Green land investment in rural Scotland: social and economic impacts

Outlines the findings of research into the range of potential social and economic impacts relating to new forms of green land investment in rural Scotland.

3. Literature and Evidence Review

There has been a recent increase in land purchases and management in rural Scotland by companies seeking to benefit from natural capital investment. This has implications for Scottish Government goals of landownership diversification, just transition, net zero, and community wealth building.

This research addresses the lack of evidence and understanding regarding the wider and long-term implications of green land investment on rural communities and economies in Scotland.

A review of academic and grey literature provides a definition of green land investments and the motivations of green land investor-owners, including: reputational impacts, financial returns, operational impacts, environmental and/or social impacts, and personal drivers.

3.1 Scotland and the Natural Capital Market

Natural capital is defined as the “habitats and resources of the natural world that combine to provide social, economic, and environmental benefits to people…[including] the water, air, soil, plants and wildlife on which we depend” (Scottish Government, 2021b: 10). Professor Dieter Helm describes natural capital as the “assets that nature provides us for free” (2022: 2), and highlights that systems (such as land) can contain multiple natural capitals that interact (e.g. carbon, air quality, and biodiversity), reinforcing the need for holistic approaches to land and land management (Helm, 2022).

At present, conversations about natural capital are often equated with investments in carbon, because carbon credits are the only internationally – or even nationally – recognised markets at scale. Furthermore, the increase of existing voluntary domestic carbon markets, and the development and anticipation of new markets (e.g. biodiversity credits) are supporting the viability of large-scale land use transitions, including rewilding and afforestation (McMorran et al., 2022a). It is clear that there is an increase in land purchases and land management by companies seeking to ‘inset’ their own carbon emissions, or profit from others’ needs to offset their emissions (Scottish Land Commission, 2022). However, other financial mechanisms for facilitating the delivery of other environmental benefits are possible – as witnessed by the proliferation of examples collected by the Green Finance Institute[13] and new transactions being set up, for example through the ‘Revere’ Initiative[14] between the UK National Parks and Palladium International. A key example in Scotland is the Memorandum of Understanding signed by NatureScot and three financial institutions to support a pilot project that aims to mobilise private investment in landscape-scale restoration (NatureScot, 2023).

This drive for new land uses, land management approaches, and new actors shaping landscapes is arguably in tension with Scottish Government policy regarding the diversification of landownership, as new entrant farmers and community organisations are priced out of land access and forestry ownership becomes more concentrated (see: Daniels-Creasey and McKee, 2022; Wightman and Hollingdale, 2023; Merrell et al., 2023)[15], as well as commitments to community empowerment and participation in land use decision-making. The land market and land management implications from investment in natural capital in Scotland is likely to “reinforce existing structural inequalities in relation to concentration of landownership and decision-making power, and related outcomes for communities” (McMorran et al., 2022a). Research by the James Hutton Institute has demonstrated that such natural capital investments, in particular by large-scale and concentrated landowners, are already impinging on sustainable rural development (Daniels-Creasey and McKee, 2022). These potential concerns are reflected in the Scottish Government’s consultation ‘Land Reform in a Net Zero Nation’, which proposes (amongst other measures) to ensure that large-scale land acquisitions are in the public interest (with obligations both for buyers and sellers), and that large-scale landowners comply with the Land Rights and Responsibilities Statement (Scottish Government, 2022b). This proposed intervention in the land market is complex and controversial (for example, see Scottish Land & Estates, 2022). The Scottish Government has also been proactive in publishing ‘Interim Principles for Responsible Investment in Natural Capital’, that seek to support the development of a:

“values-led, high integrity market for responsible investment in natural capital, that helps deliver policy goals for economic transformation, climate change and biodiversity, and that provides community benefits and support a Just Transition” (Scottish Government, 2022c)

Despite the focus of numerous media reports in high-profile international publications (e.g. MacDonald, 2021; Macfarlane, 2021; BBC News, 2022; Mann and Matijevic, 2022; Marshall, 2022; O’Grady, 2022; Armstrong, 2022, amongst others), there is little academic research that defines the range of green land investment types and investor motivations, or that provides evidence regarding the likely impact of land reform proposals on mitigating negative and maximising positive effects of the natural capital market in Scottish land.

