Making natural capital work for your community

Making natural capital work for your community

Natural Capital has been an agenda dominating topic in the Scottish rural land market for a number of years and it is widely accepted that much of the investment required to deliver on the natural capital schemes will need to come from private investment. The Green Finance Institute highlighted that there is an estimated £15bn to £27bn gap between the investment currently committed and the amount that we’ll need to invest over the next decade to deliver nature restoration targets.

How does this affect my community?

In March 2022 the Scottish Government published Interim Principles for Responsible Investment in Natural Capital which set out as a key principle for such investment that it “delivers public, private and community benefit”. In recent weeks the Scottish Government have announced the Facility for Investment Ready Nature in Scotland, which will provide grants of up to £240,000 to organisations and communities for nature restoration projects. Successful projects will have to demonstrate the means to engage and share benefits with the local community. Further demonstrating the importance of community benefit as part of natural capital investment in Scotland.

What is meant by ‘community benefits’?

The Scottish Land Commission is now working on providing guidance for policy around how community benefits from natural capital investment can be delivered. The first step in this process is the publishing of a discussion paper Community benefits from investment in natural capital. In this paper, the Scottish Land Commission proposed a definition of what is meant by ‘community benefits’ within the context of investment in natural capital and set out expectations as to how they shall be delivered. The proposals have been shaped by emerging practice and interviews with key stakeholders.

The proposed definition is:

Community benefits are packages of intentional benefits arising from investment in natural capital enhancement, creation, and restoration projects, provided on a negotiated basis for the long-term benefit of the geographically local community.”

Natural capital providing wider public benefits

The paper distinguishes between the wider public benefits of natural capital projects such as carbon sequestration, biodiversity and clean water or air from the community benefit being considered by this definition, where it is the immediate local community who may be affected by a project. The benefits to this local community should be intentionally considered and be further to the wider public benefit.

A distinction is made from similar community benefits generated from renewable energy schemes where a set financial return can be given to the community, with natural capital investment projects being diverse and financial returns varying the way in which community benefits are delivered will be considered on a project by project basis. There is no one prescribed approach which will suit all. Examples given in the paper are allocating surplus land for local housing, creating local jobs and procuring services locally.

Opportunities to get involved

The Scottish Land Commission considered existing natural capital projects where community benefits were delivered, and identified that engaging with the community openly at the planning stage of the project can highlight potentially contentious issues which is of benefit to both the community and those delivering the project. Taking a collaborative approach between organisations and having stakeholders work together to may deliver greater economic, societal and environmental returns.

The paper sets outs seven principles, proposed as good practice in how community benefits should be delivered:

  • Community benefits should be delivered to and with the geographically local community that will be affected by, or can influence, the planned natural capital project
  • Community benefits should be considered early on in project development and integrated into the project, including considering the costs of delivering the community benefit at the purchase stage
  • Community benefits should be rooted in engagement with the community and in an understanding of the local needs and priorities – dialogue should be opened at early stage
  • Community benefits should be agreed with the local community – using established community groups and aligned with local strategic and development plans
  • Community benefits should be a considered and deliberate element of a natural capital projects and in addition to public benefits
  • Community benefits should be proportionate to the scale of the project and to the impact on the local community
  • Community benefits should be clear and understandable

It is clear from these principles that considering the benefits to and engaging with a community from the very start of any natural capital project will be key to what will be considered good practice by investors and project managers.

The discussion paper invites comments from interested parties before 20 March 2023. Guidance for policy and practice will then follow later in the year. If you would like to discuss any of the points raised please do get in touch with Kate Bond or your usual Anderson Strathern contact for further information.

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