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What Is Natural Capital?

Natural Capital is a term to encompass the value to man of natural assets, living organisms and the land on which these exist. The Government’s Green Book defines this as follows: “Natural capital includes certain stocks of the elements of nature that have value to society, such as forests, fisheries, rivers, biodiversity, land and minerals. Natural Capital includes both the living and non-living aspects of ecosystems.” A number of recent developments have brought into renewed focus the opportunities that Natural Capital provides to farmers and landowners. We spoke to Edward Long, Senior Associates at Birketts to find out more.

Biodiversity Net Gain is an increase in biodiversity as measured against a baseline. From November of this year, most large development sites will be required by law to provide an increase of a minimum of 10% in biodiversity post-development compared to the pre-development baseline. This is a biodiversity net gain of at least 10%. This requirement will bite for smaller sites from April of next year. Whilst biodiversity protection and enhancement have been a feature of planning policy for a number of years, this is the first time it has been a strict legal requirement.

This Biodiversity Net Gain can be provided on-site or off-site and many developers will be looking off-site for that gain, which presents an opportunity for landowners to exploit the Natural Capital of their land for profit and for the public good.

Nutrient neutrality (along with its close cousin water neutrality) is another subject which has hit the news recently. This is also a planning requirement, so that after development has taken place no more nutrients will enter a particular catchment than were entering it before the development took place.

This requirement has its origins in habitat protection legislation. The Habitats Regulations require as a matter of strict law that development does not adversely affect the integrity of any designated habitat site. As a result of work to assess the state of a number of designated habitat sites, Natural England has concluded that many sites are degraded as a result of excessive nutrient burden. Consequently, these areas have been declared to be subject to Nutrient Neutrality.

The resulting pressing need for developers to offset nutrients from their developments by enhancements elsewhere once again offers real opportunity to farmers and landowners to leverage the potential of their land to capture or to be a reduced source of nutrients. This can be achieved through a range of Natural Capital solutions such as converting farmland into woodland or the creation of reed beds to process effluent.

Carbon capture is the use of vegetative growth, peatland restoration and soil management to capture carbon dioxide and hold the associated carbon to reduce atmospheric carbon dioxide concentrations.

At a global level, the biggest threat to global ecosystems is climate change caused by man and as the target date for net-zero moves ever closer, businesses are increasingly looking for ways to offset any unavoidable carbon dioxide emissions. One way to do this is to purchase carbon credits, generated as a result of Natural Capital solutions, e.g. woodland creation.

Assurance schemes such as the Woodland Carbon Code and the Peatland Code have been established to ensure that purchasers of credits can link these to quantified and verified emissions mitigation.

Please note that the content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at May 2023.


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