Green land investment in rural Scotland: social and economic impacts

1. Introduction

This report presents new research that aims to understand the range of social and economic impacts relating to new forms of green land investment in rural Scotland. The green land investment activities include: afforestation, peatland restoration, ‘rewilding’ or ecological restoration, and renewable energy.

The research was undertaken in three phases: (i) literature and evidence review to develop definitions of key concepts and a typology of green land investments; (ii) a workshop to identify a formal definition of rewilding; (iii) in-depth case studies in six locations where green land investment is occurring across rural Scotland.

This research is timely given the Scottish Government’s target of becoming a net-zero society by 2045 and the goal of ensuring a ‘just transition’. This research provides novel insights into the perceived and actual impacts on rural communities of land use change driven by policy and market drivers relating to net zero.

This report outlines research that aims to understand the range of socio-economic impacts relating to new forms of green land investment that are occurring in rural Scotland. The research has sought to develop a robust understanding of this specific activity on those living and working in rural Scotland, in particular communities of place that are located on or close to land that is used for green land investment activities. As detailed in this report, these activities include (but are not limited to): afforestation, peatland restoration, ‘rewilding’ or ecological restoration, and renewable energy. It is noted that landholdings may incorporate multiple activities as part of a diversified land management plan.

A detailed literature and evidence review aimed to develop definitions of the key concepts (e.g. ‘green land investment’), as well as a typology of green land investments. An online, interactive workshop was held to identify a formal definition of ‘rewilding’ for use by the Scottish Government, reported separately^[3].

This current report details findings from the in-depth investigation of six case studies located across rural Scotland. Case studies were based on landholdings that had green land investment activities ongoing and where there was a nearby rural community (or communities). Case study selection sought to include a diversity of green land investor types and green land investment activities, as well as rural community contexts (see Table 1). Secondary data analysis has demonstrated key landholding characteristics and change over time of rural populations in the case study areas.

While this report looks at cases of private ownership/investment, the definition for ‘green land investment activities’ is also relevant to contexts where there are community and public sector landowners.

The research responds to the following research questions:

1. What are the different types of green land investment activities and the differing motivations of landowners?

2. What are the social and economic impacts of green land investment?

3. How does green land investment affect different groups within communities, e.g. the impact on housing or access to land for housing and land prices, those in local employment, local businesses owners, those in communities and businesses reliant on tourism that could be affected by change of land use in the vicinity, those working on the land including tenanted farmers, small landholdings and rented crofts, tenants in tied housing on rural estates, owner/occupier farmers?

4. What are the potential benefits and / or negative impacts of these types of green land investment activities, for rural communities located close to land under new private ownership?

5. To what extent do private-sector interests support or conflict with the needs of rural communities and their interests, e.g. the responsibilities of rural land ownership, from land rights to agricultural tenancies?

6. What are the wider and long-term implications of changes in rural land use and ownership for rural communities, as a result of new forms of green land investment?

1.1 Research context

The Scottish Government has committed to becoming a net-zero society by 2045. Scottish Government has also committed to ensuring that the transition to a low carbon economy is ‘just’, conducted fairly and inclusively, and that it “account[s] for the current injustices associated with land use in Scotland, and the wider challenges faced by many rural communities” (Scottish Government, 2021a: 34). In other words, the changes required to reduce our reliance on fossil fuels and to achieve the carbon emissions targets set out by the Scottish Government will be undertaken in a way which is socially just. Some of these actions are, at least in principle, straightforward: efforts can be made to ensure that those employed in traditionally carbon-intensive industries are re-trained and to reduce the impacts of the decline of such industries. The implications of a transition to a low carbon economy in rural Scotland, and what a ‘just transition’ will mean for rural communities, are less well understood.

The context for this research also includes policy changes that will impact on rural and island communities, including the development of the Rural Delivery Plan, the Agriculture and Rural Communities (Scotland) Bill, the Rural and Islands Housing Action Plan, and the review of the National Islands Plan, amongst others. Other drivers of change in rural Scotland include population changes (e.g. including depopulation in remote rural areas, in contrast to population growth in accessible rural areas), significant concerns regarding a lack of affordable housing, pressures on local services, as well as impacts arising from the ‘cost-of living’ crisis, including high fuel and food prices, and increasing fuel poverty (Thomson et al., 2023).

The ‘just transition’ aligns with a societal and political shift towards rebalancing the power of private landownership in Scotland so as to ensure greater public access to the benefits arising from it, and that landownership and management arrangements contribute to the public good. The Scottish Government has advocated for a greater diversity in the types of landowners, the scale of land holdings, and the range of tenures available. Consequently, several pieces of land reform legislation now exist in Scotland^[4], and there has been a recent consultation on ‘Land Reform in a Net Zero Nation’ (Scottish Government, 2022a). Furthermore, Scotland’s Third Land Use Strategy aims to support land use that will meet the Scottish Government’s net zero and biodiversity targets through adopting a landscape and ecosystems approach, and to provide a platform for inclusive and transparent dialogue across policy and land use sectors (Scottish Government, 2021b).