3.2 Defining Green Land Investments

An initial review of the available literature on green land investments along with media articles on the phenomenon of large-scale land purchases for green activities or purposes in Scotland resulted in an initial definition of green land investments as follows:

“The purchase of, or investment in (directly through shareholding or indirectly through intermediary companies) land to undertake nature restoration, regenerative land management or approaches that maintain or enhance natural capital, and/or sequester carbon emissions.”

Subsequently, a review of academic and grey literature was completed to refine the definition and create a typology of green land investments (see Section 3.1 for literature review methodology).

While none of the literature offered an encompassing definition of green land investment, elements of the mechanisms and activities that were in the project’s initial definition were verified. Three articles described land purchase (van der Ploeg et al., 2015; McMorran et al., 2022; Salter, 2022), one mentioned investment in land (Sharma et al., 2023), and one article mentioned both purchase and investment in land (Ross, 2021). The purposes they ascribe to these land acquisitions or investments include: carbon sequestration (van der Ploeg et al., 2015; McMorran et al., 2022), carbon offsetting (Ross, 2021; McMorran et al., 2022), and carbon trading (Ross, 2021; Sharma et al., 2023); forest conservation (van der Ploeg, Franco and Borras, 2015; McMorran et al., 2022); investment in natural capital (McMorran et al., 2022); the use of financial instruments such as sustainability funds and climate bonds (Sharma et al., 2023); and to “decarbonise business emissions, offset future tax liability, cash in on public subsidy, benefit from land speculation, or all the above” (Davidson, 2022). These articles focused largely on the financial aspects of land ownership and investment activities. Box 1 provides an overview of the models of green land investment currently operating in Scotland, based on ongoing landownership research (Wightman, 2023).

Box 1: Models of green land investment operating in Scotland (after Wightman, 2023):

1. Bespoke investment funds typically structured as Limited Liability Partnerships whereby the investors are partners.

2. Existing financial institutions operating through subsidiary companies or partnerships.

3. Commercial companies established for the explicit purpose of restoring nature.

4. Wealthy individuals operating through a variety of structures (companies, trusts etc.).

5. Existing landowners engaging the services of an intermediary company who attracts investors and enters into a lease or other legal arrangement.

In our definition, we have described activities undertaken by green land investor-owners but not their motivations. A list of motivations was produced from the literature review and supplemented by a review of websites created by some of the Scottish ‘green land investors’ that outlined their activities and their purposes. Green land investment motivations are differentiated from land ownership for other purposes, in that the green motivations are a primary driver for purchase/investment rather than a side effect. It was found that the primary motivation of green land investor-owners varies according to what extent they are seeking a return on their investment (and seek to engage with natural capital markets) or are compelled by environmental and social obligations (with implications for social justice). The investor-owner motivations fall along a spectrum rather than into discrete categories (Figure 2). Many also have multiple motivations and activities, and therefore distinguishing the priority of each motivation from the outside (i.e., based only on website content or media reports) can be difficult. These literature-derived motivations have been further refined through discussions with the Research Advisory Group and interviews with green land investor-owners and landowner representatives (see Section 4.1).

In the resulting typology, the primary motivations of green land investors are:

  • Reputational impacts
  • Financial returns
  • Operational impacts
  • Environmental and/or social impacts
  • Personal drivers

These motivations and related examples are detailed in Table 3 (see below).

The literature findings have been checked and enhanced through field research (see Section 4.1). The resulting definition of green land investments used in this report is:

The purchase of, or investment in (directly through shareholding or changing focus of owner investment, or indirectly through intermediary companies) land to undertake nature restoration, regenerative land management or approaches that maintain or enhance natural capital, and/or sequester carbon emissions, differentiated from traditional ownership by the green motivations as a driver rather than a secondary outcome.

While this report looks at cases of private ownership/investment the definition could also apply to community owners and public sector owners.

Figure 2: Spectrum of green land investor motivations (adapted from Sullivan, 2018)
Figure showing spectrum of green land investor motivations, in terms of creating environmental, blended or financial value.

