Farming and the Nature Market: How Farmers Can Thrive in a Changing Climate

November 14, 2025 by Admin

Across the UK and the Isle of Man, a quiet revolution is reshaping the countryside. Farmers, long seen as food producers and stewards of the land, are now at the forefront of a new kind of economy, one where nature itself has value.

This growing sector, known as the nature market, allows farmers and landowners to earn income by protecting, restoring, or enhancing natural habitats. It’s a way to respond to the twin challenges of biodiversity loss and climate change, while unlocking new financial opportunities that strengthen rural resilience.

But what exactly are nature markets? How do they work? And most importantly, how can farmers participate in them today?

 

What Are Nature Markets?

A nature market is an emerging economic system that assigns measurable, tradable value to the benefits nature provides, often referred to as ecosystem services. These include biodiversity, carbon storage, clean water, flood mitigation, and soil health.

In simple terms, nature markets enable farmers to generate and sell “nature credits” verified units that represent improvements to the natural environment. Buyers might be developers needing to offset environmental impacts, companies aiming to reach net-zero targets, or local authorities funding nature recovery.

In the UK, this concept is now supported by the Nature Markets Framework,  a government-led initiative published by DEFRA in 2024. The framework sets standards to ensure that nature-based credits are credible, transparent, and verifiable, giving confidence to both investors and landowners.

This means farmers can now earn money not only from producing food, but also from producing measurable biodiversity gains and climate benefits.

 

The Growing Role of Nature in the Farming Economy

For centuries, farming has shaped the British landscape, creating the patchwork of hedgerows, woodlands, and pastures that define the countryside. Yet as agricultural pressures increase and global markets fluctuate, many farmers are seeking new ways to diversify their income.

Nature markets provide one of the most promising opportunities. By improving habitats, storing carbon, or managing floodplains, farmers can sell nature credits that reflect their positive environmental impact. These activities don’t replace food production they complement it, often by making better use of marginal or underproductive land.

The result is a more balanced, sustainable rural economy one that rewards both productivity and stewardship.

 

The UK Nature Markets Framework Explained

The Nature Markets Framework is the UK Government’s roadmap for scaling private investment into environmental restoration. It was developed to ensure that emerging nature markets operate with integrity, and that the benefits they create are real and lasting.

According to DEFRA, the framework is built on four key principles:

1. Integrity: Projects must meet high environmental standards and avoid “greenwashing.”
2. Additionality: Actions must go beyond what is already legally required or would have happened anyway.
3. Verification: Independent assessments confirm that credits represent real outcomes.
4. Transparency: Data and transactions should be publicly visible to maintain trust.

In practice, this means every BNG unit, carbon credit, or habitat enhancement must be traceable and backed by evidence. Farmers can register their projects with official bodies like Natural England’s BNG Register or The Woodland Carbon Code to ensure they meet regulatory standards.

The framework is designed not just to protect nature, but also to unlock private capital directing billions in investment toward farmers and land managers who deliver environmental gains.

 

Nature Markets Available to Farmers

There isn’t just one “nature market.” Instead, several interconnected markets are emerging, each focused on a different aspect of environmental improvement.

 

Biodiversity Net Gain (BNG)

Perhaps the most advanced of these is Biodiversity Net Gain (BNG). Introduced under the Environment Act 2021, it requires developers in England to ensure that new construction projects deliver at least 10% more biodiversity than was previously on the site.

When developers cannot achieve this on-site, they must fund biodiversity improvements off-site, and that’s where farmers come in.

By creating or enhancing habitats such as wildflower meadows, woodlands, or wetlands, farmers can generate BNG Units. These are verified and sold to developers through Natural England’s registry. Each unit represents a measurable gain in biodiversity value, calculated using the Biodiversity Metric 4.0 tool.

This offers farmers a long-term, legally secured income stream, often for 30 years or more,  while simultaneously improving their land’s environmental quality.

Carbon Markets

Carbon markets are another cornerstone of the nature economy. Farmers can earn carbon credits by capturing or storing carbon through activities such as woodland creation, peatland restoration, or regenerative soil management.

These credits can be verified through the Woodland Carbon Code or Peatland Code and sold to companies aiming to offset emissions.

By integrating trees, cover crops, and rotational grazing, many farms are already achieving measurable carbon sequestration, creating a new financial reward for sustainable land use.

 

Water Quality and Natural Flood Management

Emerging water quality markets and flood mitigation schemes reward landowners who improve water systems. Farmers who restore river corridors, create wetlands, or manage runoff can sell credits to water companies or local authorities.

Initiatives like Reedbed Creation in the Fens and Upstream Thinking are examples of how farmers are already being paid for improving water quality and ecosystem resilience.

 

Habitat Banks

A habitat bank is a designated area of land managed specifically for producing biodiversity units over time. Farmers or landowners can create habitat banks independently or partner with specialist organisations like Environment Bank or The Green Finance Institute.

These projects aggregate habitat creation, manage it under conservation agreements, and then sell units to multiple buyers. This model is ideal for larger farms or estates that can commit to long-term ecological management while generating steady income.

 

How Farmers Can Access Nature Markets

Engaging in nature markets doesn’t require farmers to stop producing food. Instead, it often begins by identifying parts of the farm that could deliver greater environmental value.

