The evaluation of the cost-effectiveness of Payments for ecosystem services (PES) in fostering positive environmental outcomes has been central to the scientific debate on their implementation. PES cost-effectiveness can be affected by a myriad of environmental, institutional and socio-economic factors operating at different spatial and temporal scales. Moreover, it can be affected by synergies and trade-offs in the provision of ecosystem services (ES). Planting trees is increasingly considered an effective measure to provide water-related ES. It can enhance watershed services such as nutrient retention, erosion control, stream flow regulation, protection against extreme events (e.g., floods and landslides), and lead to a permanent change in land use, replacing agricultural activities that give rise to diffuse pollution. Very few studies currently exist on the cost-effectiveness of tree planting for water quality benefits PES schemes in Europe. Including both review and research elements, this paper highlights challenges in undertaking such assessments. It develops a conceptual framework to help underpin future studies, with its application to three case studies in Denmark explored. Particular attention is given to the estimation of environmental effectiveness in the provision of water quality services and the importance of co-benefits. In the case where we exclude co-benefits from the analysis, the financial costeffectiveness is always above zero, with central estimates (without discounting environmental improvements) of euro 10/Kg N, and euro 0.36 to euro 0.50/mg pesticide. Once co-benefits are accounted for, however, the social costeffectiveness is negative (except for under the low estimates) as the value of the co-benefits exceeds the costs, with central estimates of - euro 28/Kg N, and - euro 0.34 to - euro 0.23/mg pesticide. The paper discusses the implications and lessons for PES cost-effectiveness analysis, and identifies research gaps. Increased knowledge of forest water benefits and the cost-effectiveness of woodlands for water schemes would help underpin future incentives to enhance the provision of these ES.

Trade-disseminated Phytophthora species are implicated in a recent upsurge of Phytophthora diseases in the UK and the establishment and spread of these pathogens in the wider UK environment via diseased propagation material. The costs and benefits of introducing best practices in the nursery sector and for society at large were explored in relation to avoiding potential impacts of introductions of new pathogens in the wider woodland environment. The analysis formed part of a wider project on the drivers of introduction and spread of Phytophthora species and opportunities for mitigation by plant nurseries. The effect in reducing the risk of introductions of new pathogens is not easily quantified, but the shorter the interval between avoided outbreaks, the greater the benefit of introducing best practices. The maximum interval between avoided outbreaks for the benefits to exceed the costs from a nursery perspective can be estimated. The results indicate that the benefits of introducing nursery best practices are unlikely to outweigh the costs from a nursery perspective where Phytophthora alone is considered. The analysis is extended by also considering benefits in reducing risks of Xylella. Scenario analysis based upon modelling harvested wood and carbon impacts is then used to investigate potential costs that would be expected to be borne by society in the event of the introduction and spread of a new Phytophthora species affecting either oak or Sitka spruce stands in Britain. The results indicate the magnitude of the externality involved, with the cost of an outbreak affecting oak estimated at around 500 pound million and one affecting Sitka spruce at 11 pound 300 million. While approaches taken in the paper are exploratory, there seems a strong case for some social incentives or control in the nursery sector, to reduce the probability of new diseases infecting British forests.

This chapter describes how to design appropriate and cost-effective forest green infrastructure for water payment schemes to protect and improve water quality. It is structured by the main steps involved in establishing a payment scheme, starting with identifying the water issues and how tree planting and forest management can help, managing potential disbenefits and exploring multiple benefits, followed by scheme design, monitoring and communication. The approach is relevant to all actors involved in sustainable water management, farming and forestry, from policy makers, catchment planners and land managers to private investors, practitioners and local communities. We provide a common language and framework to help ensure schemes are successful in delivering water and other ecosystem services while minimising possible trade-offs (such as the potential for tree planting to reduce water resources).

AbstractForest Green Infrastructure (FGI) provides society with a wide range of benefits. Significant climate change mitigation benefits arise outside the forest associated with the use of harvested wood products. These include both carbon storage in wood products and carbon substitution benefits associated with the use of wood instead of more fossil energy-intensive materials such as concrete and steel, or of fossil fuels in energy production. This chapter considers the potential of extending coverage of the UK Woodland Carbon Code to the carbon benefits of wood products associated with woodland creation projects. It builds on previous approaches to including the carbon benefits of harvested wood products under existing carbon market standards. The key recommendations include (1) exploring ways of allocating carbon units between woodland owners and wood users that provide incentives to increase the quality and supply of timber, the carbon storage and substitution benefits per unit of wood, as well as the overall benefit to society; (2) consideration of potential double-counting issues and how these can be minimized; and (3) investigating rebound and leakage effects, which affect by how much fossil fuel use in the economy changes as a result of increased woodfuel use. Depending on the management system and species used, woodland creation projects involving wood harvesting may increase overall carbon benefits once carbon storage and substitution benefits have been accounted for particularly over multiple rotations. Further work would be required to assess whether average and generic values of carbon storage and substitution benefits could be incorporated into the UK Woodland Carbon Code’s project-level accounting and impacts on the levels of carbon credits that could then be claimed.