Table 3. Description of motivations for green land investment

Motivation - Reputational Impacts


  • Secure social licence[16]
  • Environmental, Social and Governance/Corporate Social Responsibility goals
  • Respond to community resistance/environmentalist pressures
  • Prestige*
  • Green credentials/legitimacy/branding

(Le Billon, 2021; Koronka et al., 2022; McMorran et al., 2022a; Reed et al., 2022; Scottish Land Commission, 2022)

Motivation - Financial Returns


  • Expansion into new markets, diversification*
  • Additional land-based income
  • Government (green) grants (including stacking private/public funding)
  • Price premiums for eco-products
  • Expectation of payments from future markets/public finance
  • Capture subsidies
  • Differentiate portfolio (e.g. additionality of other social/environmental impacts to carbon credits)
  • Tax exemptions/relief*
  • Option value
  • Speculation*
  • Inflation hedging*
  • Land value returns*
  • Rental returns**

(van der Ploeg, Franco and Borras, 2015; Meissner and Grote, 2017; Wynne-Jones et al., 2020; Koronka et al., 2022; McMorran et al., 2022a; Reed et al., 2022; Scottish Land Commission, 2022; Sharma et al., 2023; Thompson, 2023)

Motivation - Operational Impacts


  • Ameliorate risk (e.g. climate change, reputational, to assets/supply chain)
  • Reduce impacts from other parts of operation
  • Insetting
  • Offsetting

(Le Billon, 2021; MacDonald, 2021; Brice et al., 2022; Koronka et al., 2022; McMorran et al., 2022a; Reed et al., 2022; Sharma et al., 2023)

Motivation - Environmental and/or Social Impacts


  • Community wealth building*
  • Rural employment*
  • Biodiversity
  • Afforestation
  • Peatland restoration
  • Nature restoration or ‘rewilding’
  • Carbon sequestration

(Wynne-Jones et al., 2020; Koronka et al., 2022; Reed et al., 2022)

Motivation - Personal Drivers


  • Fulfilling moral obligation, altruism
  • Personal interests*
  • Lifestyle factors*
  • Power*

(Holmes, 2012; Geisler, 2015; Meissner and Grote, 2017; Dempsey and Bigger, 2019; MacDonald, 2021; Koronka, Ovando and Vergunst, 2022; McMorran et al., 2022a; Salter, 2022; Sharma et al., 2023)

*These motivations may also apply to non- green land investor-owners but are evident with green land investor-owners as well.

3.3 The socio-economic impacts of green land investment in rural Scotland: existing evidence

As described, natural capital investment is growing rapidly in the UK, driving significant changes in the land use sector (Hollingdale, 2022). Many landowners and managers are interested in new market-based opportunities (Waylen and Martin-Ortega, 2018), so further change seems likely. The pace and scale of land use change due to the natural capital and carbon markets is both a potential opportunity for achieving net zero, meeting the finance gap in nature-based solutions, and supporting community wealth building, and a key challenge – particularly in terms of achieving a ‘just transition’ in rural Scotland. The Scottish Land Commission is clear, however, that: “we can’t allow the drive to net zero to pitch community and private interests against each other. Our approach must benefit everyone” (Glenn, 2021).

The challenges are both national – in terms of policy alignment and meeting the public interest in our land resource – and local, impacting in particular on rural communities and the people and households who live and work there. The opportunities and challenges of landownership and land use change in light of the climate emergency will have implications for rural livelihoods (e.g. farming, forestry, gamekeeping), as well as the wider rural economy (e.g. the impact on rural services, hospitality businesses, tradespeople).

A recent evidence review has found that large scale private acquisitions of land in Scotland for natural capital may bring real risks. These include concentrating the distribution of benefits associated with natural capital, and conflicting with wider policy ambitions around diversifying landownership and increasing opportunities for communities to influence decisions around land use (McMorran et al., 2022b; Atkinson and Ovando, 2021). The rapidly emerging risks in Scotland’s land market have clear parallels to international contexts of land financialisation – whereby land becomes traded as a financial investment instrument rather than a productive good (Fairbairn, 2020) and arguably ‘land-grabbing’ (van der Ploeg et al., 2015)[17]. However, it is noted that relatively little land is transacted in Scotland on an annual basis (Merrell et al., 2023).

There is evidence of significant impacts on the land market in Scotland, with poor livestock grazing land rising in price by 60% during 2021 (McMorran et al., 2022b)[18], reportedly pricing out individual farming businesses from expansion, reducing new entrant farming land access, and restricting opportunities for community organisations to utilise right-to-buy mechanisms (Daniels-Creasey and McKee, 2022). Where green land investment results in increasing landownership concentration, there may be implications for sustainable rural development (e.g. land availability for affordable housing or economic development; see Glenn et al., 2019).

