Natural capital and agricultural tenancies – an evolving legal concept

Published on
2 min read

Natural capital is high on the government’s agenda, particularly post-Brexit, with a shift away from the Common Agricultural Policy towards rewards for producing food and protecting or enhancing the environment. But what is natural capital and should this be a key consideration in your agricultural tenancy negotiations?

Natural capital is, in its broadest sense, the stock of natural resources in the world around us – for example, water, air, trees, wood, soils, biodiversity. Post-Brexit, the shift of focus is away from the EU Common Agricultural Policy towards The Environmental Land Management scheme which is to be rolled out in 2024 – said to be the “cornerstone of the government’s new agricultural policy”; agricultural support is being shifted from area based payments to land managers being paid “public money for public goods’ and natural capital underpins the government’s concept of public goods – eg clean air, clean and plentiful water, thriving plants and wildlife, beauty, heritage and engagement with the environment.

Agricultural tenancy considerations

How can a landlord benefit from natural capital and work in conjunction with its tenant to jointly benefit from the financial gains that can be derived from it? This will need to be considered when entering into any tenancy negotiations in order to ensure the principle of natural capital and the financial benefits that can be derived from it is addressed in the tenancy itself. 

Any landlord or tenant who is thinking about entering into a new tenancy agreement or who has an existing tenancy in place, ought to be thinking about these concepts. It is evolving and can be quite technical in terms of drafting within the tenancy agreement itself, which is where Mills & Reeve can provide assistance.

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