Land acquisition for natural capital stalls
While 2024 saw demand for land for natural capital investment fall off a cliff, 2025 saw residual demand dissipate to almost nothing. While the factors noted above were influential on these investors, agents also confirmed that the extreme optimism seen in previous years – and the significant speculation in land purchases that followed – has been shattered by reality.
Agents report that potential investors are far more sceptical about the investment case, have been watching early adopters struggle with the realities of land ownership and management, and note that some of those investors have struggled, or been unable, to exit their projects – let alone with any profit. Land with natural capital projects (e.g. woodland with attached carbon units) that has come on to the market has been unattractive to buyers who would otherwise have been interested in acquiring such land.
Agents further noted that large-scale natural capital investors are increasingly wary of the future value of carbon credits, further potential interventions in land management, and what their exit strategies would be.
The focus in the evidence base this year on “exit strategies” is particularly interesting as it indicates that many of these natural capital investors – acting rationally from a financial perspective – never intend to be long term landowners or environmental stewards. Instead, these investments appear to be seen much like any other investment opportunity – to be held for a relatively short period time before being sold for a profit. This behaviour does not align well with the long-term nature of environmental regeneration and adds further weight to arguments that reliance on private investment motivations to support natural capital enhancement should be reevaluated.
Further, concerns on the future price of carbon credits poses another interesting policy question. If the UK meets its net-zero target by 2050, who will be buying credits to offset remaining emissions, and in what volume? For example, trees would need to be planted in the next couple of years to start delivering verified carbon credits in volume by the late 2040s, but if the main contributors to current emissions – energy, transport, agriculture, industry – have all been successfully decarbonised by 2050, will these new forests look more like stranded assets than a prescient investment?
Whilst action to restore nature is of course a good thing, it’s not one that investors currently seem to think is profitable in the short or long term, which again suggests the need for a different policy approach.
