Natural Capital on Farmland – Your Glossary

Farm cluster group

Working together in a group or ‘cluster’ of local farms can help farmers get involved with environmental projects and access public or private funding with more confidence and reduced financial risk.

By sharing knowledge and setting aims and objectives together, farmers joined up in cluster groups could achieve more impactful results for nature and their businesses.

A farm cluster group is often set up by a lead organisation such as the FWAG Association, which oversees many Farming and Wildlife Advisory Groups across the UK.

• Read more: Suffolk FWAG CEO Anna Beames shares how she’s worked with our LAND360 team and the Helmingham estate managers to engage local farmers on natural capital investment
• Read more: A cluster group of over 100 farmers and land managers across the North York Moors are using LAND360 to protect and enhance natural capital within the iconic National Park.

Income diversity

The greater the variety of income streams a farm or estate business has coming in, the greater its income diversity.

Having multiple income sources, which is also termed ‘diversification’, increases the financial resilience of a business.

If revenue is coming in from different sources, a farmer or estate manager’s cash flow will be impacted to a lesser degree if one of the income streams drops – which could be caused by external market factors out of the business owner’s control.

For example, if wet weather resulted in a poor harvest, other farm business income, such as private funding for habitat creation projects, could help keep cash flow more stable.

• Read more: Examples of ways in which farmers and estate managers can harness natural capital to enhance income diversity

Biodiversity Net Gain (BNG) credits

Slightly different to a BNG unit, a BNG credit is a unit of biodiversity that has been valued and is ready to be traded.

Defra is building a national bank of statutory biodiversity credits, created by farmers and land managers on Natural England pilot sites, as a last resort for property developers to purchase from. This is because as of November 2023, they will need to legally deliver an uplift of 10% BNG for each new residential, industrial or commercial site in England.

Defra has purposely priced the statutory biodiversity credits high – from £42,000 per unit up to £650,000 for lakes (to be confirmed in November 2023) – to encourage developers to invest in further on-site or off-site habitat creation.

• Read more: How understanding natural capital data can help farmers and land managers make decisions on new business opportunities - such as marketing biodiversity units

BNG creation project

To make the most of increasing demand for biodiversity units, especially from the property development sector, a BNG creation project could be an attractive business option for farmers and land managers.

This phrase covers any environmental project that results in biodiversity net gain. It could include sowing a multi-species pollen or nectar mix on part of a field, or restoring hedgerows or ponds on-farm.

Plans for any BNG creation project must consider the habitats already present in the area, soil types and a clear vision of the result for the farm or estate business.

• Read more: How investing in biodiversity and natural capital could help futureproof land-based businesses
• Read more: How to maintain biodiversity on farmland and estates

Defra habitat classification

When it comes to classifying BNG credits, Defra has created three categories for habitat areas on farmland and estates – low, medium and high distinctiveness.

This categorisation factors in how many flora and fauna species are present within the habitat area, and how common or rare the habitat’s features are.

In Summer 2023 Defra set out these indicative prices for each category of statutory biodiversity credits. The prices will be confirmed in November 2023.

• Read more: What tools are available to measure and monitor biodiversity?

Carbon flux

Carbon flux is a measure of the flow of carbon between different carbon stocks over time - i.e. carbon flowing from the atmosphere to the land and living things, and vice versa.

Carbon sequestration happens when carbon is captured from the air and stored within elements of natural capital on-farm, such as grassland.

Carbon is also released into the atmosphere via carbon dioxide emissions, a greenhouse gas produced when fossil fuels are burned for energy.

It’s in the interests of farmers and estate managers to understand carbon flux across the land they manage to help spot opportunities to increase carbon sequestration – which will not only help with achieving the industry’s Net Zero target but could also be funded by private or public sources.

• Read more: Why and how exploring carbon capture as an income opportunity can help futureproof farm businesses

Natural capital

Natural capital is used to describe any element of nature that produces value or benefits to people, directly or indirectly.

Natural capital is everything we see around us. Farmland examples include trees, ponds, hedgerows, and woodland, as well as the soils used to grow crops. It also includes natural elements with social benefits, such as public footpaths or countryside views, which have a positive effect on people’s mental wellbeing.

For many farmers and estate owners/managers, natural capital is in abundance across the landscapes they manage. However, the income potential of these natural assets may not have been realised yet.

• Read more: Natural Capital - what is it and how can it be measured on farmland? (fera.co.uk)

Natural assets

The term natural asset(s) is often interspersed with the term natural capital. Ultimately, they mean the same thing. Nature is an asset available to farmers and estate owners/managers, therefore it’s worth calculating its value and treating this asset as you would with any other form of capital in your business inventory.

• Read more: Why is Sustainable Land Management Important to Futureproof Farm Businesses? (fera.co.uk)

Natural capital baseline

The definition of a baseline is ‘a minimum starting point used for comparisons’. A natural capital baseline is therefore a starting point for understanding the quantity and quality of natural capital present across a landscape. Land managers can then use this baseline to monitor the success of practices that may be implemented to improve or enhance natural capital.  

Establishing a baseline is a crucial starting point when seeking opportunities to futureproof a farm business. Natural capital planning and assessment tools, like LAND360, can help with this.

