Guidance

Rules for combining EWCO payments for woodland creation with other sources of payment for ecosystems services: operations note 62

Updated 20 February 2025

Applies to England

• Publication for Northern Ireland
• Publication for Scotland
• Publication for Wales

1. Purpose

This operations note sets out the rules on the compatibility of England Woodland Creation Offer (EWCO) payments, and payments for ecosystem services from other sources. This operations note clarifies where it is, and is not, compatible.

2. Background

Land managers frequently ask whether they can access other sources of ecosystem services payments alongside EWCO payments for delivering environmental outcomes from woodland creation. Circumstances may vary.

The Department for Environment, Food and Rural Affairs (Defra) is developing a policy framework for ecosystem market development. This will present overarching principles for high integrity ecosystem service markets in the UK, including principles for combining revenue streams from different sources within a single project, land parcel or investment (‘stacking’), arrangements for monitoring and evaluating the impacts of stacking rules in individual ecosystem markets and between ecosystem service markets, and the launch of a new process to accelerate the development of robust standards for ecosystem investment projects.

The policy framework will signpost detailed guidance and eligibility rules for individual schemes and markets including EWCO and other forestry grants.

Defra will continue to provide and update scheme-specific rules and guidance, as appropriate, within the context of this policy framework and associated monitoring and evaluation programme.

3. Rules

1. Land managers may be eligible to receive EWCO payments in addition to payment for ecosystem services from other sources, subject to conditions.

2. It is the applicant’s/agreement holder’s responsibility to determine whether the conditions for accessing payments for ecosystem services can be met, while also fulfilling their obligations as set out in the supporting guidance for EWCO.

3. Eligibility to receive payments for ecosystem services from other sources may be constrained by various rules and tests that are established to protect environmental integrity of ecosystem markets and the value for money of publicly funded schemes. For guidance regarding the interaction with specific schemes see below.

4. Recipients of EWCO ‘additional contributions’ payments for a specific ecosystem service will not be eligible to receive payments for the same service through participating in other schemes and ecosystem markets. For example, a recipient of EWCO additional contributions cannot sell water quality benefits if they have also received a payment for water quality as a EWCO additional contribution.

5. Defra plans to introduce a new policy which will permit EWCO recipients to return additional contributions payments that they have received, to meet eligibility requirements to receive payments from other public funding sources and/or to be eligible to sell the corresponding ecosystem services to third parties. Guidance on the process for returning additional contributions payments will be published in the coming months.

3.1 Interaction with specific schemes

Projects funded with EWCO payments may be eligible for registration under the UK Woodland Carbon Code (WCC). This is subject to individual proposals meeting the WCC’s additionality tests.

In most cases, projects funded with EWCO payments will not be eligible to be sold as biodiversity units for Biodiversity Net Gain (BNG). There may be cases where it is possible to stack the EWCO with BNG if landowners are able to create further habitat enhancements on top of an existing EWCO agreement; further guidance will be forthcoming.

Where ecosystem service markets other than BNG require the creation of woodland, this should not be eligible for EWCO payments.

4. Sources of further advice

Read more about the England Woodland Creation Offer.