What land is this?

29 Jun 2022

Scottish fields

Ross Macleod of the Game & Wildlife Conservation Trust considers the importance of understanding natural capital for the future of farming.

Aldo Leopold, often considered to be the father of wildlife ecology, wrote nearly a century ago that:

“We abuse land because we regard it as a commodity belonging to us. When we see land as a community to which we belong, we may begin to use it with love and respect.”

In so doing, he probably helped set in train much of what we now know of as regenerative ecology and more generally as ‘rewilding’. It took rather longer for the concept of rewilding to take root in wider economic and political thinking. Change started from the early 1970s, when Ernst Schumacher challenged mainstream economics in his critique, Small is Beautiful, arguing for a focus on sustainable development:

“Now, we have indeed laboured to make some of the capital which today helps us to produce a large fund of scientific, technological, and other knowledge… but all this is but a small part of the total capital we are using. Far larger is the capital provided by nature and not by man – and we do not even recognise it as such.”

His remarks set the scene for a rapid evolution in critical thinking and development around ‘natural capital’. Yet whilst this subject is now rarely far from debate around land and business management, much remains to translate this energy into a sound, deliverable blueprint for oversight of our natural resources at farm, estate, or at landscape-scale.

Subsidy based on environmental outcomes

The current direction of travel adopted by the individual UK administrations for changes to agricultural support is clearly different. England is pushing ahead with the introduction of the Sustainable Farming Incentive (SFI) this year, whilst from 2025, Scotland will retain elements of the current Basic Payment System but incorporate ‘conditionality’ requirements on at least half of public support. Nevertheless, both approaches recognise the importance of focusing on environmental outcomes, and both identify the significance of achieving change at farm and at landscape-scale level.

The Game & Wildlife Conservation Trust (GWCT) has been researching the relationship between agricultural production, greenhouse gas emissions, soil health, water management, biodiversity impacts and many other issues through our work at the Allerton demonstration farm since 1992. The GWCT’s Scottish demonstration farm in Aberdeenshire has also been contributing to that research since 2015.

In Scotland, we have gained broad insight into the balance of greenhouse gas emissions and sequestration since 2018 by undertaking carbon audits. These have helped identify the main sources of emissions, chiefly from the sheep flock and to a lesser extent, from fertiliser and fuel usage, and, sequestration in the form of healthy soils, hedges and woodland. The annual audits help us understand what we need to focus on to maintain an efficient, productive farming enterprise whilst also bearing down on emissions.

Understanding natural capital

In parallel with the carbon audits, we wanted to understand the range of natural assets on the demonstration farm, and particularly, the condition they are in.

Undertaking a biodiversity or natural capital assessment is therefore a logical step, as this provides guidance on where habitats may need to be maintained or improved. Without this knowledge, we may degrade the very soils on which we depend to produce farm revenue.

NatureScot (the public body responsible for Scotland’s natural heritage) piloted a natural capital assessment template this spring with 50 farms, and we were very pleased to take part in this exercise. This helped to identify the different habitats on the farm, and in asking us to describe how we manage in these areas, the template produces a summary of natural assets and a rating of their condition. It also highlights the most significant ecosystem services (for example provisioning of food and timber, regulating for soil or water quality, and cultural opportunities around recreation) delivered on the farm and a summary of risks and opportunities to consider. Doubtless the template will be further refined following the pilot project, but it seems likely that it will become a key part of the evidence base for evaluating conditionality payments from 2025 in Scotland.

We also completed a separate natural capital assessment earlier this year which, although a broadly similar exercise, generated a set of accounts to place financial value on the balance of natural assets and emission liabilities. By reference to the pricing of carbon market units, this assessment allows us to interpret the economic implications of changes to the mix of assets and liabilities. In turn, this has got us thinking about how we invest for the long-term, farming both productively and with care for the environment.

Opportunities for biodiversity net gain

Our colleagues in England are currently taking assessments a stage further by mapping out opportunities for biodiversity net gain – areas where the environment on a farm might be enhanced, and an income derived, without reducing productive land management operations.

This approach is underpinned by reference to the Department for Environment, Food & Rural Affairs (Defra) Biodiversity Metric 3.0, which provides a standardised benchmarking system and which can thus facilitate trading of biodiversity units. There is no active commitment to a similar approach in Scotland at present, but we keep an eye out for any announcements from Scottish government that might mirror this approach.

If the way forward on farm support in Scotland still isn’t entirely clear, it hasn’t prevented considerable activity in land markets, led recently by the prospect of revenue from planting for forestry or woodland. There seems to be both a speculative element to these sales on the part of buyers and perhaps too, a gap in knowledge on the part of sellers, unsure about the value of their assets now and into the future. Factor in potential changes to tax treatment of land assets, and landowners have a challenging set of circumstances to navigate!

North or south of the border, some of the risks can be mitigated by getting to grips with carbon auditing and natural capital assessments. These will at least provide indications of first steps for action, tracking outcomes and gauging future value in a world needing to confront the clear and present danger from climate change and biodiversity loss.

Ross Macleod is Head of Policy (Scotland) at the Game & Wildlife Conservation Trust which advises landowners and farmers on game and wildlife management and supports best practice for field sports. www.gwct.org.uk