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Delivering natural capital projects alongside food production

Delivering natural capital projects alongside food production

How can small and medium size farmers help deliver natural capital projects alongside food production?

Rewarding natural capital and ecosystem services 

Natural capital is the umbrella term for natural assets that benefit humankind, such as woodlands, peatlands and rivers. Ecosystem services are the benefits that flow from these assets, for example, carbon storage and clean water.

Historically, it has been difficult to value these natural assets and reward those who look after them by paying for the ecosystem services that are provided. However, in recent years, better ways have been developed to do so, for example through the Woodland Carbon Code (WCC) and Peatland Code (PC).

Farmers and land managers have the opportunity to develop new natural capital by planting trees and establishing new habitat to store carbon, increase biodiversity and improve water quality. However, the mechanism for receiving payment for these benefits is quite complex and has tended to work in favour of large landowners undertaking big projects.

Investigating opportunities for carbon finance to help scale up agroforestry

To help address some of these barriers, a partnership between the Soil Association, Organic Research Centre, Woodland Trust, Finance Earth and the Scottish Rural College completed a project during 2022/23 to develop a methodology to assess the carbon sequestered by trees in agroforestry systems.

This work was funded by Defra under the Natural Environment Investment Readiness Fund (NEIRF). As well as six pilots in England, Scottish Forestry funded two Scotland farm-based pilots. The project successfully developed a useable methodology and relevant requirements for potential carbon-financed agroforestry projects. Despite this success, the key conclusion was that natural capital projects that focus only on agroforestry are unlikely to be viable. The final reports submitted as part of this project are available below.

Feasibility on small and medium sized farms

Soil Association is now leading a project to investigate the feasibility of a more aggregated whole-farm approach to accessing natural capital markets for small and medium sized farms in Scotland. This project is funded by NatureScot and the National Lottery Heritage fund under the Facility for Investment Ready Nature in Scotland (FIRNS) programme. This short 6 month development project is designed to test the opportunity for farmers and landowners to generate new natural capital and potentially be rewarded with additional payments. The current mechanisms are complex and generally only accessible to large landowners. This is resulting in missed opportunities for market participation by individual farmers, communities and civil society, as well as for delivering more nature and natural capital from our farmed landscapes.

The Soil Association is in a partnership with the Organic Research centre, Woodland Trust, Finance Earth and Soil Association Certification to deliver the project, with the support of Scottish Forestry and the IUCN teams, who respectively manage the WCC and PC.

Assessing barriers and solutions

Early on in the project, a survey was developed for farmers, landowners and other organisations involved in nature restoration projects to seek their views on barriers and possible solutions within the scope of the project. There were more than 100 responses to the survey. Analysis confirms the key barriers are complexity, (lack of) scale and project development capability/capacity. The survey also proposed mechanisms for addressing these barriers, most of which received positive responses. These insights have been to focus the feasibility assessment for the next stage.

Next steps

The project is set to conclude by end of March 2024. The partners are hoping to work with a number of farmers to test the key recommendations and solutions on the ground in a future project.

Find out more

NEIRF / Scottish Forestry

Reports published for NEIRF and Scottish Forestry

Investigating the feasibility for an Agroforestry Carbon Code – Financial appraisal

Investigating the feasibility for an Agroforestry Carbon Code - final report and recommendations

Agroforestry Carbon Code - pilot summary report

Read our previous update

Agroforestry Carbon Code

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If you're interested in keeping up to date with the progress of Agroforestry Carbon Code project, or any other agroforestry related news, please sign up to our quarterly agroforestry newsletter. Email Lucy Gatward at

Watch again - webinar: The Agroforestry Carbon Code

This webinar was recorded on 22 November 2022, coordinated by the Soil Association, in partnership with Woodland Trust, Organic Research Centre, Finance Earth, Scottish Forestry and Scotland’s Rural College.