Many start by working with an ecologist or land advisor to assess the biodiversity baseline of their land. From there, they can develop a Nature Recovery Plan, mapping areas suitable for habitat creation, woodland, or regenerative practices.

Once a project is designed, the next step is registration and verification. Farmers can register with schemes such as:

• Natural England’s BNG Register (for BNG Units)
• Woodland Carbon Code or Peatland Code (for carbon credits)
• NatureXchange (for trading biodiversity and carbon units directly with buyers)

Once verified, credits can be listed and sold, often through marketplaces, local authorities, or private developers.

Farmers can also combine credits, known as stacking , where one project generates multiple benefits, such as biodiversity and carbon gains. However, this must be done carefully to avoid “double counting,” where the same improvement is sold twice.

 

BNG Units and Long-Term Stewardship

Biodiversity Net Gain is not a one-off payment. When farmers sell BNG units, they also commit to maintaining the enhanced habitats for decades, typically 30 years.

This is where conservation covenants or planning obligations come into play. These legal agreements ensure the habitat is managed responsibly, but they also guarantee ongoing payments over time.

Each BNG project must produce measurable biodiversity uplift, recorded through baseline surveys and periodic monitoring. Farmers who work with Natural England-approved assessors or ecological consultants can ensure their projects are compliant and profitable.

As demand for BNG units grows, particularly with the UK Government’s mandatory BNG policy for developers , the potential returns for farmers are increasing. Prices currently range between £10,000 and £30,000 per unit, depending on habitat type and location.

 

Woodland and the Nature Market

Woodland creation remains one of the most popular and tangible ways for farmers to engage in nature markets. Planting trees not only generates carbon credits, but can also contribute to BNG and flood management outcomes.

Through the Woodland Creation Grant and the Woodland Carbon Guarantee, UK farmers can access financial support for establishing woodlands. These woodlands can then generate verified carbon units under the Woodland Carbon Code, which can be traded through platforms such as Forest Carbon or Sylvera.

In the Isle of Man, similar opportunities are available under the Woodland Carbon Code IOM, part of the island’s Net Zero by 2050 strategy. This local adaptation enables Manx farmers and landowners to sell carbon credits domestically while aligning with international standards.

Woodlands also offer multiple co-benefits: improved soil quality, increased pollinator populations, and reduced flood risk, making them a cornerstone of both climate and biodiversity strategies.

Nature Markets and Climate Change Resilience

Beyond financial rewards, engaging in nature markets helps farms become more resilient to climate change. Restoring wetlands and planting trees can buffer against floods and droughts, while improving biodiversity helps stabilise ecosystems.

For many farmers, this isn’t just about selling credits, it’s about future-proofing the land. Healthier soils, stronger water systems, and diverse habitats all contribute to more stable yields and long-term sustainability.

This aligns with national initiatives such as The Environmental Land Management Schemes (ELMS), which reward farmers for delivering “public goods” like clean air, thriving wildlife, and carbon storage.

 

Challenges and Considerations

While the opportunities in nature markets are significant, they also come with complexities. Farmers should approach them with the same diligence as any long-term investment.

Contracts often last 30 years or more, which can restrict future land use. Independent verification and ecological monitoring can be costly upfront, though these are often offset by future revenue. Market prices for nature credits, especially carbon, can fluctuate as the market matures.

To navigate these challenges, farmers are encouraged to seek advice from land agents, ecological consultants, or agricultural lawyers experienced in nature-based finance. Organisations such as the Green Finance Institute and Nature Finance UK also provide guidance on project development and investment readiness.

 

FAQs: Nature Markets for Farmers in the UK and Isle of Man

 

What is a Nature Market?

A nature market is a system that allows farmers to sell nature credits, measurable environmental improvements such as biodiversity or carbon storage,  to buyers seeking to offset or invest in nature restoration.

 

What Markets Are Currently Available?

Farmers can access markets for Biodiversity Net Gain, Carbon Credits, and emerging schemes for water quality and natural flood management.

 

Why Should Farmers Engage in These Markets?

They provide long-term, sustainable income while enhancing biodiversity, climate resilience, and compliance with environmental policies.

 

How Do Farmers Access Them?

By registering projects with verified schemes such as the Woodland Carbon Code, Natural England’s BNG Register, or NatureXchange, and partnering with recognised ecological advisors.

 

Are Nature Markets Available in the Isle of Man?

Yes. The Isle of Man Government supports woodland carbon and biodiversity projects through its Climate Change Transformation Programme, creating opportunities for Manx farmers aligned with UK frameworks.

 

What Are Habitat Banks?

Habitat banks are areas of land managed specifically to produce biodiversity or carbon credits, often in partnership with organisations like Environment Bank or local councils.

 

Farming and the Future of Nature Markets

The rise of nature markets represents one of the most transformative shifts in British and Manx agriculture in generations. By linking economic value to biodiversity and climate recovery, these markets reward farmers not just for what they grow, but for the ecosystems they nurture.

For those willing to engage, the potential is enormous: new income streams, enhanced land value, and a leading role in tackling climate change. Whether through BNG units, habitat banks, or carbon credits, farmers are becoming central players in the restoration of nature and in building a more sustainable economy for future generations.