Scottish forestry: trends and opportunities for landowners

Forestry plays a key role in the Scottish economy, contributing over £1 billion annually and supporting tens of thousands of jobs across rural communities. However, the Scottish Land Commission’s Rural Land Market Data Report, published in December 2025[i] found that sales of forestry have slowed, with the average price per hectare dropping from £15,327 in 2023 to £10,054 in 2024. Confirming what many industry insiders had already suspected, the market peaked in 2021-22.

At the same time, national climate commitments remain a powerful policy driver for forestry, setting ambitious woodland expansion targets and promoting related ecosystem services in addition to timber production.

Opportunities driven by policy

The Scottish Government’s Climate Change Plan for 2026 to 2040 aims to increase woodland cover from approximately 19% to 21% of Scotland’s land area by the early 2030s, and by 2040, more than 250,000 hectares of new woodland are to be created. Central to achieving this are targeted forestry grants and private financing through the Woodland Carbon Code.

The Climate Change Plan acknowledges that delivering the proposed levels of woodland creation will depend on adequate funding of Scottish Forestry’s Forestry Grant Scheme. The Forestry Grant Scheme supports the creation of new woodland through phased planting and establishment payments as well as management of existing woodlands and investments in forest infrastructure.

In the most recent Scottish Budget for 2026-27, there is a proposed increase to Scottish Forestry’s funding for woodland creation by £5.6 million. However, this increase has been criticised as not enough by industry experts, being around a third (£17.3 million) lower than was proposed in the 2023-24 budget.

Woodland Carbon Code

The Woodland Carbon Code, managed by Scottish Forestry, is the quality assurance standard for woodland carbon projects in the UK. It is a set of standards for projects that intend to remove carbon from the atmosphere through the creation and regeneration of woodlands. The Code provides landowners with an opportunity to generate carbon credits to either offset their carbon emissions or be sold to others, usually businesses, who want to compensate for unavoidable emissions.

Once a project is validated under the Woodland Carbon Code, Pending Issuance Units (PIUs) are issued – these are effectively a promise to sequester a certain amount of carbon. Once the project is subsequently verified, typically after five to ten years, those Pending Issuance Units become Carbon Credits. Both PIUs and Carbon Credits can be sold.

Some Woodland Carbon Code projects can also provide timber for the UK timber market, providing a local and sustainable material for construction.

Leveraging Forestry Grant Schemes and carbon markets can offer a dual income pathway, offering initial support through public funding and longer-term revenue from the carbon credits and timber, while contributing to climate change targets.

Diversification

Landowners may also consider diversifying land use to create recreational and amenity woodlands and forests, potentially integrating tourism opportunities or outdoor activities with woodland assets.

Farmers may consider agroforestry, where woodland and agriculture co-exist to benefit both the farm and nature. Grants are available from the Scottish Government, via the Rural Payments Service, to support the creation of agroforestry schemes within arable or grazing pasture land. Options are available to support the creation of woodland for timber production, to enhance biodiversity and sequester carbon, or for the diversification of the farm business.

Risks and challenges

Despite these opportunities, there are risks. As we have seen, forestry land values have softened, so any purchase of land for woodland creation should factor in the potential for limited growth in the underlying property asset.

Woodland creation and timber harvesting require approvals and adherence to forestry and environmental standards. In particular, when contemplating a project under the Woodland Carbon Code, consideration needs to be given to the longevity of the project. Once the woodland is established and the project validated under the Woodland Carbon Code, standards need to be maintained for the Pending Issuance Units and the subsequent Carbon Credits to uphold value.

It should also be kept in mind that while the net zero targets of the Scottish Government are unlikely to change, individual policies and funding priorities may fluctuate, so there may be no guarantee that the Forestry Grant Schemes will be available.

Key takeaway

In 2026, Scotland’s forestry landscape offers significant opportunities for landowners willing to engage with evolving policy frameworks, carbon markets and diversified enterprise models. While traditional economic returns from timber may remain strong, the most forward-thinking trends involve natural capital valuation, carbon sequestration projects and integrated land use strategies supported by climate-driven policy. Strategic engagements with grants, certification, and collaborative land use planning will be vital to unlock the full potential of forestry assets in Scotland’s rural economy.

How we can help

If you have any questions about the topics covered in this article, please contact us here or get in touch with Kate Bond directly.

[i] Rostan, J., Gibson-Poole, S., and MacKessack-Leitch, J. (2025) Rural Land

Market Data Report. Scottish Land Commission.