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Natural capital – what opportunities does it offer rural businesses and communities?

Natural capital – what opportunities does it offer rural businesses and communities?

16 December 2021

Shift to a low carbon, more diverse rural economy

Decarbonisation and natural capital are ideas that are very much on the rise, feeding into the narrative around the need for nature recovery and tackling the climate crisis, writes Chris Short, co-investigator at NICRE and associate professor of environmental governance at the Countryside and Community Research Institute.

Reducing carbon dioxide levels and cutting Green House Gas (GHG) emissions is now written into law. The UK will be net zero by 2050. The National Farmers’ Union (NFU) has gone further calling for agriculture to be net zero by 2040. Both will be challenging and, while it is essential to have the aspiration, the coming decade will determine how likely this is in terms of being feasible and achieved. In October, BEIS published the UK’s Net Zero Strategy, to ‘Build Back Better’ containing a role for nature-based solutions, the emerging ‘green’ markets. In the same month the Environment Bill became law to drive nature recovery. 

All this points towards a shift in the rural economy to one that is low carbon and more diverse, but what opportunities does this offer rural businesses and communities? I explored these when NICRE collaborated with the Centre for Research into Environmental Science and Technology (CREST) on its latest Smart Rural event.  

Natural capital, and natural capital accounting, is having an impact, developing a space for both public and private finance. The public elements are embraced in the phrase ‘public money for public good’. Interest in the private sector is growing fast chasing the early money to be made in this area, while charitable and those driven by concern want early traction to drive change. 

New approach to measuring soil carbon

In terms of soil carbon, some early adopters are offering farmers carbon payments or a soil carbon standard.  However, there is concern that no existing protocols are a good fit with the UK. There is also lack of agreement in key areas, such as how to measure carbon in soils in terms of depth, what to include and exclude and how long the carbon needs to remain in the soil to be classed as permanent. It is important to ensure these are robust from the start so the findings can be transparent and accountable.

A new approach that is coming is Biodiversity Net Gain (BNG) which is aimed at ensuring that new development ‘leaves the natural environment in a measurably better state than it was beforehand’. Developers will assess their development to ensure it delivers this overall gain – if it doesn’t do this onsite, they will have to purchase ‘credits’, essentially investing in offsite biodiversity gains through agreements with landowners. If no local market exists to do so, developers will have to purchase these from a national scheme, seeing no resulting benefit for local communities or enterprises. The Gloucestershire Local Nature Partnership (GLNP) sought some views, and found support for a place-based approach that would offer a new opportunity for a range of rural enterprises by providing proximity between the development and the project. As a result, the decision was made to establish the Gloucestershire Nature and Climate Fund.

The whole process requires governance and needs to be evidence-led. This raises key questions, including the need for certainty among both buyers and providers, as well as the role of monitoring long-term planning. As BNG is mandatory with a formal regulated process this will develop over time. But aspects of this remain challenging, not least as some nature-based solutions, such as natural flood management, have less evidence as to what works and what is ‘good’. 

What is clear is that there will be an increasing pressure on land with a push for nature recovery, increased tree cover, space for energy crops, sequestering carbon and also producing food. Perhaps the primacy of agriculture is finally under threat, but a systems approach is needed to minimise the trade-offs and maximise the societal benefits.

NICRE seeks to provide evidence of the opportunities that exist in rural areas through a renewed, and equal, relationship with urban areas. This emerging new norm needs to reduce existing inequalities, rather than reinforce them and broaden the benefits to rural economies. The mutual benefit from sharing ideas and thinking is key or otherwise it is back to the silos!

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