Who should pay for ecosystem services?

08 April 2026

Dan Turner of The Rivers Trust on the tricky business of developing environmental markets to help protect communities at risk of flooding

The early years of my career were spent working alongside farmers in the Yorkshire Dales, delivering conservation projects rooted in place and purpose. Each initiative had a clear, tangible goal, whether that was protecting sites of special scientific interest (SSSIs), reducing flood risk or improving water quality. It was deeply rewarding work. You could see the difference on the ground, often within a single season. Those projects remain some of the most fulfilling moments of my career.

And yet, even then, a quiet question lingered. While these efforts delivered genuine improvements at a local level, I couldn’t shake off the sense that they weren’t adding up to the kind of cumulative impact needed to meet the scale of environmental challenges we faced. Were we really moving the dial in a meaningful, lasting way, or simply making incremental progress within a system that wasn’t designed to think bigger?

In many ways, the answer lay in the constraints we were working within. Funding structures often reinforced ‘siloed thinking’: narrow in scope, limited in scale and largely focused on short-term, capital-based interventions. Too often, there was little provision for the long-term stewardship needed to sustain the benefits of these initiatives. It became increasingly clear to me that if we were serious about delivering change at scale, we needed to rethink not just what we were doing, but how we were valuing and funding it.

In 2020, I took the step to join The Rivers Trust. It wasn’t an easy decision. Leaving the Yorkshire Dales Rivers Trust felt like leaving behind a place and purpose I cared deeply about. But the opportunity in front of me was hard to ignore: a chance to work on something that could be genuinely transformational.

Working with the River Wyre

That opportunity was the Wyre Natural Flood Management Investment Readiness Project, work that, for the first time, felt like it might begin to answer the question that had been following me. At its heart was a simple idea: could private finance be used differently, to protect communities at risk of flooding while delivering environmental benefits at scale?

It was a bold collaboration, bringing together partners including United Utilities, the Environment Agency, Triodos Bank and Flood Re, alongside The Rivers Trust and Wyre Rivers Trust. The focus was a community in Churchtown, Lancashire, one all too familiar with repeated flooding and its consequences.

The case for action was clear. Flooding carried a heavy financial and emotional toll, and traditional engineered solutions offered limited scope in this landscape. Yet modelling showed that natural flood management (NFM) could significantly reduce risk. Crucially, there was already a foundation of trust, built over years, between the Wyre Rivers Trust and local farmers, who were willing to deliver change on the ground if the incentives were right.

What began in April 2020 as a 12-month pilot, funded by the Department for Environment, Food and Rural Affairs (Defra) and the Esmée Fairbairn Foundation, soon became a two-year effort. The complexity of developing environmental markets became clear very quickly. The questions multiplied faster than the answers. There was no handbook. While we could draw on experience from other sectors, and had invaluable support from colleagues at Triodos Bank, we were working in new territory.

At the heart of the Wyre project was a simple proposition: if nature provides services, could those who benefit help pay for them? Over 1,000 natural flood management interventions were delivered across the catchment: leaky dams, woodland creation, hedgerows and ponds, designed to slow and store water while delivering wider environmental benefits.

What made the project different, however, was the model behind it (see box below). A consortium of beneficiaries including insurers, water companies and public bodies came together to fund outcomes, rather than individual actions. To enable this, a community interest company (CIC) was established to sit between buyers, investors and farmers, aggregating demand, managing risk and unlocking a blend of private, public and philanthropic finance.

For me, this was a turning point. It created space to think beyond the constraints I had experienced earlier in my career and pointed towards the beginnings of a different kind of system, one that could align environmental need with financial value.

Wyre Catchment CIC – the financial structure

The financial structure brings together £1.5 million in capital through a blended finance approach, comprising £627,000 in grants and £850,000 in private investment provided as a nine-year loan at around 6% interest. Funds are released in stages during delivery and repaid through long term commitments from organisations purchasing flood risk reduction and other environmental outcomes.

Risk is shared across the system: investors supply upfront capital and carry the risk if the project underperforms, buyers pay only for independently verified outcomes, and land managers benefit from stable, long-term payments. The model starts with the full cost of delivering the project and works backwards to determine the level of income required to service debt, meet operational costs and deliver returns.

