New research into natural capital markets for farmers

May 9, 2022

Farmers are increasingly expressing interest in carbon trading and many are being approached by a range of companies wanting to pay them for providing a range of ecosystem services.

A new project from The Prince’s Countryside Fund (PCF) and the Food, Farming and Countryside Commission (FFCC), with research provided by Middlesex University, will identify how risks can be mitigated and the benefits made available to farms of all types and sizes.

This study will explore emerging natural capital markets and understand the opportunities and risks for farmers across the UK. The project will aim to bridge the gap between large scale, sustainable financial investment, and everyday farming practice, so farms of all sizes – including smaller, tenanted and new entrant farms – can benefit financially from the natural capital revolution, and access newly emergent natural capital markets and investment, where this is right for their business.

There is growing interest in how farmers can be paid for the environmental benefits they can provide with a number of businesses now creating new opportunities such as carbon sequestration, payment for wildlife areas or planting crops that reduce risks of flooding and pollution. Through this project, the PCF and FFCC will aim to share and interpret research findings with farmer networks across the UK in a way that informs better on-farm planning and current actions.

This project will undertake action research on the emerging investment markets around natural capital to better understand how access to this investment contributes to viable farm business plans. Findings will be shared through UK farmer networks, to enable more informed planning and on-farm actions.

Specifically, the project will research the following:

  • How natural capital markets are developing and the current state of emergent practice
  • The potential economic and social impact of payments and investments to farmers
  • How to ensure equal access for all farms, especially smaller or tenanted farms and new entrants

The project will draw conclusions and recommendations on:

  • The key social, economic and environmental risks of developing private financial markets as an approach to increasing investment into restoration and preservation of ecosystems, and how such risks could be mitigated, and
  • How access to natural capital markets can be broadened to include smaller, tenanted and new entrant farmers

Prof. Fergus Lyon of Middlesex University said: “At a time of dramatic change in farming, there is a need for new opportunities that are good for both the environment and farmers’ livelihoods. With lots of new ideas emerging, we need to understand how these new sources of income work, and identify any risks early on. While the natural capital markets are changing daily, this project will identify how these initiatives help different types of farmers.”

Sue Pritchard, Chief Executive, FFCC said: “We are very pleased to be working with The Prince’s Countryside Fund on this project. It is an important step in understanding the impact of emergent natural capital markets on farmers – particularly smaller, family farms. Our two organisations bring complementary expertise to the project, enabling us to bring together a wide range of networks, experience and knowledge, and to contribute to better policy and practice in this critical area. We anticipate it will also play a significant role in supporting better planning and more effective on-farm actions.”

Keith Halstead, Executive Director, PCF added: “The Prince’s Countryside Fund is delighted to be working with FFCC on this project which is both timely, given the changes to government agricultural policies across the UK, and relevant, as it directly responds to the increasing interest being expressed by farmers who are currently participating in the PCF’s resilience programmes. My hope is that the project can provide some clarity and offer practical guidance to farming families as they seek to better understand what this emerging market means to them.”

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