nature recovery projects with agricultural production.

Defra will be publishing a Land Use Framework for England in 2023 to help manage priorities that place a demand on our limited supply of land including: food security; sustainable development; supporting action on climate mitigation and adaptation; and promoting nature’s recovery to address biodiversity loss.

Projects need to be additional to be able to participate in the market.  

There are two tests of additionality. 

The first is that the projects deliver an improvement above a baseline measured against an agreed standard.  

The second is that the landholder does not have an existing legal obligation to undertake the project on their land.  

Ensuring additionality is very important to ensure that the environmental improvement is real. 

Unlike a grants programme, there is no set price for a project. 

The market recognises that supplier costs will vary and provides landholders with the opportunity to make an offer for the amount of money that they need to design, deliver and maintain a nature-based project on their land, such as a new woodland, wetland or grassland. 

To work out the amount of money needed, landholders need to consider:  

• the use of their land for the term of the Landholder Agreement 
• the cost of designing and delivering the Project to the Project Specification 
• the cost of maintaining the Project in accordance with the Management Plan • the cost of carrying out the compliance reporting required. 

If a landholder offer is successful in the market, then they will receive at least the amount of money they offered to supply their project for. 

If there is a surplus in the market (which will happen when buyers are willing to pay more for the credits than the landowner needs to deliver the project), then the landowner will also receive a fair share of that surplus.

The financial implications of delivering a Nature-based Project will be unique for each landholder.

We encourage landholders to seek independent financial advice.  

One of the features of the market, is that it allows landholders to set a Project Offer which takes into account all the financial implications of a Project.

The Nature-based Project Agreement would be between a landholder supplying a nature-based project to the market and the Market Operator (EnTrade).

There will also be a s106 agreement between the landholder and the LPA related to ongoing maintenance.

The payment you will need to make for the Environmental Credits will depend on the supply of Nature-based Projects and the offers made by Project Suppliers.

If your bid is sufficient to match the offers made by Project Suppliers, you will pay your bid price less the discount for your share of any surplus from the trade.

The Solent Nutrient Market is a market that facilitates trade in Nature-based Projects and the Environmental Services these projects deliver.

More information about the market process is available here

If you have Registered a Project for sale in a Market Round, you must make a Project Offer.

A Project Offer is the minimum payment that you need to enter into a legally binding commitment to deliver and maintain a Nature-based Project.

A Project Offer needs to cover:

• the use of the Project Land for the term of the Landholder Agreements

        o up to 5 years for short-term Projects

        o 80–125 years for wetlands and woodlands for on-going Projects 

• the cost of delivering the Project to the Project Specification
• the cost of maintaining the Project in accordance with the Management Plan
• the cost of the compliance reporting required.

Further information on Project Offers, payments and the market settlement mechanisms can be found here.

The length of an Agreement will depend on the type of Project being implemented.

Agreements for new Wetlands and Woodlands will be for at least 80 years.

Agreements for new temporary Grasslands will be for 5 years or less.

A Landholder can withdraw a Project from the Market until the time that the Market Round opens. 

Offers to supply Nature-based Projects, and bids to purchase Environmental Credits are binding.

Only offers that are matched by bids from Credit Buyers will be settled in the Market Round.

Projects that do not settle on a market round can be resubmitted for future Market Rounds.  

The market provides a way for landholders to earn revenue from projects that deliver environmental improvements on their land.  The market approach helps to ensure that landholders benefit from the value of Environmental Services for which there are buyers.

The rules for how the Environmental Land Management Scheme (ELM) will interact with environmental markets are still being determined by the Government.   However, the Government has indicated that farmers and land managers who sign up to other environmental agreements/schemes will not be unfairly disadvantaged when it comes to applying for environmental land management schemes where these are complementary (i.e. where the outcomes of the actions being funded are clearly different and not in conflict with one another).  Reference