Natural Capital for Landowners

Farm incomes are under pressure, and the old subsidy system is disappearing. At the same time, demand for nature-based solutions has never been higher. Natural capital for landowners means one thing in practice: land that once earned little can now generate reliable, long-term income by delivering environmental outcomes. However, the schemes are complex, the markets are young, and the right approach depends heavily on where your land sits.

What natural capital means for landowners

Natural capital describes the natural assets on your land: soil, water, woodland, habitats and the benefits they provide. Until recently, those benefits went unpaid. That has changed. Developers, water companies and corporate buyers now pay landowners to create habitats, offset nutrients and store carbon. As a result, natural capital has moved from an abstract concept to a genuine income stream, sitting alongside agri-environment schemes and grants rather than replacing them.

Early movers have tended to secure the best terms. Because these markets are still developing, professional advice before committing land is essential. Most agreements run for decades, so the decision deserves the same care as a sale or a tenancy.

Which natural capital schemes are available?

Several distinct markets now operate across the South East, and each suits different land and different objectives.

Biodiversity Net Gain. Since February 2024, most new developments in England must deliver a 10% biodiversity net gain. Where developers cannot achieve this on site, they buy off-site units from local landowners who create or enhance habitats, typically under 30-year agreements. Our Biodiversity Net Gain page explains how units are created, registered and sold.

Nutrient neutrality. In affected catchments, new housing cannot proceed unless its nutrient impact is offset. Landowners who reduce nutrient loads, for example by taking land out of intensive production or creating wetland, can sell credits to developers. Read more on our Nutrient Neutrality page.

Water neutrality. Parts of West Sussex face a similar requirement for water use. Development must demonstrate no net increase in water demand, which creates opportunities for landowners who can deliver savings. See our Water Neutrality page.

Carbon. Woodland creation and soil management can generate verified carbon units, although the starting point is understanding your current position. Our Carbon Auditing service establishes a baseline for the farm business. Agriculture produces around 11% of the UK’s greenhouse gas emissions, so buyers increasingly expect this evidence.

Corporate and ESG demand. Beyond regulation, businesses seeking to demonstrate environmental responsibility are partnering directly with landowners. Our ESG Units page covers these voluntary markets.

Can you stack natural capital schemes?

In some circumstances, yes. Stacking means earning units from different schemes on the same parcel of land, which can significantly improve the overall return. For example, habitat created for biodiversity net gain may also deliver nutrient offsetting, and both can sit alongside a Countryside Stewardship or SFI agreement. On the other hand, the rules on combining payments are strict and vary by scheme. Getting the structure wrong can invalidate units or breach an existing agreement, so stacking decisions need professional input from the outset.

Location matters more than almost anything else

Natural capital is highly location dependent. Nutrient neutrality applies only in designated catchments, such as the Stodmarsh catchment in East Kent. Water neutrality currently affects the Sussex North Water Resource Zone, which covers land around Pulborough, Horsham and Crawley. Biodiversity net gain units also trade at better values within the local planning authority where the development sits. In short, two similar farms ten miles apart can face entirely different opportunities. Because our offices cover Kent, Sussex, Surrey and the Hampshire borders, we advise on exactly these local markets every week.

How the Environment Gateway helps

The Batcheller Monkhouse Environment Gateway brings together our rural, planning and environmental expertise in one place. We start by assessing what your land could deliver and which markets apply to it. We then advise on scheme selection, agreement terms, tax implications and long-term management obligations, and we work alongside your accountant and solicitor where needed. Above all, we act for you, not for the buyer.

Natural capital will not suit every acre, and it is not a reason to abandon productive farming. For the right land in the right place, though, it offers income that few traditional uses can match.

To find out what your land could deliver, contact Toby Trotman or Scott Smith in our Tunbridge Wells office on 01892 509280, or get in touch with your local office.

Key Natural Capital Opportunities: