What landowners should consider before investing in woodlands

The UK and devolved administrations are encouraging every landowner to plant the right trees in the right places for the right reasons, offering woodland creation and management grants as an inducement.

As woodland is long-term, there are several key considerations farmers should bear in mind to avoid some of the common pitfalls and oversights associated with new schemes.

The planning stage is important as measures like soil testing, although an upfront cost, can make the difference between a scheme succeeding or failing, advised Robbie Brett, farming consultant with Ceres Rural.

See also: Advice on dealing with wayleaves on farmland

“We have just done a survey in the Cotswolds for an agricultural planting scheme, and it has shown a huge variation in the soil types in a single field,” he said.

As a consequence, different trees will be planted in different parts of the field according to whether they perform best in acid or alkaline soils.

Some trees also do better than others in wet soil while others won’t thrive in that environment.

Woodland management

How new woodland is managed and maintained in the first two years is critical. Mr Brett recommends taking advice on planting depths and densities as some schemes specify a minimum number of trees a hectare.

Maintaining those densities can make a big difference to financial outcomes, particularly for carbon capture schemes.

A plantation he visited earlier this year had lost 40% of its trees due to lack of rainfall – a situation not uncommon as a result of the 2022 drought; because of the way the scheme was being funded, with carbon credits paid for each tree, those trees had to be replaced.

“It was a big extra cost that the landowner hadn’t planned for,’’ said Mr Brett.

New woodland can offer much more than carbon sequestration benefits – it can enhance diversification opportunities, for example.

Once trees have established and start to mature there can be income opportunities around public access, such as dog exercise areas or positioning glamping pods or a camping area in the woodland.

For landowners who are considering planting to sell biodiversity credits there is important work that needs to be done before a single tree goes into the ground, to get a baseline of the current biodiversity value of the land.

This will be used to calculate payments further down the line.

“If you don’t know where you are starting from you can’t work out the biodiversity net gain in 10 or 15 years’ time,” said Mr Brett.

Businesses such as Ceres Rural work alongside ecologists to gather this data.

Offering public access can result in more favourable outcomes for woodland creation grant applications, said Mr Brett, but it doesn’t rule out applications if the landowner can’t offer this or doesn’t want to.

Farmers wishing to generate a carbon-based income must register the plantation with the Forestry Commission’s Woodland Carbon Code before planting commences.

Carbon units can be sold as early as five years after planting, validating and verifying the woodland.

The government-backed Woodland Carbon Guarantee ensures a minimum price for carbon credits, but still allows farmers to sell them on the open market.

“Baseline your soil carbon before you start planting if you are planning to sell that as well,” Mr Brett advised.

Mixed planting 

If carbon sequestration is the sole purpose of the new woodland, conifers may be the best choice as they sequester carbon more quickly.

“However, they offer less in terms of improving biodiversity. A mixed planting approach is often better, as diversity is vital and broad-leaved trees sequester more carbon in the long term,” he said.

For biodiversity net gain income, opt for a variety of mostly deciduous native species.

Planting trees is unlikely to enhance the value of farmland – for instance, planting on prime arable land would be detrimental to its land value – but not if it’s an unproductive corner. 

Therefore, taking advice on how planting trees will affect the land’s value is important before proceeding, said Mr Brett.

Where trees do add value is to property – for example, if there is a house or building near a main road and trees are planted to screen the property from that.

Trees can also offer another source of income, such as from timber or fruit and nuts. However, there is a labour requirement associated with these enterprises and an understanding is needed of how the products will be marketed.

Woodland is also subject to a range of tax reliefs – for example, if it is used for producing timber to sell, there is no income tax or corporation tax payable on that income.

There is also an exemption from capital gains tax for the value of growing timber.

Seeking expert advice on the potential for tree planting and the grant opportunities is important, especially as natural capital and carbon markets are still in their infancy.

“Time spent considering the various options and the best way of achieving your end goals is a good investment,” Mr Brett maintained.

Grants available

There are a number of grants which can fund the planting and management of new woodlands.

Farm businesses can access funding from the Forestry Commission, through the Woodland Trust and, in England, via Countryside Stewardship, with similar schemes operating in other UK countries.

There are also private initiatives such as those offered by water companies.

Both the Woodland Creation Planning Grant in England and the England Woodland Creation Offer can be used to plan and pay for tree planting, although the initiatives have different minimum area requirements of between 1-5ha.

The Woodland Trust’s MOREwoods and MOREhedges schemes are alternative ways of funding new woodland and hedging.