1. Does the project benefit your business?
Natural capital projects offer new forms of diversification for farm enterprises in an otherwise uncertain sector and are ideal if you are wanting to help with enhancing the environment, but it is important to understand if the project being presented is the best fit.
With unused land having multiple potential applications – including leisure and tourism, housing or clean energy projects such as solar or wind – take the time to understand your options and work out what is right for you and your farm.
2. Know that you can provide measurable improvement
To access emerging natural capital markets and generate credits which can be sold to developers and other businesses looking to offset the environmental impact of their activities, it is essential to deliver clear and measurable improvements to the environment over and beyond the existing land use.
This will require professional input such as ecological assessments and managements plans so be prepared to factor those costs into your calculations.
3. Ensure farm ownership structures have long-term view
Farm ownership arrangements can sometimes be quite complex, with a number of owners, but only some may be involved in the management of the business.
With the long-term nature of any natural capital scheme likely to impact a business over extended periods and even multiple generations, it is important to ensure that the priorities of all stakeholders are considered.
4. Consider the tax implications
A further long-term consideration of natural capital projects and the income it generates is the impact of tax – including, but not limited to, inheritance tax, capital gains tax, income tax and VAT.
This can get complicated, and it is an absolute necessity to get tax advice to sit alongside your legal advice to ensure that the project is as efficient as possible.
5. Do you need the biodiversity credits yourself?
Another important consideration for landowners is whether they sell the credits or units generated from their natural capital projects or utilise them for their own use.
With some larger corporate customers expecting suppliers to factor in environmental improvements to their contracts and some landowners seeking to develop land on their estate, having easy access to the benefit of your natural capital project means you don’t then need to buy more units or credits from other suppliers.
Thrings’ Planning and Environment lawyers have extensive experience in navigating complex natural capital matters including nutrient neutrality, BNG and carbon sequestration, with the firm’s Private Client team supporting the long-term future of family owned businesses and partnerships. Get in contact to find out more.
