Natural assets, such as biodiversity, rivers and parks, are undoubtedly important for society’s environmental wellbeing. However, for investors, landowners and developers, there are potentially other significant benefits to exploring the world of natural capital.
The article was originally published on the Estates Gazette website.
It refers to the stock of natural assets and, although 69% of the UK’s land total was used for agriculture in 2024, there are many other assets this applies to in a property context, such as woodlands and peatlands. It also encompasses ecosystem services that provide ongoing benefits, such as flood mitigation, carbon sequestration and recreation land.
A lot of the land that would fall into this new and emerging market segment would have traditionally been used for agriculture, but due to the difficulties that sector faces, landowners are increasingly looking for ways to diversify and increase their land value. Additionally, nature’s own economy is no longer just an ESG talking point – it is being incorporated into decision making in the board room, planning committees and valuation appraisals.
One clear example of this is the introduction of the biodiversity net gain requirement, which came into force for most new developments in February 2024. Now, most developers must consider how they are to achieve at least 10% biodiversity net gain before they start on site, bringing the natural elements of a project to the forefront. The requirement also unlocks potential for those already holding natural assets, as they can profit from the sale of biodiversity units by enhancing the biodiversity quality of their land and selling the value of those gains to other developers.
While traditional farming activities are still critical for national food security, the recent trend for the consolidation of farms and the 60% decrease of farms under 100 hectares means that farmland owners have more space available to them to think about alternative income streams. Couple this with the reduction in farming subsidies and diversification is a necessity now more than ever.
To support this diversification, agricultural operators and landowners could utilise permitted development rights which allow the conversion of agricultural buildings to dwellinghouses, farm shops or even sporting facilities without the need for planning permission (subject to certain restrictions).
We’ve already touched on the potential for landowners to profit from enhancements on their land through the sale of biodiversity units, but this can be especially useful for farmland where certain areas of the site may not be suitable for food production.
There are many! But to name a few:
Marine: Marine covers a whole plethora of land assets from deep within the seabed to intertidal habitats such as saltmarsh and sandbanks, each with its own opportunities. Developers or landowners of land on the shoreline can benefit from (and be subject to) the BNG requirement and, although there’s no equivalent for offshore land just yet, marine net gain seems likely to be introduced at some point in the not too distant future (judging by the Department for Environment Food and Rural Affairs and Natural England’s Marine Net Gain Pilot Development Project and their Marine Net Gain Assessment Framework both published in January).
Minerals: Here we’re referring to land which holds mineral resources in or beneath it. This land clearly has an inherent value in terms of the resources that it can provide. However, such land is often protected from further development. For example, in London, the London Plan protects “mineral safeguarding areas… from development that would otherwise sterilise future potential extraction”. On a national level, the National Planning Policy Framework similarly protects those sites which hold mineral resources, as well as the associated sites used to handle and process such resources.
Woodland: Woodlands themselves are not only home to incredible ecosystems, but they have wider benefits for the surrounding areas, from mitigating flood risks, to helping reduce air pollution. The 2025 Woodland Trust report also highlighted the health benefits of visiting woodlands. With targets for reforestation having not been met since its 2021 report, and government grants available (such as the Woodland Creation Planning Grant), this asset type is an attractive long-term investment. Additionally, due to the ability for woodlands to capture carbon, landowners can apply for Woodland Carbon Credits, and there is even a streamlined process for small woods of less than 5 hectares, meaning that even smaller scale projects are worth exploring.
From a development perspective, ancient woodlands, and ancient or veteran trees, are classified as irreplaceable habitats by the NPPF and development which results in the loss or deterioration of such habitats should not be permitted save for in exceptional circumstances.
Peatlands: Similarly to woodlands, credits can be generated under the Peatland Code, offsetting the impact of developments, by requiring carbon sequestration to take place, making this another asset type to watch, and critical to getting towards net zero.
If this summer’s heatwave has taught us anything it is that green spaces in urban zones are invaluable, and not just for the cooling effects (thank you to London’s plane trees), but also for the mental health benefits and bringing people together as a community. Schemes incorporating such areas are crucial to regeneration in city centres, not only because they allow developers and landowners to meet their BNG requirements, but also because they create places where people want to live and thrive.
And it’s not just BNG which requires landowners and developers to add nature elements to their spaces, many local planning authorities are reframing nature as a priority. For example, in London, urban greening (such as green roofs, rain gardens and street trees) must be provided as part of all major developments. While in Southampton, the local planning authority uses the Green Space Factor to assess the quality and functionality of green infrastructure within the city. Green space in urban areas is no longer a nice to have, but an essential part of future development.
Yes, as the policy landscape, investor appetite and agricultural economics all continue to change, natural capital is moving from an outside concept to an important consideration in almost every development decision. The challenge is to stop thinking of it as a constraint, but an opportunity and asset class in its own right, and as one that can secure planning consents, unlock additional income streams and add variety to a portfolio. There is also value to be secured in this area, not just on the balance sheet and the quest for net zero, but from a social standpoint too.
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