Natural Capital Market Framework

Cabinet Secretary's Foreword

Scotland's beautiful and diverse natural environment is at the heart of our identity, economy, and communities. It underpins our economic and social prosperity and can be described as our natural capital (Dasgupta Review, 2021). This natural capital – our biodiversity, forests, fisheries, clean and healthy air, water, seas, and soils – is immensely valuable. The monetary worth of Scotland's natural capital is estimated at £230 billion, yet its true value is incalculable. Our natural capital provides the essentials that make our lives possible and worthwhile: food, water, energy, medicines, building materials, recreation, flood resilience, pollination, carbon sequestration, and resilience to the increasing impacts of climate change.

Historically, natural capital has often been overlooked in decision-making, leading to the degradation and sometimes even loss of our natural assets, reducing their ability to provide the benefits that underpin our society and economy. As part of Scotland's National Strategy for Economic Transformation (NSET), to support a wellbeing economy, the Scottish Government is committed to developing a values-led, high-integrity market that promotes responsible private investment in natural capital.

The Scottish Government already invests a significant amount of public money to maintain and enhance our natural capital, including investment in the creation of woodlands, the restoration of peatlands, and the protection of biodiversity. However, no government can meet the scale of the challenge alone. It is a public and private responsibility.

Responsible, values-driven, high-integrity private investment in Scotland's natural capital through the Peatland Code (PC) and the Woodland Carbon Code (WCC) is already supporting our response to the twin crises of climate change and biodiversity loss. This market framework outlines the steps the Scottish public sector will take before the end of this parliamentary term to:

• build on current activity and attract greater responsible private investment into high-integrity natural capital markets (section 1);
• ensure that private investment in natural capital benefits local communities, supports Scotland's environmental objectives, and follows Scotland's principles of responsible, values-led investment in natural capital (section 2);
• and enable Scotland's farmers, crofters, and land managers to be rewarded for providing nature-based benefits by participating in high-integrity natural capital markets (section 3).