Indeed, the 2022 Rural Land Markets Insights report highlighted the “potential for social and cultural impacts due to the potential for relatively rapid and large-scale land use transitions” (McMorran et al., 2022b: 43). Such impacts include the decline in rural community populations where members are employed in traditional land-based activities, including sporting land management and hill sheep farming, which are no longer primary land use objectives (e.g. due to afforestation and renewable energy development). Rural depopulation (as a result of changing or declining employment) has serious consequences for key service provision, including healthcare and education. Changing rural employment may have implications for local wage levels, the market for other service industries (e.g. mechanics, tradespeople, etc.), and the demographic composition of rural communities (e.g. the outmigration of working-age populations, increase in second home ownership, etc). There remains limited evidence and understanding regarding the wider and long-term implications of the natural capital market in land on rural communities and economies (Scotland’s Moorland Forum, 2022; McMorran et al., 2022a).

The community impacts of estate acquisitions by corporate owners are also uncertain. On one hand there is a risk to communities due to such owners seeking primarily to achieve investment returns, but there is also the opportunity for corporate owners (or other types of green land investors) to provide “new approaches and resources to community development due to their need to ensure social acceptability” (McMorran et al., 2022b: 43). Indeed, incoming green land investors may be keen to support community initiatives, through providing funding, entrepreneurial, or business knowledge. A recent report for the Scottish Government has demonstrated the local economic impacts of natural capital investment, in particular highlighting the anticipated positive impact on the wider local economy as a result of investment in woodland creation, and positive employment across different scenarios (i.e. woodland creation, peatland restoration, regenerative agriculture, and coastal restoration) (WSP, 2022).

However, recent research by the James Hutton Institute indicates that community engagement does not tend to be prioritised by new landowners or those embarking on significant land use change (Daniels-Creasey and McKee, 2022; Fischer and McKee 2017; Pinker 2018; Pinker 2021). Our research shows the key role played by individual and personal relationships (McKee, 2015; Glass et al., 2021). Some new landowners (or generations of family ownership) appear to prioritise commercial interests and estate financial viability, rather than maintaining relationships with local community members, which can undermine community engagement processes (Fischer and McKee 2017; Pinker 2018; Pinker 2021). It may be anticipated that a rise in absentee (i.e. non-resident), corporate landownership may have implications for landownership transparency and accountability (cf. McKee, 2015), and the implementation of the Land Rights and Responsibilities Statement (a key measure proposed within the Scottish Government’s consultation ‘Land Reform in a Net Zero Nation’).

Research by the James Hutton Institute also illustrates the perceived negative environmental and landscape impacts of green land investment ownership and land use change (Daniels-Creasey and McKee, 2022)[19]. In one study, interviewees from rural communities in the South of Scotland described a lack of landscape diversity, in particular with large areas of afforestation, which was perceived as environmentally detrimental, with few benefits for biodiversity. Interviewees feared that landscape diversity – an asset they consider crucial to attracting tourists – would continue to disappear, again with implications for rural employment and the wider economy (Daniels-Creasey and McKee, 2022).

Critically, the shift in types of landowners and their motivations for ownership is likely to change social relationships in rural communities that remain entwined with local landholdings, with implications for community empowerment and the ‘just transition’. There is a significant knowledge gap around these changing relationships and their implications for rural community sustainability and empowerment, which offers a clear rationale for this research. Indeed, as the research presented here demonstrates, different communities of place (and different people within those communities) are impacted by green land investment activities in diverse ways, both positively and negatively. Recognising this diversity is both a challenge and key to the just transition.

This research seeks to build understanding about the needs and aspirations of rural communities regarding training, skills, and employment in the light of just transition planning (building on the recommendation in WSP, 2022), providing valuable evidence to the Scottish Government in terms of its goals to support generational change in agriculture, rural repopulation, and the shift to the wellbeing economy. Through gathering the lived experience of rural communities impacted by landownership and land use change, this research aims to support policy development that seeks to maximise the potential from the natural capital market, ensure policy alignment and clarity of the ‘public interest’, and minimise negative impacts on individuals and rural communities, in the short and long term.



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