Exploring Natural Capital

With the agricultural transition continuing to see the phasing out of farm subsidies through the Basic Payment Scheme (BPS), and the introduction new public funding and private investment that rewards environmental land management, there has never been a more important time for landowners to understand how they can maximise their natural assets.

CLA member Glenn Buckingham is the farm manager at Helmingham Estate in Suffolk. He is embracing the opportunity to understand the value of the natural capital at the estate and how it can become a valuable asset, alongside the important role of crop production.

“Food production will always matter and must be the most important output,” says Glenn. “But doing this with regard to protecting and enhancing all aspects of our natural capital should allow us to have quality food, sustainably sourced, from within an enhanced landscape.”

Natural capital applies economic thinking to the use of natural resources and the environment. It is about measuring the impact a business has on the environment, and the benefits that the environment provides to society and the economy. Armed with this knowledge, land managers can be rewarded financially for the stewardship or improvement of their stock of natural capital.

There are a number of emerging areas where land managers can be paid to manage their natural capital. Some of these are driven by Government activity, most notably in new agricultural policy. In other cases, the private sector is investing directly in managing or improving the environment due to a range of regulatory, financial and voluntary drivers.

Helmingham Estate has been in Countryside Stewardship Schemes for many years, always working towards enhancing biodiversity across the land. 38 of the original 50 ponds on the home farm have been restored, as well as planting 600 new trees as part of an agroforestry scheme.

To get a thorough understanding of the natural capital at Helmingham Estate, Glenn has been working with the Suffolk Farming Wildlife Advisory Group (FWAG) and Fera Science Ltd, a part Government owned research centre, that seeks to provide solutions that support sustainable agriculture.

“With changes in upcoming schemes such as (the reduction of) BPS payments, we know we have to find additional income from existing resources such as opportunities which reward investment in natural capital assets,” comments Glenn. “Knowing that there is potential value in natural capital, you realise you need to know what natural assets you’ve got to begin with.”

Fera has developed a natural capital assessment service called Land360. By combining data and science the company says its service can accurately measure and map existing land habitat features and estimate carbon and biodiversity opportunities to help farmers, landowners and estate managers make informed land use decisions.

“We’ve engaged Land360 to look at our natural capital to make a baseline assessment so we can understand what we have how much it will be valued. We’ve created all the data sets and gathered the information to go forward into a natural capital marketplace,” Glenn comments.

“The first part of the survey was to provide all the maps and all the various holdings to Fera and allow them to look at these along with satellite imagery.

“They (Fera) have assessed everything, whether it’s a pond, a hedge or woodland and developed that information into an area based spreadsheet, which then gives us values for the estates carbon and biodiversity.”

Glyn Jones, head of science at Fera Science, says their work on emerging nature markets and government policy is not just of interest to those who manage the land.

“Initially we thought our work would just be of interest to estates and farmers,” says Glyn. But it has become much more than that. We’re talking about the same kind of issues (carbon and biodiversity opportunities) with housing developers, chemical companies, major retailers and renewable energy businesses. They are all interested in the same factors that are in front of farmers and land managers. This all adds up to a very complex problem that land managers face.”

The CLA has a wealth of information available to members to help them understand the concept of natural capital. This includes an ‘Introduction to Natural Capital’ booklet that looks at the financial and ecological benefits, emerging markets and how to measure assets. There are also CLA Guidance Notes that go into greater depth on the some of the key areas for consideration.

Members can also access a CLA Natural Capital Business Directory that provides a list of companies and organisations offering a range of natural capital services to landowners and land managers.

Agricultural policy in Wales is on a different timetable for BPS cuts to England, but it is still worthwhile for members in Wales to be assessing the potential opportunities for private sector nature markets, such as carbon credits.

Chief Land Use Policy Adviser Susan Twining said: “We are currently working with the Defra Green Finance Team on their policy development of natural capital and also on future market governance.

“We believe Defra should be increasing funding that supports land managers understand and measure their natural capital baseline assessments. It is something we are raising with their officials,” Susan adds.

“There is a lot of potential for land managers to maximise income streams from their natural capital. Be that through the new Environmental Land Management schemes (ELMs), Countryside Stewardship, the Woodland Creation offer or private investment opportunities.

“Private sector nature markets can be initiated through regulations, such as the upcoming Biodiversity Net Gain (BNG) rules for development, or through voluntary approaches from businesses who wish to offset their emissions and impacts on biodiversity.”

The government has confirmed that in some cases, having multiple sources of income for the same piece of land will be possible. This is often referred to as ‘stacking and bundling’.

“Nature markets can be a complex area and the CLA is here to help members understand what the opportunities may be for them,” Susan comments. “We’re planning a series of events for members this autumn to provide clarity on what is available in this emerging sector.”