Scottish Government

Nature Conservation Designations and Land Values

CHAPTER THREE: THE SSSI AND ESA SCHEMES IN SCOTLAND

3.1 This chapter briefly describes the nature of the SSSI and ESA scheme as they currently operate in Scotland. Particular attention is given to the characteristics of land designated under both schemes. The chapter concludes with a description of the proposed changes to the SSSI scheme concentrating on the key issues in relation to land values.

SITES OF SPECIAL SCIENTIFIC INTEREST

Description of existing scheme

3.2 Sites of Special Scientific Interest are designated on the grounds that they are the most important areas for the conservation of habitats, species and geological features. The SSSI system extends across Britain and represents the mainstay of land and freshwater-based natural heritage designations. In Scotland, there are over 1,450 SSSIs covering 990,000 hectares or 11.6% of the total land area (SNH, 2000). Most land is privately owned and, in general, the areas designated are managed as part of working farms, sporting estates or forests.

3.3 At present, areas can be designated as a SSSIs by Scottish Natural Heritage (SNH) under the Wildlife and Countryside Act of 1981. Designation is based on GB guidelines relating to scientific criteria. Only sites reaching a certain minimum qualifying standard are considered for designation with the final selection depending on the diversity of habitats and species in Great Britain and the geographical variation which natural habitats exhibit.

3.4 SSSI status has three implications for landowners and occupiers. Firstly there are implications in terms of the planning system since all planning authorities are required to consult SNH when deciding on applications for development which may affect an SSSI site. In cases where planning development is denied, SNH have no obligation to compensate landowners. Secondly, owners and occupiers of SSSI designated land are required to inform SNH in advance if they intend to carry out an activity which could potentially affect the conservation value of a site. A list of such activities (known as Potentially Damaging Operations or "PDOs") is provided by SNH. They are, in the main, activities for which planning permission is not required. For example, cutting a drain in a peat bog or ploughing up a meadow to grow a different crop may, in some cases, be defined as a PDO since it might affect the plants, animals or geological features for which the site has been designated. Having examined the individual case, SNH may either consent to it taking place or enter into an individually negotiated management agreement with the owner or occupier to compensate them for not going ahead with the activity. Finally, SSSI land owners may be able to enter into an agreements with SNH to undertake positive management practices which enhance the conservation value of the site over and above that which would exist under existing management practices. This latter type of agreement has become increasingly common over the last decade.

Geographical Coverage and Land cover

Figure 3.1 illustrates the geographical coverage of SSSIs in Scotland. They are shown to vary significantly in size with the largest coverage occurring in the Flow country of Caithness and Sutherland.

Figure 3.1 SSSI designations in Scotland

3.5 The type of land designated varies widely in terms of it economic potential. As an indication of this variability, Table 3.1 presents the land cover composition of SSSI designated land.

Table 3.1 Land Cover Composition for SSSI designated areas in Scotland

Notes:

Based on information from the Macaulay Institutes database, Land Cover of Scotland (MLURI, 1988)
Boundary data for ESA and NSA sites provided by SEGIS.
Boundary data for SSSI sites provided by SNH.
Undefined landcover areas are caused by differences in the definition of coastal boundaries.

Accessibility

3.6 The vast proportion (95%) of SSSI designated land is located in remote rural areas, that is areas outwith 30 minutes drivetime of a settlement of 10,000 or more. This suggests that most SSSI land will not be a target for potential land purchasers wishing to combine rural lifestyles with accessibility to urban centres. Sites which are located within accessible areas as shown in Figure 3.2. In these areas, pressures for development may be more intense.

Figure 3.2 The accessibility of SSSI designated areas

The extent of management agreements

3.7 At 31 ^st March 2000, 170 SSSI lump-sum payment management agreements were in existence. These related to 27,022ha (2.7% of total SSSI designated land) and had a historic cost of 6,467,760 (SNH, 2000). Many of these lump-sum payments, particularly the larger payments, were negotiated in the late 1980s, early 1990s. Ongoing SSSI management agreements payments made during the year to March 31 ^st 2000 covered 64,932 ha (6.5% of total SSSI land) and cost 1,854,002 (SNH, 2000).

3.8 The principle of compensation for not carrying out a PDO has received considerable adverse attention. The system is open to abuse and is at odds with usual planning procedures and other regulatory controls on the environment. However, referrals to SNH for compensation have become far less common in the course of the 1990s. At least part of this can be attributed to the increasing role of SEPA and the extension of Environmental Impact Assessment (EIA) to forestry proposals. Thus many of the cases for which compensation has been paid in the past would not now, even without changes in the SSSI system, reach the stage by which SNH would be obliged to enter negotiations.

3.9 Importantly, over 90% of owners and occupiers of existing sites have not sought to secure compensation through proposed changes in management despite their potential entitlement for profit foregone. The proposed changes to the scheme in particular the removal of this entitlement may nevertheless affect these existing landowners, as discussed in Section 3.3 below.

THE ENVIRONMENTALLY SENSITIVE AREAS (ESA) SCHEME

Description of scheme

3.10 The objectives of the ESA Scheme are set out in section 18 of the 1986 Agricultural Act as follows:

• To conserve and enhance the natural beauty of an area.
• To conserve the flora or fauna or geological or physio-graphical features of an area.
• To protect buildings or other objects of archaeological, architectural or historic interest in an area.

3.11 The Act gave the Secretary of State for Scotland the right to designate areas of Scotland as ESAs if it was felt that the maintenance or adoption of particular agricultural methods was likely to help achieve these objectives.

