Going green to restore Scotland has natural appeal for investors

Green-minded investors are attracted to projects that encompass woodland creation and peatland restoration <i>(Image: .)</i>
Green-minded investors are attracted to projects that encompass woodland creation and peatland restoration (Image: .)

Natural capital projects are a positive opportunity for landowners, says Patrick Porteous of Landfor

Large-scale natural capital projects are becoming increasingly popular among a range of investors looking to mitigate the effects of climate change, loss of habitat and biodiversity in our rural areas.

This kind of investment involves new woodland creation, peatland restoration and the protection of fragile ecosystems with the aim of improving biodiversity and sequestering carbon from emissions to generate tradeable carbon credits.

Patrick Porteous, managing director of the natural capital and forestry specialist Landfor Chartered Land & Forestry Agency, points out that the company, which is heading for its fourth year of operations, has been very successful at selling large areas of land for these kind of projects.

“We are seeing demand for native woodland expansion projects, where investors are looking for future revenue streams which they expect to come from financial support for land based biodiversity and restoration projects. This is supported by the government with the aim of achieving woodland creation and peatland restoration targets which attracts green minded investors for a number of reasons,” he comments.

As 2023 nears its end, Landfor has been involved in several of the largest land sales in Scotland, all destined for natural capital projects.

“I have personally been advising on land and forest sales for over 16 years and very pleased to have been able to deliver on the selling instructions I have been given by landowners. People have confidence in Landfor’s ability to execute on what are, by any standards, quite complex land and forest sales. says Porteous.

“In recent years sporting estates have increasingly adapted their objectives to look at a range of land uses that now includes natural capital projects with the ability to generate positive returns,” he notes.

Traditionally, sporting estates have always been run at a significant loss to the landowner, rather than a source of profit. They have and continue to be run as a lifestyle choice bringing in much needed private investment to the rural economy, thereby providing employment opportunities for local people. Injecting capital into rural areas where opportunities are often thin on the ground.

“What we are seeing now is that the direction of travel for traditional sporting estates is a move to a more holistic approach, where natural capital considerations are combined with managing and developing habitat for game species as well as wildlife generally,” Patrick Porteous comments.

There is a very positive opportunity for landowners, he notes.

“By entering into these natural capital projects, be it the restoration of peatlands, or woodland restoration, they are in a better position for gaining carbon credits. These credits are a by-product of, for example, enhancing and restoring native woodlands, and they give the landowner the hope of improving returns over time,” he comments.

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The whole issue of carbon credit pricing is still somewhat in flux.

However, it is very clear that reducing our carbon emissions and sequestration is going to be more and more important as the fight against catastrophic climate change picks up whether you are a believer or not.

This means that the value of carbon and biodiversity credits is most likely to increase over time.

“It is important to stress that this is not ‘greenwashing’. These natural capital projects are tangible and directly improve our threatened habitats,” he comments. “It is also creating a new rural industry, much like the one we saw when renewable energy started in Scotland.

“Being able to monetise various aspects of natural capital projects is already changing the fortunes of many landowners and forest owners which is good for the economy.”

One of the long-standing regrets of all those involved with the forestry sector is that the Scottish Government’s tree-planting targets are never met.

Patrick Porteous comments that the bureaucracy which the sector has to deal with is preventing tree planting targets being achieved. Scottish Forestry, the government’s forestry authority, have failed to address this problem over several years despite the government setting targets year on year.

“This is through no lack of private investment or the will to plant more trees by the landowners and simply a failure of the system in place.

“There are just too many obstacles and very little certainty of getting a planting project approved that makes financial sense. The costs of applying for planting and actually establishing the trees is prohibitive, especially for those funding these projects from personal finances with no certainty of getting a project approved that provides enough of a return to cover the costs.

“I see many landowners put off from investing in woodland projects in certain parts of the country specifically down to the bureaucracy and time it takes to get approval to plant woodland.

“This is no way to encourage much needed rural investment or to achieve the government’s climate change targets,” he concludes. n