Nature markets: new opportunities on your doorstep

The government's latest nature markets policy paper arrives with a strong emphasis on nature recovery and locally led delivery. The Mobilising private finance for local nature recovery paper and blog was published on Monday 26 October to coincide with the international Biodiversity COP17.

While the title may be intended to align with international biodiversity discussions and growing attention on nature recovery, the document is broader than that, covering a wide range of environmental markets including biodiversity, water, carbon and sustainable farming.

The publication largely brings together the various strands of work already underway across government rather than any new policies. For CLA members and other rural businesses there are three key areas of note:

• An emphasis on local and place-based activity
• A new taskforce to look at private sector support for sustainable farming, rather than solely public funding
• Water reforms that could unlock significant funding for nature-based solutions

There are other essential strands of work that will, over time, drive demand for nature-based solutions from different business sectors such as water companies, corporate businesses and direct supply chains. This could increase interest in voluntary natural carbon credits and nature credits, alongside the current compliance markets for Biodiversity Net Gain and nutrient neutrality.

For land managers who are looking at nature markets or funding for environmental projects, it provides a positive direction of travel but there is still more to do to fully unlock private sector funding for farming and nature.

There is a strong theme throughout the paper on locally led, place-based approaches to increasing private funding for nature recovery and environmental action. This is perhaps not surprising given the Prime Minister’s focus on devolution and local decision-making, but it is not new, and makes sense given the local nature of many environmental issues and opportunities.

Local Nature Recovery Strategies (LNRSs) are already in place and increasingly being positioned as a key mechanism to develop local investment pipelines and regional partnerships through which private finance will flow into nature recovery projects. Each responsible authority has funding for LNRS leads to create the partnerships, ensure LNRSs are considered in local and business planning, and deliver a pipeline of projects.

The LNRS delivery could translate into something more ambitious which has been demonstrated through the Local Investment in Natural Capital (LINC) pilot projects in areas such as Cornwall, York and North Yorkshire, the West Midlands and Cumbria. These have provided valuable experience and knowledge about how local leadership can transform nature recovery. Already examples such as the Marches Forward Partnership, led by council leaders across Shropshire, Herefordshire, Monmouthshire and Powys, has created a Nature Investment Zone to drive funding for the environment.

There are also new pathfinder projects involving combined authorities and National Park Authorities, who are trialling new approaches. For example, Greater Manchester Combined Authority is set to pilot implementation of the Land Use Framework through an upland investment test case. And South Downs National Park has established ReNature which provides advice to farmers and landowners within their area. These initiatives may provide useful examples of how local environmental investment could operate in future.

The Farmer Collaboration Fund, which was opened for first round of tenders in September, is intended to help groups of land managers work together and this may be a route to access environmental market opportunities. Additional rounds are expected over the coming years and could provide valuable support for farmer clusters and collaborative delivery models.

While local delivery presents opportunities, it also presents risks. The effectiveness of these approaches will depend heavily on the quality of local leadership, available expertise, business engagement and institutional capacity. Experience with LNRSs already shows significant variation between areas in both ambition and delivery, as a result, delivery is likely to vary considerably across the country.

Another important theme is the growing focus on agri-food resilience and the role of food supply chains in supporting environmental delivery. This is in response to the Defra Farming Roadmap 2050 direction of declining public funding and expectation of more funding from the supply chain, and a commitment to investigate how this might be done.

Defra is setting up a Private Finance Taskforce to look at increasing private sector investment in sustainable farming in England. The CLA expects to contribute to these discussions following member input at national committees during the summer.

The government is also considering the development of a national code or standard for regenerative agriculture and related environmental claims. Although details and timelines remain unclear, greater consistency could help provide confidence for consumers and businesses. The challenge will be ensuring that any new framework complements existing initiatives rather than creating additional layers of bureaucracy.

Alongside this sits a proposed ‘Soilshot’ programme, something that was suggested by Minette Batter’s Farming Profitability Review. Defra will explore how agri-food supply chains can support investment in soil health. Much of this work will focus on standards, metrics and data collection, reflecting the increasing importance of measurement and verification in environmental markets.

Many of the commitments in the paper fall into the category of market enablers, which are essential for market confidence and growth.

Several measures aim to improve market governance and investor confidence. These include ongoing work to develop an Environmental Market Governance Scheme, continued support for the British Standards Institution's Nature Investment Standards Programme and the creation of a Nature Investment Assurance scheme.

While these initiatives may increase costs and add complexity for some projects, they respond to a fundamental challenge facing environmental markets: trust. Investors and buyers need confidence that environmental outcomes are real, measurable and enduring. Strong governance frameworks are likely to become increasingly important as markets mature.

The government also plans to strengthen claims and recognition frameworks to ensure they are accurate, and expand capacity for validation and verification services which addresses a current bottleneck that can delay transactions and increase costs.

Water industry reform has the potential to unlock £3bn for nature-based solutions over the next five years. New legislation is being developed, so this will not be a quick fix, but over the longer term it aligns with the local focus and partnership working.

There is growing interest in catchment-scale projects, nutrient reduction schemes and flood resilience initiatives that reward land managers for environmental outcomes.

Taken together, the paper demonstrates that the government remains committed to expanding private investment in nature recovery and sustainable land management.

However, many of the actions highlighted are long-term programmes, pilot projects or framework development exercises that will take several years to mature. For landowners looking for immediate market opportunities, this can feel frustratingly slow.

The direction of travel is increasingly clear. Future nature markets are likely to be more local, more collaborative and more closely connected to food supply chains, water management and corporate sustainability goals. Yet for all the ambition, the challenge remains translating policy frameworks into functioning markets that deliver meaningful opportunities for landowners today.

For CLA members, the key message is to remain engaged locally, build relationships with emerging delivery partners and stay informed about the evolving standards and governance frameworks that will shape the next generation of environmental markets. The opportunities are growing, but the pace of delivery still has some way to catch up with the ambition.