Land management is key to Scotland achieving its net-zero ambitions – and it is vital that government acknowledges the advantages of scale when tackling the climate emergency. This was according to Scottish Land & Estates, which commented after the Scottish Parliament voted for a motion last week affirming its commitment to tackling the twin crises of climate change and biodiversity loss.
The rural business organisation said that its members were well-placed to continue delivering action on the ground, including peatland restoration, woodland creation and other key measures such as water management, habitat restoration and delivery of clean energy – but that the Scottish Government needed to view estates as key partners in delivery.
Investment in land has reduced over the last year, partly as a result of market uncertainty over Scottish Government’s land and carbon policies. This has impacted forestry, farming and the natural capital market place, which are all key to meeting Scottish Government’s climate and nature targets.
Scotland’s annual Rural Land Market Prices Report – a collaboration between the Scottish Land Commission and Scotland’s Rural College (SRUC) – reported the subdued rural land market activity. The report analysed interview responses from land agents throughout the country. It highlighted that whilst the market remains demand-driven, both supply and demand noticeably decreased through 2023 with a marked decline in overall land values particularly affecting estates and marginal hill land. The exception to this trend was prime arable land, where values had remained steady.
The report noted that economic factors contributed to weakened market sentiment, including high interest rates which made borrowing money harder, and the cost-of-living crisis which drove certain commodities upwards (making it less profitable to manage a land-based business). Institutional investors had started turning away from land due to lower yields, opting for alternative investments like government bonds or gold.
Government policies, including those related to land management and short-term lets, had also introduced uncertainty and impacted market dynamics.
The report said that mixed dynamics had been observed in the farmland market, with some sectors experiencing growth while others faced challenges. Farmers seeking economies of scale had driven demand for land expansion on the back of two quite profitable years. Rollover funds played a significant role in driving market activity in 2023, particularly from those who sold to forestry or natural capital in 2020-21.
The forestry sector in Scotland saw a significant slowdown compared to previous years. Factors such as rising costs, regulatory uncertainties, and lower timber prices affected the market. Confidence decreased due to unclear policy direction and lengthy approval processes.
The report said that purchasing land for natural capital purposes had also slowed considerably compared to previous years. Most applications for carbon schemes were from existing landowners and farmers rather than new landowners who had recently acquired land for this purpose. Companies were instead leaning towards forming partnerships with landowners instead of purchasing land themselves. Alternative models, such as leasing land or funding projects for future credits, had gained in popularity.
Eleanor Kay, Senior Policy Adviser, Agriculture & Climate Change at Scottish Land & Estates, said, “Rural and land-based businesses wholeheartedly welcome the Scottish Government’s commitment to tackling the twin crises of climate change and biodiversity loss. Our members are well placed to continue delivering progress on this matter and it is vital that government recognises the role of estates and land managers as partners for the actions needed to achieve ambitious net zero targets.
“The government has already had to accept that it would not meet its original net zero targets by 2030 and it needs to take steps to ensure that it avoids counterproductive policymaking. By seeking to fragment land use, as it is attempting to do through the Land Reform Bill, it will both reduce the pace of delivery and also the level of investment available to undertake forestry and peatland schemes.
“Around 70,000ha of new woodland been grown on private land since 2015. The Scottish Government aims to create enough woodland to cover 21% of Scotland’s total area by 2032 – but at the current rate of delivery, it would take almost 48 years to reach this target through only small-scale projects of 0-50 hectares.
“In their recent proposals for a carbon land tax, the Scottish Government would be punishing those who are already making the greatest contribution to climate mitigation and nature restoration. There are serious questions around how this would work in practice and it will do little to help Scotland’s rural economy and encourage investment and employment.”
SLE added that it wanted to see greater use of data in Scottish Government decision-making around climate change and that progress was required on delivery of Just Transition Plans.
Ms Kay continued, “Data led decision making must be front and centre in the design of future policy and legislation as too often we see ideological positions ignoring significant evidence in policymaking. Farming and land management are good examples of where government and the rural sector can improve our use of data to provide better outcomes.”