COVERING it with large swathes of forestry once provided a tax loophole for the rich and famous, but now 4500 acres of peatland in the far reaches of Scotland are to be restored.

The Heritage Lottery Fund (HLF) is backing a £4 million plan to fell the alien conifers in the Flow Country of Caithness and Sutherland, with some used to fill up the furrows and allow the water level to rise in a bid to bring back the peat.

It is being seen as one of the most significant single contributions to achieving climate change targets, with an estimated 400 million tonnes of carbon stored in the peat in the Flow Country – double the amount of carbon in all the UK's forests.

As well as playing a critical role in the fight against climate change, restoring peatlands in the Flow Country would also dramatically improve the habitats for many rare plants and species, such as otters, hen harriers and golden plovers.

Because of a tax loophole created under the Thatcher government, great swathes of non-native conifers were planted in the early 1980s. Until this loophole was closed in 1988, it allowed any investment in woodland to be written off against personal income tax.

Celebrities who exploited it included Sir Cliff Richard, Phil Collins, Terry Wogan, and snooker players Steve Davis and Alex Higgins.

Now the Peatlands Partnership has made a significant step forward in its five-year project for the Flow Country after winning the first stage in its £4m HLF bid and a development award of £147,000 to take its plan to the next level.

Colin McLean, head of the HLF in Scotland, said: "The Flow Country is an area of exceptional natural heritage merit. More than 8000 years of the history of plants, weather and people lie preserved in its layers of peat.

"Yet this living landscape is as important to our future as it is to our heritage. We are delighted to be able to give our initial support to a project which will reverse the damage of earlier forestry planting, while we still can, and make an important contribution to the global climate change agenda."

Work to restore the Flow Country – one of the last great wildernesses left in the UK – which has been put forward by the UK Government as a potential Unesco World Heritage Site, is seen as critical given that conifer plantations have dried out the peat with carbon being released into the atmosphere from the crumbling terrain.

As a result, huge areas of blanket bog have been damaged or are eroding with devastating effect. Bog plants have been lost, rare bird species have seriously declined, and carbon is now being emitted rather than absorbed and stored.

The Flow Country's blanket bog covers an area of almost one million acres, which represents more than 50% of Caithness and Sutherland. It stretches from the A9 Latheron to Thurso road in the east, to past Altnaharra in the west and south almost to Lairg.

A loss of only 5% of the carbon stored in peat would equate to the UK's total annual green house gas emissions.

Dr Pete Mayhew, senior conservation manager of RSPB Scotland, one of the project partners, said the restoration plan had been tried and tested on smaller pieces of land which had been bought over the last 12 years in the Flow Country.

He said: "Where we have done this the sphagnum [moss which contributes to the formation of peat] has grown back quite vigorously in about 10 years. Give it another two or three decades then it will be back to a really very well-functioning bog."

A new field centre will be located at the RSPB's Forsinard Flows nature reserve, which has been at the centre of peatland restoration work for 16 years.