Exploring new markets can offer new income streams, but land managers still have a lot of questions around the practicality of delivering nature-based solutions. In figure 4, we examine the decision flow experienced by land managers, exploring whether they may have land suitable for the creation of nature-based solutions.

What’s the risk?

Many of the markets for nature-based solutions are in their infancy and lack standardised regulation. However, early adopters are achieving success and the income associated with these new ideas means that problems are not as insurmountable as they may first appear. We summarise some of the barriers in figure 5, to demonstrate how many of them are within the land manager’s control to resolve.

Who might help fund the creation of nature-based solutions?

Changing land uses and creating habitats can be an expensive process. To help farmers manage the costs and risks of this process, it is possible to get financial backing from investors.

Government wants the private sector to invest in nature-based solutions and has a target to raise at least £500 million in private finance to support nature’s recovery every year by 2027 in England, rising to more than £1 billion by 2030. This is just under half of the current annual government farming budget for England (£2.4 billion per year).

The appetite to channel private finance into nature-based solutions means that farmers may have sophisticated stakeholders on both sides of their scheme (see figure 8), which speaks to the need to have good advisors on board from the outset.

Rise of the ESG investor

Environmental, Social and Governance (ESG) investors were once considered niche. However, it is now the single fastest-growing investment type.

According to Dow Jones, sustainable fund growth is projected to double over the next few years as investors are becoming increasingly concerned that extreme weather, climate change and ecosystem breakdown will impact business operations as well as the planet.

Bloomberg reported that money held in ESG-focused funds grew by 53% last year, to £2.7 trillion. ESG-motivated investors are looking to invest in nature-based solutions and their appetite is likely to grow.

Getting the house in order

It is advisable even if not strictly necessary that rural businesses calculate their own emissions and environmental impact and then put in place strategies to reduce and mitigate this impact before they sell environmental offsets to an external buyer. This is particularly important in the case of carbon emissions.

Policy support for nature-based solutions

The UK is undergoing a transition away from the Common Agricultural Policy, towards new devolved support policies for the rural sector. The English, Welsh and Scottish governments are each at different stages of policy development, adopting varying approaches to supporting farmers and land managers to deliver nature-based solutions.

England has the most developed funding schemes for nature-based solutions, through its Environmental Land Management schemes.

Scotland has slower timelines but is adopting a more joined-up approach, with an emphasis on responsible investment. Both governments want to support the development of a private environmental marketplace and have schemes that provide blended finance.

Wales lacks detail on support schemes for large-scale innovative nature-based solutions, instead focusing on enabling farm-level solutions.

Mindset shift

Farming mindsets will have to change as direct payments disappear. Astute and forward-looking land managers recognise that change is coming and will adapt and innovate their land management practices and strategies to preserve the long-term success of their businesses.

_{Read the articles within Spotlight: Nature-based solutions below.}