Selling the commons

Somewhere in the Pennines, a farmer is being asked to sign a document. The paperwork, dense with terms like ecosystem services, biodiversity units and natural capital accounts, offers income in exchange for rewilding a portion of his land. The money comes ultimately from a developer in the South East, who is legally obliged to offset the ecological damage of a new housing estate. Between the farmer and the developer stands a financial intermediary, perhaps a fund as likely to be based in London or New York. It is this intermediary that captures the majority of the value. And it is the British taxpayer who made the entire transaction possible.

This is the world of natural capital markets: a policy project that has been in construction for over a decade, that has passed through three prime ministers and two parties of government, and that most people in Britain have never heard of. What is decided in DEFRA guidance notes and Treasury annexes is nothing less than who owns the value of the British natural environment, and who gets to profit from its recovery. Understanding how we arrived here requires going back to a deceptively simple idea: that nature has a price, and that Britain is not collecting it.

The government’s own guidance, updated as in February 2026, defines natural capital as “certain stocks of the elements of nature that have value to society, such as forests, fisheries, rivers, biodiversity, land and minerals.” The operative word is value. For most of human history, a river was simply a river. Under natural capital accounting, it becomes an asset on a balance sheet, producing quantifiable flows of what economists call ecosystem services: flood mitigation, water purification, recreational amenity, carbon sequestration. Each of these can be assigned a monetary figure. The river can now, in principle, be priced, and once priced, traded. 

The intellectual scaffolding was supplied by Professor Sir Partha Dasgupta, whose Review on the Economics of Biodiversity, commissioned by HM Treasury in 2021, argued that GDP ignores the depreciation of natural assets and that the solution is to put nature on a ledger that allows markets to price ecological outcomes. The argument sought to address a clear need. The UK is among the most nature-depleted countries on Earth, with species abundance down 19 per cent since 1970, and decades of conservation spending had failed to reverse the decline. 

Moreover, Prof. Dasgupta offered something rarer still: a policy that could be presented simultaneously as pro-environment and pro-business. Something perceived as fiscally responsible and innovative, yet acceptable to the Treasury. All the while endorsed by a financial sector that stood to benefit from a new asset class. It was, in short, too convenient to resist. Labour has continued it for identical reasons. The alternative of treating nature recovery as a genuine public good, accountable to democratic scrutiny rather than market signals would demand either higher taxes, or an honest admission that the ecological crisis exceeds what markets can supply. Neither admission is politically comfortable.

The machinery of natural capital was implemented in stages. The Environment Act 2021 made it a legal requirement for new developments to improve biodiversity by at least 10 per cent, secured for a minimum of 30 years. However, developers were allowed to meet that obligation by purchasing biodiversity units from landowners elsewhere. Thus, creating a compliance market by statute. The Environmental Land Management scheme replaced EU farming subsidies with payments for habitat restoration and carbon capture. This effectively created the supply side of the same market. Labour has since added a Nature Restoration Fund (a central pot into which developers can pay levies) and set targets for private investment in nature to reach £1 billion annually by 2030.

The natural capital market did not emerge spontaneously from private enterprise. It was engineered, step by step, using public money. The government has committed £30 million of taxpayer capital as a “first loss” cornerstone investment in the UK Nature Impact Fund, meaning the public absorbs initial losses before private investors are touched. This is the logic of blended finance: public funds de-risk the asset class, making it attractive to institutional investors who could not otherwise justify the exposure to their own stakeholder, and then point to the resulting market activity as proof that “nature has value.”

The investment industry has not been slow to respond: natural capital funds raised $13.4 billion globally in 2025 alone, with companies like Environment Bank leasing farmland from farmers to sell biodiversity credits to developers, and the City’s ratings agencies, banks and fund managers are extending their infrastructure into the new asset class. This is an extraordinary opportunity handed to those able to capture it by the state, built on land that has sustained British communities for generations, and underwritten in significant part by the British public.

The human costs are already visible. Hundreds of tenant farmers across England, Wales and Scotland are being displaced by ESG funds, corporate buyers and overseas investors seeking to purchase large estates primarily to generate environmental credits rather than to farm them. Tenant farmers, who manage roughly a third of all UK agricultural land and have limited legal protection, are the most exposed. They have no credits to sell. The land their families have worked for generations is being transmuted into a financial instrument, and they are not among the beneficiaries. This is the predictable consequence of treating the countryside as a portfolio of assets rather than a living inheritance.

There is also the question of what the market is actually buying and selling. Ancient woodland cannot be replaced by plantation forestry, however many biodiversity units are assigned to the latter. The complexity of a functioning peat bog, accumulated over millennia, cannot be replicated on a spreadsheet. The Environmental Audit Committee has only expected the policy to deliver “a small improvement in biodiversity overall.“ 

Natural England has warned that government baseline data on ecosystems is insufficient even to measure whether the market is working. A scheme designed, ostensibly, to protect the natural environment is operating without the basic evidentiary infrastructure required to know whether it is succeeding. What it is demonstrably succeeding at is generating a new and lucrative asset class.

Wildlife Trusts and RSPB warn of a “wild west” in the absence of robust oversight on these new assets. There is no statutory regulator for the nature credit market, the legal status of biodiversity credits has never been tested in a British court, and the National Audit Office found that DEFRA could not account for how it would spend the income from statutory credit sales. The Chancellor wants Britain to be the global leader in this market yet cannot account for what the market is doing to British nature.

None of this, it should be said, is the invention of the left. The natural capital project was designed and legislated by the Conservative Party. This is the party that has historically styled itself as the custodian of the English countryside, of rural communities, and of the organic bonds between people and place. The natural capital framework violates these instincts at every turn. It does not protect the countryside, but financialises it. It has handed stewardship of that countryside from the farmer to the asset management industry. This is the antithesis of conservatism.

It would be wrong to conclude that everyone who designed this system is acting in bad faith, or that the ecological crisis driving it is not real. But a flawed structure produces predictable outcomes, and the structure here has been designed to serve financial capital at the expense of the communities, farmers and habitats it claims to be protecting. The specific choices about who bears the risk, who captures the value and who is displaced have been presented as technical necessities when they are, in fact, political decisions. Until the incentives change, Britain’s nature will not be managed for the benefit of the people who live within it, but as a line item in a portfolio.