Alladale Wilderness Reserve

Alladale Wilderness Reserve

Key Facts

The whole reserve covers 9,300Ha, this project is about: 

1. Planting an additional 110,000 new native trees across 4 sites that together cover 100Ha; and

2. Restoring a further 700+Ha of peatland

This pilot is part of a wider Kyle of Sutherland river catchment plan to restore 5 high priority rivers stretching over 200km.

The proposed work will contribute to the Scottish government’s targets to support the restoration of 250,000Ha of peatland by 2030, to halt biodiversity loss by 2030 and reverse it by 2045, and to achieve net zero by 2045.

Additionally, it will help address the Aichy targets that have not yet been met in Scotland. The project will also develop key ESG performance indicators relevant to the habitat and local community needs.

What is the project doing for Nature and Environment?

Our pilot river catchment restoration seeks to restore freshwater and terrestrial ecosystem function in a key salmon river system through native woodland creation and peatland restoration.

If we can create a replicable gap finance model for sharing, we hope to enable the scale-up of restoration projects across the whole Kyle of Sutherland catchment.

Monitoring of carbon uplift will be measured against baseline using techniques enshrined by the peatland code; freshwater and terrestrial biodiversity will be monitored using remote sensing, bioacoustics, aerial and fixed-point photography, and eDNA sampling; we also aim to monitor hydrologic flow naturalisation across the riverine system.

How are communities engaged and benefiting?

Our community engagement has begun through group meetings and presentations with members and associates of the North Ross Deer Management Group, communicating progress, the wider plans for KoS and potential framework for a replicable model that if successful could be used by other land owners/managers. Similar is planned with proprietor members of the Kyle of Sutherland Fisheries Trust.

At this development stage we are also exploring the opportunity to deliver more local employment and training in addition to that which already exists, as well as how best to integrate a community benefit fund through the delivery phase.

A community tree nursery at Ardgay also forms part of the wider plans.

Work is open source with updates available to all and any interested parties as well as through TENT social media channels.

What is the business model employed to fund the project?

We are seeking to fund the nature financing gap (after public grants) with private sector investment, in return for a share of future ecosystem service revenue.

The model assumes initial future income will be generated through carbon sequestration via peatland, utilising the peatland code.

Proposed investment however would also cover the funding gap for long term woodland creation as well potentially bring forward other nature investment requirements on the reserve.

The model under discussion is based on a “waterfall’ of returns, whereby the offtake from future carbon sales flow first to the investor and is subsequently shared in different percentage bands with landowner and benefit fund, once initial defined returns have been met. 

Describe the partnerships formed and how they support project viability?

The project is managed by a partnership between The European Nature Trust, with Gleann Mor Natural Capital as lead on financial modelling, buyer engagement, investment and revenue generation.

The project is in development stage, with the focus on achieving an outline agreement with terms of trade agreeable to both investor and landowner which might be replicable.

Key considerations are:

  • Sharing of future returns
  • Covenant on land used for Peatland restoration 
  • MRV (mearsurement, reporting, verification)
  • Risk management procedures (e.g. for grazing / fire)
  • Insurance product potential for all parties
  • Long term impact on land valuation and control

Any future partnerships will be between Alladale and the investors, with current development activity being made in consultation with potential investor NewCore Capital.

What are the main challenges and risks to the project and how are they managed?

  • Technical - Peatland restoration and tree planting will be carried out under Peatland Code and Scottish Forestry Grant requirements, which provides a level of technical certainty to both parties, alongside 3rd party verification and contractor work. Added to this will be long term management plans of the key sites and requirements for the landowner to deliver these.
  • Financial - Marrying the demands and interests of the investor over a 10-15 period alongside those of the landowner and community, so that risk is understood and mitigated appropriately both via potential return and initial commitment. Designing an agreement that takes the price of carbon off the table at the beginning and exploring financial risk mitigation through the potential of a suitable insurance contract.
  • Political - Building in flexibility to take advantage of the potential Biodoversiy market and any changes to the grant landscape.
  • Environmental - Key risks are damage to the habitat on restored sites, which could be either through grazing or fire. The Peatland Code already sets aside 25% of project area for damage, this is accompanied by deer management strategy to reduce grazing pressure and fire risk control. 

Key Learning and Insights

  • Technical - Independent and market accepted M.R.V is crucial for investor confidence, alongside experienced 3rd party contractors and delivery partners. The project also wants to be in position to add new science and solutions as they become proven and accepted.
  • Financial - Aligning the financial timelines of the parties is paramount to even beginning discussions, this should form part of a broader agreement on principles. Once these are established it is about defining acceptable returns for the risk over those timelines, whilst taking a route that seeks to take price (for carbon) off the table to begin with. 
  • Political - allowing a degree of flexibility where possible via principles, to accommodate future regulation and market change,
  • Environmental - a baseline survey will be carried out prior to starting restoration work, and monitoring of the response of key species, will provide a vital understanding of the scale of the work needed and whether is it successful. The monitoring strategy and costs will inform the template design and financial model.

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