• Read more: How to Measure Natural Capital (fera.co.uk)

Benchmarking

Benchmarking is a process to measure the quality and performance of a business. This is a technique commonly used within agriculture to compare the performance of similar farming businesses/systems each year or those operating in specific geographical areas.

Benchmarking helps to identify areas where potential improvements could be made to benefit a business financially or environmentally. For example, AHDB’s Farmbench platform enables beef, lamb, dairy and arable farmers to assess their yield and cost data against comparable farms and make evidence-based decisions.

Biodiversity

The living element of natural capital, biodiversity is defined as the variety and quantity of living species within the natural environment – usually plants, animals, bacteria and fungi. A healthy state of biodiversity is central to a productive agricultural system, hence it’s in the interests of farmers and land managers to protect biodiversity.

• Read more: How to maintain biodiversity across your farm business (Fera.co.uk)

Biodiversity unit

Biodiversity is measured in biodiversity units. This value is based on the number of species and condition of plants and wildlife present. Measuring biodiversity enables farmers and land managers to track changes in the state and level of biodiversity over time.

Biodiversity loss

Biodiversity loss relates to the decline in the variety of species in the natural environment. The UK has lost almost 50% of its biodiversity since the 1970s, primarily caused by the loss of habitats.

This is of concern not only for general society, but also for farmers and land managers. A healthy state of biodiversity is needed to maximise the success of livestock and crop production and help maintain an attractive rural landscape.

Biodiversity net gain

Often referred to as BNG, biodiversity net gain means that biodiversity has been managed in a way that means it’s left in a measurably better state than it was before.

Habitat

A habitat is an area where a living species typically resides. For example, woodland is the natural habitat for a range of species including mammals, insects, fungi and lichen. Soils is the natural habitat for nematodes, bacteria and grasses.

Many of these habitats can be classed as a form of natural capital, which have the potential to be economically beneficial to land managers.

Sustainable land management

In simple terms, sustainable land management relates to how individuals, communities or businesses can use land to the greatest societal benefit.

There are many practices that can be implemented to support sustainable land use, but there is not a ‘one size fits all’ solution to this. Every farm and estate business is unique and different approaches will be needed to support more sustainable land management.

Stewardship schemes

These are typically payment schemes introduced by the UK government to support land managers. A variety of countryside and environmental stewardship schemes are available to farmers and estate managers across the devolved nations.

These stewardship schemes pose valuable opportunities for land managers to use public funding to invest in natural capital.

To find out about current agricultural stewardship schemes, click here.

Environmental Land Management scheme (ELMs)

The overarching ELM scheme will replace the Common Agricultural Policy (CAP) which included the Basic Payment Scheme (BPS) and was released in 2021 as part of the UK government’s Agricultural Transition Plan 2021 to 2024.

The intention is for three schemes to be phased in across England:

• Sustainable Farming Incentive (SFI)
• Landscape Recovery
• Countryside Stewardship Plus
• Read more: Guide to Agricultural Environmental Schemes in England (fera.co.uk)

Sustainable Farming Incentive (SFI)

As part of the Environmental Land Management scheme, the Sustainable Farming Incentive rewards farmers for managing land in a sustainable way that benefits food production and environmental security.

Farmers will be paid to provide public goods including:

• Improved water quality
• Biodiversity
• Climate change mitigation
• Animal health and welfare
• Healthy hedgerows, soils and grasslands

Within the updated SFI scheme for 2023, there are 23 actions on offer. These cover:

• Soil health
• Moorland
• Hedgerows
• Integrated pest management
• Farmland wildlife
• Buffer strips
• Low input grassland
  
  
• Read more: Guide to Agricultural Environmental Schemes in England (fera.co.uk)

Agroforestry

Agroforestry is a practice that can be used by land managers to improve biodiversity and natural capital across a farmed landscape. It involves incorporating tree cultivation into traditional farming practices, bridging forestry and agriculture to deliver benefits for the business and nature more widely.

Examples of agroforestry could look like:

• Woodland being grazed by livestock
• Hedgerows and buffer strips adjacent to cropland or pasture
• Alleys of trees planted within crop fields
• Read how agroforestry is being done in practice: LAND360 Case Study: Helmingham Estate (fera.co.uk)

Remote sensing

Remote sensing is a phrase used to define the process of gathering data from devices that detect electromagnetic radiation (light from the sun), visible light, infrared light and near-infrared light.

LAND360 Mapping+ uses remote sensing technology to build a comprehensive map of your land. Find out more here.

• Read more: How Can Remote Sensing Technology help Farmers Calculate Natural Capital? (fera.co.uk)

Regenerative agriculture

Fundamentally, regenerative describes methods of agriculture that produce food while also maintaining, protecting or enhancing elements of natural capital.

There are many definitions for regenerative agriculture. For example, Rhodes, 2017 defines regenerative agriculture as an alternative means of producing food that may have lower, or even net positive, environmental and/or social impact.

The IPCC, 2019 state that regenerative agriculture involves sustainable land management practices that are focused on ecological functions effective in building the resilience of agro-ecosystems.

• Read more: What is Regenerative Agriculture? (fera.co.uk)

To find out how to make the most of natural capital across your land, and to discover how Fera can help, click here.