Critically, meeting the Scottish Government’s net zero target will require significant change in land use and land management practices (Shukla et al, 2019). The Scottish Government has incentivised particular land uses and land management approaches for carbon sequestration such as woodland expansion (e.g. the Forestry Grant Scheme) and the restoration of peatlands (e.g. through NatureScot’s Peatland ACTION initiative). The growth of the market for carbon sequestration and ecological restoration has implications for land value and use, and it has led to an increased demand for land ownership for these purposes (McMorran et al., 2022b; Merrell et al., 2023). There has been a notable recent rise in companies and individuals seeking to buy land in Scotland, ranging from multi-national corporations seeking to offset (or ‘inset’) the carbon emissions from their business activities to individuals and companies wishing to undertake regenerative land management, nature conservation or ‘rewilding’ (see Waylen and Marshall, 2023; Merrell et al., 2023^[5]). Community landowners, charities, and the public sector have also acquired land for the purposes of carbon sequestration and nature protection.

It is anticipated that landownership and management for environmental goals will interact with existing and traditional land use practices, such as upland livestock grazing. The environmental impact of livestock farming is well-established. For example, a 2006 report by the Food and Agriculture organisation of the United Nations stated that "livestock production is one of the major causes of the world's most pressing environmental problems, including global warming, land degradation, air and water pollution, and loss of biodiversity.”^[6] In 2022, the Scottish Government published its Vision for Agriculture, which outlines its commitment to developing an agricultural support framework ‘that delivers high quality food production, climate mitigation and adaptation, and nature restoration’.

The expansion of renewable energy generation also has implications for land use, management, and ownership in Scotland. The Scottish Government has set a goal of generating 50% of Scotland’s energy consumption from renewable sources by 2030 (Scottish Government, 2017). After a steep drop in onshore wind projects due to the closure, in 2015, of the Contract for Difference (CfD) scheme to all but offshore and less established forms of renewable energy, the UK government decided to open the auction to onshore wind from the fourth CfD round (in 2021) onwards. This shift opens up further opportunities not only for landowners to invest in windfarm projects, but also for affected local communities to negotiate shared ownership or benefit arrangements regarding any new infrastructures, helping to facilitate a more just energy transition (Just Transition Commission, 2022; Pinker 2020; Pinker 2021).

This research has engaged with understandings of power (e.g. Lukes, 2021) and empowerment. Empowerment is possible through processes of changing or sharing power, and it may be defined as a “multi-dimensional social process that helps people gain control over their lives” (Page and Czuba, 1999 in Hur, 2006: 524). McKee (2015) found that historical power relations and persistent hierarchies inhibited rural community empowerment in land management decision-making in Scotland. The question arises, therefore, whether new forms of landownership with different ownership motivations could change or disrupt power relations, and what the implications would be for community empowerment and engagement in land decision-making? Community empowerment through asset acquisition processes can affect wellbeing by addressing the social, cultural, political, and economic determinants that underpin individual health and wellbeing (WHO, 2022). Wellbeing depends upon an ability to mobilise a range of material, social and psychological resources, all of which are intrinsically connected to place (Atkinson et al, 2012). It may be that green land investment and land ownership could impact community wellbeing and the ability of communities to mobilise resources, with implications for community empowerment. This project aims to understand the role of green investment and land ownership in enabling or inhibiting empowerment in rural places and the subsequent impact on the wellbeing of individuals in rural communities.

The report provides practical recommendations regarding best practice in rural community engagement in decisions relating to land, necessary for the successful implementation of a ‘just transition’ in rural Scotland. This research has been undertaken within the context of the Scottish Land Commission’s Good Practice Programme, in particular the focus on best practice community engagement. The report aims to provide current evidence and case study examples that inform the recommendations outlined in the Scottish Land Commission’s recently published guidance on ‘Delivering Community Benefits from Land’ (Scottish Land Commission, 2023) and the implementation of the ‘Interim Principles for Responsible Investment in Natural Capital’ (Scottish Government, 2022c)^[7].

The next chapter sets out the research design and methodology, whilst Chapter 3 provides an overview of the literature and evidence review, including the definition of green land investment and typology of green land investment activities. Chapter 4 details the case study findings, including an overview of the key themes of social and economic impacts (both positive and negative) influencing communities of place and communities of interest as a result of green land activities. This chapter also describes experiences of community-landowner engagement, and opportunities for positive engagement, as well as the hopes and fears held by rural communities with regard to the long-term implications of green land investment. Chapter 5 outlines how the research responds to the research questions, whilst Chapter 6 provides recommendations arising from the research findings for rural communities, green land investor-owners, and policymakers.