Diagram illustrating the financial structure of the Wyre Catchment CIC

The Wyre project has become an important blueprint in the flood funding space. Now in its fourth year of delivery, it shows what is possible. But it also highlights how difficult this work is. As our team began to develop new initiatives, including the Aire Resilience Company in Leeds and the Resilient Glenderamackin project in Keswick, it became clear that while the principles could be adopted, the model itself could not simply be lifted and shifted.

A catchment-based approach

Each catchment is different. Each has its own environmental pressures, community dynamics and economic realities. Success depends on understanding those differences and building from the ground up.

One of the most important lessons is that this work must start with the needs of the catchment, not the priorities of a single funder or business. Only by understanding those needs can you begin to identify where value exists and who might be willing to pay for it. This is not straightforward. It requires translating environmental outcomes into revenue streams, understanding how interventions reduce risk or create value for businesses. In practice, this sits across two emerging market types: statutory and voluntary. Statutory markets, driven by regulation, can create demand but are often rigid. Voluntary markets offer more flexibility but rely on engagement rather than obligation.

Much of our work has focused on voluntary approaches. These require a different mindset. Projects often need to respond to multiple drivers at once, balancing the needs of businesses, communities and the environment. What holds them together is a consistent focus on what the catchment needs.

Environmental finance models

One approach that has worked well is the consortium model. The Aire Resilience Company, for example, brings together businesses across Leeds that share exposure to flood risk. By pooling resources, they can fund NFM interventions upstream, something that would be difficult for any organisation to do alone.

While Wyre showed what is possible, it also revealed the limits. Private finance alone is unlikely to meet the scale of need. It is a critical part of the solution, but not the whole solution. The Resilient Glenderamackin project made this clear. As the work developed, it became evident that reducing flood risk to Keswick, in a largely rural catchment, could not be achieved exclusively through private finance. The project has since transitioned into a Landscape Recovery pilot, part of the government’s Environmental Land Management schemes (ELMs), recognising the essential role of public funding in enabling change at scale.

This points to a broader opportunity. Blending public and private finance can help share risk, align incentives and support more ambitious, long-term approaches to land management. There has been real progress in recent years. Private finance is beginning to flow into nature, and policies such as biodiversity net gain are creating new markets. But this space is still in its early stages.

There is a tendency to focus on the scale of capital that could be unlocked. But experience tells us to be cautious. The government’s private finance initiative (PFI) procurement policy, in use between 1992 and 2018, showed that attracting private finance into public goods does not guarantee good outcomes. While it unlocked investment, it often did so through rigid, long-term contracts that prioritised financial returns over flexibility and public value.

The importance of partnership

But finance and structure alone are not enough. Trust remains fundamental. Strong relationships with farmers and landowners are essential, built over time and grounded in fairness and transparency. These are the people managing the land every day. They must be partners in design and delivery, not simply recipients of funding.

If environmental markets are to succeed, we need stronger drivers. Businesses need to better understand their dependence on nature and be supported to act on it, recognising the role that healthy ecosystems play in protecting assets. Initially this could include requiring sectors such as utilities and infrastructure to budget for resilience, creating the foundation for small and medium-sized enterprises (SMEs) to follow.

There is also a role for government. By underwriting certain markets or providing early-stage support, it can reduce risk and help crowd in private investment, while ensuring value for taxpayers.

Looking back, the journey from those early projects in the Yorkshire Dales to where we are now has not been straightforward. But it has clarified something important. Delivering change at scale is not just about doing more. It is about doing things differently, rethinking how we value nature, how we fund it and how we work together to protect it. Environmental markets are not a silver bullet. But, done well, they are part of a wider shift towards recognising that the health of our environment is not separate from our economy, it underpins it.

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Themes of evidence-led land management and private finance will be explored at The Rivers Trust’s free, online Annual Conference on 07 May 2026. Find out more here. For more CIWEM news updates, sign up to The Environment newsletter.

Dan Turner is land management and nature markets lead at The Rivers Trust