During the COVID-19 pandemic, the prevalence of mental illness has increased. Access to trees, woods, forests, and other natural environments including urban parks and green spaces has become even more important for individuals to support and maintain their wellbeing. This new research is the first of its kind to value the mental health benefits associated with the UK's woodlands. The values are based on the role of woodland in alleviating mental illnesses, resulting in reduced costs to the NHS and employers. The annual mental health benefits associated with visits to the UK's woodlands are estimated to be Pound Sterling185 million. Country-level values based on population size are given in the table below. This research is expected to be of use to policy makers in making the case for continued investment in and expansion of the UK's woodlands and treescapes, and the provision of public access to ensure people reap the benefits of those woodlands.

The multidisciplinary ‘Phyto-threats’ project was initiated in 2016 to address the increasing risks to UK forest and woodland ecosystems from trade-disseminated Phytophthora. A major component of this project was to examine the risk of Phytophthora spread through nursery and trade practices. Close to 4000 water and root samples were collected from plant nurseries located across the UK over a three-year period. Approximately half of the samples tested positive for Phytophthora DNA using a metabarcoding approach with 63 Phytophthora species identified across nurseries, including quarantine-regulated pathogens and species not previously reported in the UK. Phytophthora diversity within nurseries was linked to high-risk management practices such as use of open rather than closed water sources. Analyses of global Phytophthora risks identified biological traits and trade pathways that explained global spread and host range, and which may be of value for horizon-scanning. Phytophthoras having a higher oospore wall index and faster growth rates had wider host ranges, whereas cold-tolerant species had broader geographic and latitudinal ranges. Annual workshops revealed how stakeholder and sector ‘appetite’ for nursery accreditation increased over three years, although an exploratory cost-benefit analysis indicated that the predicted benefits of introducing best practice expected by nurseries outweigh their costs only when a wider range of pests and diseases (for example, Xylella) is considered. However, scenario analyses demonstrated the significant potential carbon costs to society from the introduction and spread of a new tree-infecting Phytophthora: Thus, the overall net benefit to society from nurseries adopting best practice could be substantial.

The PESFOR-W EU COST Action (15206) is a network of researchers and practitioners from 40 countries interested in the effectiveness of woodland measures in reducing agricultural diffuse pollution to watercourses, and the design and governance and cost-effectiveness of woodlands for water payments for ecosystem services (PES) schemes. Diffuse pollution from agriculture is a significant pressure affecting over 40% of Europe’s river and coastal water bodies. Accumulating evidence indicates that the EU Water Framework Directive’s objective that each water body reaches “Good Ecological Status” by 2027 in many cases will only be achieved by targeted land use change. Small-scale forest planting (“Woodlands-for-water”) is a potential solution to this problem. To help underpin future development of woodlands for water projects, PESFOR-W is creating ‘look-up’ tables on the effectiveness of woodland creation for reducing a number of key diffuse pollutants. An initial evidence review found that woodlands buffers reduce nitrate concentrations by over 70% on average in both oceanic and Continental climates, with the strength of effect strongly related to buffer width. PESFOR-W is developing a common protocol for assessing the cost-effectiveness of woodlands for water PES, creating a spatial repository of case studies, and will develop guidance on development of new schemes. It is exploring the potential for creating a Woodland Water Code along similar lines to the Woodland Carbon Code developed for the carbon benefits of woodland creation projects in the UK, and for linking with existing schemes covering other woodland benefits to help achieve wider goals of the carbon-water policy nexus.

