As the climate crisis intensifies, innovative financing mechanisms that support both environmental restoration and economic viability are becoming essential. We recently developed a Nature Investment Land Assessment Tool – a comprehensive toolkit that bridges the gap between policy and practice – supporting local authorities to understand nature data and identify opportunities for nature-based financing.
The Policy Foundation
Wales has established a strong environmental policy framework through the Environment (Wales) Act (2016) and the Wellbeing of Future Generations Act (2015). These mandate greenhouse gas reductions and ensure land-use decisions align with sustainability and community wellbeing through a “placemaking” approach that integrates social, economic, and environmental considerations.
Planning Policy Wales (2024) actively encourages renewable energy projects with biodiversity benefits, creating a policy environment conducive to innovative financing solutions. However, translating these policies into practical investment decisions has remained challenging – until now.
The Challenge: From Policy to Practice
Our research revealed several critical barriers to nature-based investment:
- Carbon Accounting Complexity: Welsh local authorities must report carbon emissions, and while nature-based solutions carry negative emissions factors that offset council emissions, the accounting rules create trade-offs between revenue generation and emissions reporting.
- Policy Divergence: England’s biodiversity net gain policy requires strict 10% quantitative improvements with standardised frameworks, while Wales operates under a more flexible biodiversity net benefit framework. This means Welsh financing tools must consider alternative revenue streams beyond biodiversity offsets.
- Data Integration Challenges: Effective financing requires comprehensive data combining land ownership, biodiversity potential, flood risk, infrastructure planning, and grid connectivity – information that previously existed in silos.
- Blended Finance Necessity: Successful nature-based financing rarely relies on single revenue streams but requires blending multiple sources: grant funding with carbon credits, borrowing with biodiversity credits, or ecosystem services alongside restoration.
The Solution: The Nature Investment Land Assessment Tool
The Nature Investment Land Assessment Tool addresses these challenges by providing a comprehensive platform that serves multiple users and purposes:
For Local Authorities
The tool supports councils in identifying land suitability within their local plans, helping planning teams determine which areas would be best suited for nature restoration and biodiversity enhancement. This directly addresses the policy requirements while supporting strategic decision-making for carbon reduction targets.
For Land Owners and Investors
Private landowners and investors can quickly identify the optimal sustainable land use for specific parcels and assess overall sustainable land use potential. The tool recognises that few areas will have low potential for every sustainable purpose, helping users maximise the value of their land assets.
Strategic Prioritisation
Users can select specific strategic priorities to produce maximal value for their chosen objectives, whether that’s carbon sequestration, biodiversity enhancement, flood mitigation, or renewable energy generation.
How It Works
Each unit of land undergoes detailed assessment against multiple criteria for suitability and likely performance across different land uses. To provide consistency across diverse land use options, the tool calculates:
- Social Value Costs and Benefits: Quantifying the broader societal impact of different land use decisions
- Direct Investment Returns: Assessing the financial viability and return potential for private investors
- Blended Finance Opportunities: Identifying how multiple revenue streams can be combined to make projects viable
Beyond Current Limitations
The tool recognises that current opportunities beyond Biodiversity Net Gain are limited. By providing comprehensive data and analysis, it aims to inform national government about the need to design new mechanisms that reward landowners for producing and managing land use changes that contribute to strategic environmental and economic aims.
Strategic Impact
The Nature Investment Land Assessment Tool represents a practical solution to the theoretical challenges identified in our policy review. By integrating complex datasets and providing clear, actionable insights, it enables:
- Evidence-Based Decision Making: Moving beyond gut instinct to data-driven land use decisions that maximise both environmental and economic returns.
- Policy Implementation: Translating high-level policy objectives into practical investment opportunities that can attract both public and private capital.
- Market Development: Creating the information infrastructure necessary for a functioning market in nature-based solutions.
Moving Forward
The Nature Investment Land Assessment Tool demonstrates how research-based insights can be transformed into practical solutions. By bridging the gap between policy intention and investment reality, it provides a pathway for achieving Wales’s environmental objectives while creating economic opportunities for landowners and investors.
As we face the dual challenges of climate change and biodiversity loss, tools like this become essential for ensuring that good intentions translate into effective action. The future of nature-based financing lies not just in policy frameworks but in the practical tools that make those policies actionable.
The Nature Investment Land Assessment Tool represents a crucial step toward a future where environmental restoration and economic viability go hand in hand, creating sustainable landscapes that benefit both people and planet.