Private sector finance for natural capital improvement schemes will be essential if the UK government is going to deliver its goal of making this generation the first to leave the natural environment in a better state than we found it.  However, investment will only come if there are returns, and that requires new, innovative models to extract economic value from the ecosystem services provided by the investment.  

Change is coming.  The Dasgupta report last week made clear radical change is needed, and policies and regulatory intervention is inevitable.  However, innovation is also needed, with bright people finding methods to create returns from the ecosystem services offered by nature.  This might be payments for natural capital services to offset development to deliver biodiversity net gain, or generating carbon credits for corporates eager to demonstrate a commitment to carbon neutrality, or it might be improving water quality and reducing water treatment costs, to give just some examples.

To encourage such innovation, the government has launched its natural environment investment readiness fund (NEIRF), pledging £10m in grants for projects that will demonstrate ways to make investment returns from natural capital improvements. 

We are working with clients on innovative projects in this space and we know that there are lots of great ideas, so competition for this £10m will be strong.  We also know from our work with investors that there is a huge amount of money searching for a home where financial returns and improvements to the natural world go hand in hand, so the rewards for successful projects could be significant.