Defra seeks to unlock more private finance for public goods

Additional private finance, on top of any money provided by the Environmental Land Management scheme in England, will be needed if farmers are to deliver a resilient food system and meet the government’s environmental goals, 

This is according to a new Defra-commissioned study, led by the Green Finance Institute, in partnership with 13 other groups including banks, the NFU, Tenant Farmers Association and supermarkets.

See also: Environmental Land Management – your questions answered

The report sets out four key ways in which more private finance can be unlocked. These are:  

  1. Improved data availability – to help farmers, banks and the private sector include natural capital improvements in their businesses and decision-making processes
  2. Better environmental outcomes metrics – so that both the private sector and farmers know where to invest their time and resources to meet government targets
  3. Guidance on environmental markets – to give confidence when dealing with things like stacking ecosystem services, setting standards, involving tenants and tax treatment of revenues
  4. Aggregation model support – to encourage landscape-scale projects and help farmers attract private finance.

The aim is that more private finance will “facilitate food production and environmental improvement, while diversifying farmers’ incomes”.

“Putting these market enablers in place will provide a solid foundation to deliver on this ambition, and meet the UK’s climate and environmental ambitions, which include stimulating at least £500m of private investment per year by 2027 to support nature recovery.” said a statement.


NFU president Minette Batters indicated that farmers were up for the challenge.

“As custodians of the land, boosting carbon sequestration, biodiversity and water quality are just as much a priority for farmers and growers as producing quality, nutritious food for the nation,” she said.

“Greater access to private sector finance will enable British farm businesses to continue to invest in this important work and, crucially, build business resilience.”

This is particularly important given that the current government budget of £2.4bn for English agriculture is only ring-fenced until the end of this parliament – which is expected in 2024.

Thereafter, the sector will be competing with many other departments for Treasury funding and there are fears it could lose out.

At a recent National Sheep Association webinar, Janet Hughes, head of future farming at Defra, predicted that there would be increased private investment in the sector.

She said her department was keeping a close eye on it, to ensure that developing government schemes were complementary to that.

“We want you to be able to earn money from carbon credits, biodiversity net gain and water companies,” she said.