3.12 A total of ten areas on Scotland have been designated as ESAs since 1987 (see Table 3.2).

Table 3.2 Environmentally Sensitive Areas, Scotland, July 1997

Source: Crabtree et al. (1999)

3.13 Each ESA has its own particular objectives, reflecting the different environmental attributes of the area and farming systems. In order to enter an ESA scheme farmers must produce a conservation plan that commits them to carrying out certain positive conservation activities appropriate to their farm (so-called "Tier 2" activities). They will then be entitled to a payment for carrying out these activities plus a Tier 1 payment that compensates them for adhering to a basic management prescription for the area. Tier 2 payments come in one of two forms: annual payments for adhering to certain management prescriptions and capital payments for capital works such as fencing for stock control, dyking or bracken control). For the scheme as a whole, 57% of committed Tier 2 expenditure in 1997 were for annual payments to farmers, 43% for capital works (Crabtree et al., 1999).

Geographical coverage and Land cover

3.14 The geographical spread and size of ESA designated areas are shown in Figure 3.3.

Figure 3.3 ESA designations in Scotland

3.15 The areas vary significantly in both size and land use. Table 3.3 shows the composition of land cover in ESA designated areas.

Table 3.3 Land Cover Composition for ESA designated areas in Scotland

Notes:
Boundary data for ESA and NSA sites provided by SEGIS (SERAD).
Boundary data for SSSI sites provided by SNH.
Undefined landcover areas are caused by differences in the definition of coastal boundaries.

Accessibility

3.16 Ninety per cent of ESA designated area is classified as being a remote rural area, the remaining 10 per cent being within 30 minutes drivetime of a settlement of 10,000 or more. Figure 3.4 indicates that most of the accessible land falls within either the Central Southern Uplands or Loch Lomond ESAs. Only in these areas would you expect there to be a high demand for land from the residential market or from new part-time lifestyle farmers with jobs in urban centres.

Figure 3.4 The accessibility of ESA areas in Scotland

Participation in the scheme

3.17 Uptake of the ESA scheme was initially slow but increased gradually. By 1997, only 24% of total holdings in ESA designated areas were estimated as being entered in the scheme (Crabtree et al, 1999). However, this estimate is based on the total number of holdings within ESA areas (including minor holdings). Analysis of the proportion of land entered suggested a 44% uptake across Scotland as a whole although this varies significantly between areas (see Table 3.4)

Table 3.4 ESA entrant status on total farm area basis (hectares) All farms for which June census 1997 data are available. Total farm area ( '000 hectares)

Source: Crabtree et al., (1999)
In some cases part of the farm area lies outwith the ESA boundary giving rise to a total farm area in excess of 100% of the ESA scheme area. The % is the total farm area divided by the area as defined by the boundaries of the scheme.

3.18 Closer analysis of participation in the ESA scheme has suggested that unless the farmer has a strong personal interest in conservation, farmers will participate in the ESA scheme only if the management prescriptions fit the farm well without major adjustment and if payments enhance income. Consistent with expectations, low uptake was found to be concentrated in areas where the opportunity cost of entry was high. Analysis of rents on tenanted farms within the Farm Accounts Survey suggests that the benefits of ESA entry may be feeding through into the level of rents in designated areas on LFA tenanted farms (see Appendix 2). However the limited sample size and lack of ability to control for other variables makes drawing conclusions on the effects of the scheme on rental values difficult.

3.19 For the majority of those that have entered the scheme, there have been clear benefits with net farm incomes increasing by an average 25%. Most income effects were explained by the excess of payments over the additional costs of adhering to conservation plans. Participation had very little effect on the commercial operation of the farm. Importantly, analysis has suggested that income gains do not increase with size. That is, once the size of the farm exceeds 4 European Size Units, income gains are roughly constant. This has some implications in terms of the effect of the scheme on land values. In particular, to the extent that ESA payments are capitalised into the value of ESA designated land, it would suggest farmers with smaller holdings benefit more than larger land owners.

PROPOSED CHANGES TO THE SSSI SCHEME

3.20 The SSSI system has been criticised on a number of counts. Most notably, there have been criticisms of the means by which SSSI areas are selected, number of potentially damaging operations detailed for each site, the size of payments to landowners for not going ahead with new projects which would damage the area, and the lack of consultation or consideration of the interest of local communities.

3.21 In the light of these criticisms, Ministers are currently proposing to revise the SSSI system. Particular reforms which they are considering include:

• Reducing the circumstances in which a land manager can receive compensation for not undertaking a project which would damage the nature conservation interest of an SAC, so that in general land managers will not receive compensation for not going ahead with a new project.
• Making SNH's refusal of consent for a damaging operation final, subject to a fair appeals mechanism.
• Increasing the availability of positive management agreements to pay land managers for action to conserve or enhance the nature conservation interest of SSSIs.

3.22 The aim is to retain the essential features of the SSSI system. However, the proposals do introduce fairly radical departures from the existing system in terms of the property rights of landowners. There are two key issues in terms of the effects on land values. Firstly, the abolition of landowner rights to compensation following refusal from SNH for a PDO will remove a current protection of future interests. This may result in a downward pressure on land values. In contrast, the extended availability of positive management agreements similar to those in operation under the ESA scheme may have a positive effects on the value of SSSI designated land because it entitles provides the land owner/occupier with a source of relatively risk-free income. In other words it may enhance present and future income associated with the land. The net effect on land values will depend ultimately on how much money will be available to fund additional positive management agreements. This in turn, may be related to what happens to existing compensatory agreements.

3.23 Further analysis of the impacts of changes to the SSSI scheme is presented in Chapter 7.

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