Farmers and land managers in upland areas of the UK are being urged to assess the value of the natural capital in their care and consider carefully how they can turn it to their economic advantage. Traditionally referred to as ‘less favoured areas’ it is this land that has great potential to deliver the carbon sequestration and biodiversity net gain that now has a market value.
“As natural capital markets emerge, we are beginning to realise just how out of date our view is of ‘less productive’ land and the value of the work done by those who look after it,” notes Founder and Executive Chairman of Trinity Natural Capital Group Dr Hosein Khajeh-Hosseiny.
With a background in private equity investment, Hosein notes the surge in interest from city financiers. “Under the auspices of supporting green, some try to extend their capital accumulation through unfair means which foster dispossessions as well as social and ecological marginalisation,” he says.
Known as arbitrage opportunities, financiers take advantage of a considerable price uplift that can exist for the same asset across different markets. These are rare in mature markets, but ample in agriculture and the fast-moving natural capital markets, especially where farmers are unaware of the differences, he explains.
“These arbitrage opportunities provide immediate profits for the unscrupulous investor often at the expense of farming and landowning families who may have cared for the same land for centuries, but don’t know its value in nascent markets. This may be for the so-called ‘less productive’ land itself, its potential to sequester carbon or some other element of its natural capital.
“The fact is these now have a very different financial value in certain markets than they have hitherto commanded. The whole of rural economics has changed as a result; the greatest potential for uplift lies in upland areas of the UK, particularly parts of Wales and Scotland,” continues Hosein.
The only sustainable way to improve the economic prosperity of these areas, as well as deliver the nation’s aspirations for nature recovery, is for the farmers and landowners themselves to retain control of the natural capital in their care, he says.
“No city financier will have the commitment nor the connection with the land required to deliver these gains. The opportunity is to capture its full economic value as well as reverse the decades-long vicious circle of inequity and often environmental decline upland areas have suffered.
“But if farmers and landowners don’t have credible tools and support to evaluate the uplift, they will be tempted to sell their assets at a fraction of their real value,” warns Hosein.
What’s changed is that there are now a number of tradable commodities associated with the land – previously the only one was the food it produces. “Digital markets have now opened up that allow farms of all sizes to participate in the sale and purchase of natural capital – its potential to sequester carbon, to boost biodiversity and to improve water quality, for instance. For upland farmers, there’s also high value potential in the provenance of the food you produce. The first step is to accurately assess what you have.”
Version 2.0 of Sandy, the new digital assistant from Trinity AgTech, was launched in January. Already recognised across the industry as the leading authoritative and independent software for all who manage the land, it calculates, evaluates and reports carbon, biodiversity and water stewardship metrics. This helps you assess your natural capital assets and plan your journey for leaving the land in a better state than you found it.
If you choose to trade your gains, Trinity Natural Capital Markets (NCM) provides a fair platform to do so, that takes into account the risks associated with natural capital. With no unnecessary intermediaries, it’s efficient and brings direct to you the full value of your asset. And it’s a virtuous trading environment, with flexibility in terms of the project duration and the choice of mitigation practices.
One area with great potential for upland farmers is to identify where grazing efficiency can be improved, notes Trinity AgTech Managing Director for Sustainability, Dr Alasdair Sykes, who works with Trinity’s Scientific Board and in-house software engineers to turn on-farm practice into measurable data.
“This is typically an issue in upland areas where cattle and sheep are left to graze open areas with little consideration given to land suitability or stock management. The economics of actively managing the flock or herd have never stacked up before, so this is not only environmentally unsustainable, but at the very best, would be no more than about 80% efficient,” he explains.
“By focusing on more productive areas and improving those swards, and by actively managing the grazing, you can take less productive land out of the system and strategically plant trees or rewild areas with no loss of farming output.”
Providing a mosaic of habitats across the farm increases biodiversity as well as allowing opportunities to capture carbon in trees and hedgerows, notes Trinity AgTech Managing Director for Science Dr Jonathan Hillier. “The shelter they provide can also help increase productivity and may help with water stewardship. When practiced by someone with intimate knowledge of the farmed area, silvopasture can increase carbon capture with no loss of farming output,” he adds.
These can all be accurately measured by Sandy with progress monitored, along with the economic benefits that accrue. Sandy follows ISO 14064-2:2019 standards and is aligned with the Carbon Credit Principles from the Taskforce on Scaling Voluntary Carbon Markets, so the carbon credits can be efficiently traded through NCM. Now emerging are additional opportunities to trade biodiversity co-benefits that will soon be available through the same platform.
For those on the right soils, rewetting peatland can provide considerable additional carbon capture opportunities, as well as biodiversity co-benefits. “But land managers may be aware that, although you can capture significant amounts of CO₂ through restoring peatland, this can result in methane emissions that offset the gains you make,” notes Jonathan.
“The new Peatland Code provides some clarification here. What’s truly ground-breaking about the peatland module in Sandy is that it enables farmers to account for these and design effective interventions accordingly.”
Trinity AgTech is working with a number of farm cluster groups on a range of projects across the UK.
