Natural Capital, Payments and Green Finance – Why This Matters Now

Why is natural capital being talked about more now?

Governments, markets and supply chains are increasingly interested in how land is managed, not just what it produces. Actions to protect, enhance and restore natural capital:

• Build resilience to future climate and environmental change
• Quantify change and the impact of change on ecosystem services
• Target support to optimise the benefits provided
• Reward actions that deliver public benefits

How does natural capital connect to carbon and nature markets or green finance, and what does it mean for farmers?

Green finance means money that supports environmental outcomes, such as improved habitats, lower emissions, or cleaner water. On farms, this financing can take different forms.

• Peatland Code and Woodland Carbon Code
• Voluntary carbon and nature markets
• Biodiversity net gain (England only)
• Supply-chain incentives and insetting
• Other new and emerging schemes

How does this link back to natural capital thinking?

Most schemes – public or private – are based on the same logic:

1. Identify the asset
2. Identify those who benefit from the ecosystem services that asset provides
3. Identify actions to protect, restore or enhance its condition
4. Deliver a measurable benefit

Natural capital thinking helps farmers:

• See what assets they already have
• Understand the value of these assets to the farm and beyond
• Understand which actions deliver multiple benefits
• Ask the right questions before engaging with markets