This review was commissioned by Welsh Government (WG) from the Environment and Rural Affairs Monitoring and Modelling Programme (ERAMMP) to provide key evidence of potential benefits and disbenefits of woodland creation, woodland expansion and managing undermanaged woodland, to provide an evidence base to inform the development of a National Forest for Wales. During the commissioning process, WG emphasised that the evidence provided must reflect the collective views of the community by reviewing the literature in an objective way highlighting where evidence is contradictory or weak. Within the time available, evidence of causality of impacts, the likely timescales and magnitude of these impacts should be also be presented, for both positive and negative impacts of woodland expansion and management of undermanaged woodlands. This Evidence Pack should also build on the evidence put forward in the ERAMMP Sustainable Farm Scheme (SFS) (https://erammp.wales/en/resources) which included a range of assessments of the value of intervention measures which promoted trees within a landscape setting for a range of environmental, economic and social outcomes. The required rapid production of the review in four months meant an expert approach of key evidence was expected rather than a systematic review. Key topics to cover were selected, in partnership with WG, focussing on issues that could fundamentally change decision-making going forward. The final agreed list was arranged under a series of high-level subject headings, and the individual reviews published as ERAMMP Reports 33 to 38 and include; Biodiversity; Managing Undermanaged Woodland; Future-proofing our Woodland; Climate Change Mitigation; Ecosystem Services, and Economics and Natural Capital Accounting. An Integrated Assessment was also commissioned to provide a synthesis of cross-cutting themes and dependencies between topics. These ERAMMP reports are all provided as Annexes to this report.

We have conducted one of the first attempts to integrate empirical biodiversity data with economic modelling of optimum rotation length for forest stands. We sought relationships between different taxonomic groups and stand age for a range of forest types based upon UK biodiversity assessment data. We then examined the impact of these relationships in combination with biodiversity monetary values on stand-level forest management - something which ecologists might anticipate would lead to extended rotations. Although we found some evidence of significant relationships between overall species richness and stand age for many of the forest types considered, with examples of minima at around 40 years for Sitka spruce in foothills and Corsican pine in lowlands and a maximum at around 50 years for Scots pine in lowlands, at individual taxonomic group level only about 4% of responses were different from constant. However, the overall results mask potentially diverse relationships for individual taxonomic groups. We found evidence of increasing and decreasing relationships (as well as no response) at individual group level which may result from the particular niche requirements and the species assemblages present. When incorporated into the economic Hartman model, the main relationships were found to make minimal difference (with two exceptions) to optimal rotation length under standard assumptions based upon biodiversity values from the literature. When we extended our modelling to incorporate a higher value afforded to biodiversity than published values, we saw significant changes in optimal rotation length in more cases. Our results suggest the need for further refinement of biodiversity estimation and valuation methodology - and we make recommendations for future developments.

The paper reports on the meeting of the Payment for Ecosystem Services Cost Action/18.10.2016-17.10.2020 (CA 15206 PESFOR-Water), which took place from 25 th to 27 th September, 2018 in the Congress Center of the Flamingo Grand Hotel, Albena, Bulgaria. The meeting was related to the European scientific program COST (European Co-operation in Science & Technology). COST Action PESFOR-W includes representatives of 39 countries.

Urban trees and woodlands provide a wide range of ecosystem services (ES) to society, for example, flood risk reduction, air purification, and moderation of urban heat islands. Despite this, local government budgets for tree planting and maintenance have declined in many cities throughout the world. Thus far, the academic literature has largely ignored whether businesses are willing to help fund urban forests and the ES they provide. Business financing via payments for ecosystem services (PES) within the urban realm is also under-researched and lacking in practice. This study aims to address these research gaps. Semi-structured interviews were carried out with 30 businesses of varying sizes and sectors, operating in Southampton, UK. Respondents thought a public-private partnership would be feasible, with a focus on voluntary payments towards enhancing air quality, reducing flood risk, and improving aesthetics. Respondents would prefer to choose from a list of location-specific, cost-effective, monitored projects to fund directly, for marketing and/or corporate social responsibility purposes. To facilitate business funding of urban forest-based ES, clear communication of the expected environmental benefits and a strong business case are required, drawing on the experience of similar initiatives. From our findings, we recommend the piloting and analysis of such PES schemes.

The EU Water Framework Directive aims to ensure restoration of Europe’s water bodies to “good ecological status” by 2027. Many Member States will struggle to meet this target, with around half of EU river catchments currently reporting below standard water quality. Diffuse pollution from agriculture represents a major pressure, affecting over 90% of river basins. Accumulating evidence shows that recent improvements to agricultural practices are benefiting water quality but in many cases will be insufficient to achieve WFD objectives. There is growing support for land use change to help bridge the gap, with a particular focus on targeted tree planting to intercept and reduce the delivery of diffuse pollutants to water. This form of integrated catchment management offers multiple benefits to society but a significant cost to landowners and managers. New economic instruments, in combination with spatial targeting, need to be developed to ensure cost effective solutions – including tree planting for water benefits - are realised. Payments for Ecosystem Services (PES) are flexible, incentive-based mechanisms that could play an important role in promoting land use change to deliver water quality targets. The PESFOR-W COST Action will consolidate learning from existing woodlands for water PES schemes in Europe and help standardize approaches to evaluating the environmental effectiveness and cost-effectiveness of woodland measures. It will also create a European network through which PES schemes can be facilitated, extended and improved, for example by incorporating other ecosystem services linking with aims of the wider forests-carbon policy nexus.

The paper provides an overview of the papers included in this special issue, and presents thoughts about New Frontiers of Forest Economics. The paper argues that science does not mean analysis alone; it should be complemented by synthesis and forest economics is a promising field to rediscover synthesis as a methodology of science. The paper sets the goal of boundless profession of forest economics and suggests three key areas of research: (i) economic models that interweave other-regarding and non-cooperative self-interest preferences; (ii) rigorous analysis and synthesis of externalities and development of new economic approaches to address the diversity of interrelated property rights of complex ecosystems; and (iii) treating markets and political institutions as entangled institutions.

Evidence from behavioural economics illustrates how cognitive factors can affect the preferences, values and choices of individual decision-makers. The evidence also shows how policy ‘nudges’ that account for the influence of cognitive factors can shift choices in socially desirable directions. Despite a wide range of potential applications, little research has been published to date applying behavioural economics in forestry. As an example of how behavioural economics could be used, this paper considers the potential for nudges in encouraging woodland creation to help meet climate change mitigation and adaptation goals. Although forests offer significant climate change mitigation and adaptation potential, land managers are often reluctant to create new woodlands, hindering accomplishment of national targets. Nudges could potentially help overcome the barriers. Disaggregating behavioural elements of woodland creation using the Stages of Change model, we identify a number of relevant intervention points at which nudges could be applied. It is argued that nudges may best be tailored towards different types of land manager taking account of differences in attitudes, motivations, circumstances and behaviour. To be effective, a combination with other policy instruments is likely to be needed. Pilot studies are recommended in determining which nudges are cost-effective. The paucity of existing studies drawing upon behavioural economics, or testing out nudges, points to this as a current frontier of both forest economics and policy, but can also be considered a frontier of environmental policy more widely. Developing a consistent valuation framework allowing for the social endogeneity of preferences and for optimization (or some other protocol) to be used in selecting policy options remains a fundamental challenge.

Cost-effectiveness analysis is important in focusing policies on minimising the costs of meeting climate change mitigation targets and other policy goals. This chapter provides a review of previous cost-effectiveness estimates of forestry options and underlying approaches, focusing especially upon UK studies, and setting the estimates in the context of those for other mitigation measures. Methodological issues such as discounting affecting estimates are discussed and existing evidence gaps highlighted.For the UK, research gaps include evidence on impacts of afforestation on forest soil carbon balance, on comprehensive GHG balances for forest stands, on carbon stock changes during early tree growth and once stands reach maturity, and carbon substitution (or displacement) benefits. Better evidence is also needed on opportunity costs and on leakage effects.Existing evidence indicates that forestry options are generally cost-effective compared with a range of alternatives. Whether this conclusion holds in particular cases will vary between projects and regions, as well as being dependent upon the approach adopted. To the extent that cost-effectiveness estimates depend upon the methodology adopted and benchmark used, future comparisons could benefit from greater methodological transparency and consistency.Not only may forestry options be relatively cost-effective but, given the challenging task of reaching current targets, they are likely to be critical if existing international objectives on climate change mitigation are to be met.

Although widely considered to be a core aspect of quality assurance of climate change mitigation activities, additionality remains a source of much controversy in relation to carbon accounting and carbon markets. This chapter illuminates the multi-faceted nature of the concept and develops a taxonomy of different forms. It provides an overview of how additionality is currently applied in relation to both compliance and voluntary carbon markets, including tests used and underlying evidence base requirements. This draws upon and updates an earlier review commissioned to help inform development of a Woodland Carbon Code designed to underpin climate change mitigation activities in the UK by the forest sector. Sources of uncertainty and trade-offs in practical application of the concept are highlighted, and potential perverse incentives explored.