In the UK, “natural capital” is attracting the attention of investors, but who owns our natural capital and who should control it? Should it be under the control of the government, conservation charities, or local communities? Is it safe in the hands of large corporations and private equity firms?
It is big business. “The total asset value of natural capital in England we can currently value was an estimated £1.4 trillion in 2020, 78% of the total UK asset value.” (ONS)
What is natural capital?
Natural capital is “Any natural resource or process that supports human life, society and the economy forms an important part of our natural capital.” They count both existing value and future value. Examples are the productivity of soils and clean water (ONS).
The ownership of land is important. Landowners act as stewards. They are responsible for the ‘asset management’ of that land. Biodiversity, carbon sequestration and flood mitigation depend on their management.
Less than 1% of the population own half the land in England (New Economy Brief research). The aristocracy and gentry own 30%. Corporations own 18%. Some land is undeclared.
“It matters because who owns land gets to choose how it’s used; and that has big implications for almost everything. Where we build our homes, how we grow our food, how we protect ourselves from flooding, how much space we set aside for wildlife – all this is hugely affected by who owns land” – Who Owns England
Natural capital includes emerging markets like carbon credits or biodiversity net gain credits. They offer a way to monetise land management improvements. And, as we wrote last week, these credit schemes are now attracting investment from private equity firms.
The commodification of nature
But there is risk with the financialisation of nature. If we treat ecosystem services, like carbon, biodiversity and water credits, as tradeable assets, it might lead to commodification and market consolidation.
Historically, commodification has driven land grabbing. It has enabled profit extraction. And it has excluded local and Indigenous communities from both their land and the economic benefits it generates (Nature4Justice). Commodification drives up land values, outpricing local buyers.
‘Greenwashing’ is another hazard of carbon credit systems. Private equity firms are driven by their duty to maximise investor returns. Their focus is on finding and extracting the profitability in complex ecological systems . This means they might ignore social and ecological impacts on the local community (Financial Times).
In an ideal world, big corporations would reduce their carbon emissions to near zero. Purchasing carbon credits, or offsetting, leaves them free to increase their emissions.
Those who argue against financialised nature markets – economists, ecologists, and grass-roots organisations – say that the natural capital should be managed by local communities. Localised outcome based payments would then fund sustainable land management practices. This could be better for the environment in the long run.