Natural Capital moving up the agenda

I would like to begin this column by wishing everyone a happy and healthy 2022. Let us hope that the next 12 months will bring us less challenges and disruption than we have seen over the previous two years.

2021 ended with climate change and the environment continuing to rise up the political agenda. With funding for land management changing significantly, now is the time for landowners to be considering how their natural assets can be maximised.

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.

To help our members gain a better grasp of how natural capital is relevant to them, the CLA held a webinar where expert speakers discussed the development of environmental markets and how members can take advantage of current and future opportunities. This can be viewed on the CLA website.

The CLA has also produced a guide called ‘An Introduction to Natural Capital’ and developed a series of Guidance Notes on the topic.

Natural capital will be at the forefront of Government thinking in the coming year. We know that the future Environmental Land Management (ELM) schemes will definitely be influenced by natural capital thinking. The basic premise of ELM schemes is that farmers and landowners who manage their land to deliver for climate change, water improvements and nature, for example, will get paid for doing that. This can be done alongside the important work of producing high-quality food which is so important for the nation.

There are clear, and increasingly measurable, benefits to well-managed natural capital, such as clean air, higher water quality and mitigation of climate change. This has generated interest from the private sector, with businesses starting to invest in these outcomes.

We know that many businesses are interested in green issues and are making pledges to get to net-zero. It is important for these businesses to look at the way landowners manage their land, and how this work could support their own environmental ambitions.

That is why the CLA is involved in work by the City of London and others on putting together a framework – standards, broker accreditation, registries etc. – that will enable new markets for carbon, biodiversity and other aspects of the environment, to develop. This work is finding ways to channel green investment into the rural economy and ensuring it is right for farmers and land managers.

Although much of the detail of new government schemes is still to be announced landowners should be planning for the future. We know that the Basic Payment Scheme (BPS) is going, so those who manage land should be thinking about the profitability of their business without BPS. Considering the opportunities from new environmental schemes and markets, whether carbon, biodiversity net gain or ELM schemes, is one way forward.

Landowners should be thinking about their businesses from an environmental perspective – considering what they are already doing that delivers for the green agenda, and then looking at how they could enhance their work in this area going forward.