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Natural Capital – what farmers and land managers need to know

Natural Capital what farmers and land managers need to know

What is Natural Capital?

The concept of natural capital includes the financial and societal value which can be attached to all forms of natural assets – plants, wildlife, air, water, soil and land – the habitats and ecosystems which provide social, environmental and economic benefits to humans. In the context of farming and land management activities, a reference to natural capital now generally encompasses activities such as regenerative farming and conservation activities which enhance the natural landscape and reduce carbon footprints of farming activities, including the restoration of peat bogs and planting of trees.

Why is Natural Capital important?

The term Natural Capital has become increasingly prevalent in policy in recent years. Once an obscure economic concept, it has become shorthand for what is seen as a valuable weapon in the fight against climate change and biodiversity loss. The measuring of, and improvements to, natural capital are important issues in Scottish Government policy relating to Land Reform, Agricultural Support and the new Environment Bill but there is currently no definition of natural capital.

Future subsidy

Although the framework for future agricultural support has yet to be finalised, it is clear that enhanced support payments will require a demonstration of compliance with standards in relation to natural capital issues.

The Scottish Government’s Framework has indicated that even Tier 1 base payments will be conditional on the claimant meeting required (as yet unspecified) standards for climate, biodiversity and business efficiency outcomes.

Tier 2 Enhanced claims will be limited to businesses that are highly effective in farming and crofting for a better climate and/or farming and crofting for nature restoration.

Tier 3 – elective will include claims for targeted actions to support nature restoration.

It is clear there will be an increasing scale of evidence required for financial support for different activities.


From 2025, applicants will require to demonstrate that they have complied with certain requirements, including

· The foundations of a Whole Farm Plan including soil testing, animal health and welfare declaration, carbon audits, biodiversity audits and supported business planning;

· Protections for peatlands and wetlands; and

· (For applicants under the Scottish Suckler Beef Support Scheme) meeting new conditions to help cut emissions intensity and make beef production more efficient.


Funding is available at present for Integrated Land Management Plans (ILMP), carbon audits, soil sampling and audits and specialist advice in areas such as biodiversity, habitat and landscape management, Carbon audit action plans, Climate change adaptation and mitigation, Soil and nutrient management and Woodland management and conservation and farmers who have not yet applied should consider the options available. Get in touch to discover your options.

Low cost no cost actions

If your business is not presently eligible for any of the available funding, there are still steps which can be taken in preparation for the proposed new finding conditions. Each farming business and landowner will start from a different point. Take a holistic approach to what is present on your property.

The first step is to establish the baseline of the natural capital which is present on your property and the condition it is in. Initially, this can be as simple as walking around your property and mapping out and photographing features, habitats and biodiversity from a wildlife point of view. Anyone who is, or has been, a party to an AECS scheme will already have done so and will have a Farm Environment Assessment to refer to.

Consider how to improve – and crucially how to demonstrate or evidence improvement and protection of natural capital. Consider use of apps to demonstrate increase in species present, drone footage, photography to establish” before” and “after” pictures. This may all assist when undertaking preparation of a Whole Farm Plan.

What is the position on Tenanted Holdings?

The current consultation on the proposed Agriculture Bill envisages that amendments may require to be made to Schedule 5 of the Agricultural Holdings (Scotland) Act 1991 to allow tenant farmers greater flexibility to carry out works including climate change mitigation and biodiversity enhancement activities.

Many farmers and land managers have been trying to balance working in harmony with nature and production/profit for many years. It is clear, however, that in future any beneficial impact of day to day working practices or activities will require to be evidenced and farmers and land managers should take action and begin preparation now.

What should you do now?

Consider this opportunity to learn how to maximize the potential of your land while safeguarding its natural resources for future generations. Take action today and reach out to our team.

Together, you can embark on a journey towards a more sustainable and prosperous future.

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