Earlier this year, the groundbreaking Dasgupta Review commissioned by the UK Treasury stressed the critical role of the global financial system in supporting a more sustainable relationship with nature. It called for the financial system to channel investments towards economic activities that enhance natural assets and encourage sustainable consumption and production.

The challenge now is creating investable business models connected to nature restoration. Triodos Bank has already been working internationally on the development of new investment approaches, including in the UK through a partnership with Defra, the Environment Agency, and Esmée Fairbairn Foundation.

In June last year, four pilot projects that will protect and restore valuable habitats were selected to receive grant funding. The projects vary in scope and geography, but all connect economic outcomes to investment in environmental restoration in terms of carbon storage, air quality, flood management and human health, as well as enhancing biodiversity and wildlife habitats.

After months of hard work, all projects have made progress. The most advanced is a project by the Rivers Trust to use natural flood management, including leaky dams, bog, and rewetted peat, on 70 hectares of the River Wyre catchment in Lancashire.

This will help reduce the frequency of flooding for a number of properties in nearby Churchtown, which has experienced a one in 50-year flood event four times in the last 20 years, with a devastating impact on the local community and the economy. The project will also create new habitats for wildlife and help to mitigate climate change through the storage of greenhouse gases in the newly created wetlands and peatlands.

River Wyre in Thornton-Cleveleys | Photo: Rivers Trust

Several organisations have agreed to be buyers of the natural flood management and other ecosystem services provided by the project. These are Flood Re, United Utilities, Wyre Council, the Woodland Trust, the Environment Agency and the North West regional flood and coastal committee. Farmers and landowners will sell these ecosystem services, either by doing the work on the ground, hosting them on their land, or maintaining them. The Rivers Trust has had early talks with farmers and estates, working to develop the payment structures that will be used.

Dan Turner, a project manager at the Rivers Trust, believes that there is a huge opportunity to diversify the buyers of the ecosystem services provided by the project and also engage local communities on the investment side. “I’d love to see a crowd-sourced funding approach - wouldn't it be amazing if local flood-affected communities can invest in their own natural flood management schemes as a way of raising that initial capital investment?” he says.

I’d love to see a crowd-sourced funding approach - wouldn't it be amazing if local flood-affected communities can invest in their own natural flood management schemes as a way of raising that initial capital investment?
Dan Turner, project manager at the Rivers Trust

At the other end of the country, Devon Wildlife Trust is working on a wetlands project on the Braunton Marshes aimed at creating a new saltmarsh and intertidal habitat for wildlife and visitor resources on the northern bank of the river Caen. The trust has already purchased Horsey Island, located in the heart of the North Devon UNESCO Biosphere Reserve, a wildlife-rich area of intertidal wetland habitats and adjacent to Braunton Marshes. Existing flood defences and agricultural land use in the area is under pressure from climate change, and rising sea levels and this project has potential to create new revenue streams for landowners.

The trust wants to develop an income stream by building an ecotourism hub based around visitor and education facilities in the wetland. Other ecosystem services that could be sold at the site will be based on enhancement of the existing habitat. Salt marsh in the intertidal habitat can provide carbon sequestration packaged up into carbon credits and there is also potential to sell biodiversity net gain credits.

Horsey Island from Braunton | Photo: Martin Batt

The project is gearing up for its investment phase by refining its financial model. The partners are currently identifying the costs of the interventions, and the revenue streams that will be generated from some of the services.

Moving further along the coast, a third project will improve water quality and wildlife habitats in Poole Harbour in Dorset. Of international importance to wildlife, the harbour is home to a vast range of aquatic life and wetland birds, including egrets, ringed plovers, and grebe.

However, the wildlife habitat there is being smothered by algae, caused by nutrients such as nitrate from farms in the catchments of rivers that flow into the harbour. The National Farmers Union (NFU) is working with farmers to design a model that will benefit both the environment and farm livelihoods.

A number of local farmers have been appointed as directors of the Pool Harbour Agriculture Group, a Community Interest Company set up to take the project forward. The first phase of the project is underway, looking at the financial and business modelling.

Through this, farmers could trade credits between themselves, with those who have reduced nitrate run off to a target defined by the Environment Agency selling to those who have not. Buyers of the service could include water companies, developers and farmers, while businesses in related supply chains such as dairy processors and agronomists could also invest.

Lastly, in the Pennines, some of the most degraded peatlands in European uplands are under pressure from hot summers and wet winters caused by climate change. As well as losing its ability to store carbon, degraded peat actually emits carbon emissions, so it is vital they are restored.

Golden plover | Photo: Moors for the Future Partnership

The Moors for the Future Partnership has been conserving and restoring peatland in the area for 18 years, but needs to attract greater investment to carry out this work on a larger scale. The project team is currently working to identify a test site as proof of concept and develop a commercial business model to enable external repayable investment.

There are many complexities that need to be ironed out, across all projects. Not least, the balance of risk between buyers of ecosystem services and investors if projects do not meet environmental performance expectations, and how the projects will interact with other initiatives such as the new Environmental Land Management Scheme being bought in by government to replace the EU Common Agricultural Policy. This new scheme which is expected to roll out from 2024 will be based around public payments for public goods and will reward farmers for environmental benefits.

One key learning so far is that nature based flood management services and water quality improvements currently have a high value to buyers due to the significant and increasing costs of flood mitigation and water treatment. By comparison, the current market value of biodiversity and carbon credits are much lower. Hopefully this will change over the next few years and their true value will soon reflect the bold net-zero and biodiversity gain commitments coming from businesses and governments. At the moment, it important for pilot projects to identify and “stack” the various ecosystem services generated by landscape restoration projects to create a viable business case for investors.

“The key is that if we can get these pilot business models to work, all are scalable, and could be gamechangers for the burgeoning ecosystem services investment sector,” says Dan Hird, head of corporate finance at Triodos Bank UK.

“These projects are not about someone trying to make money out of other parties - the real objective is to restore our environment, reduce the risk of climate change, and to maintain and restore livelihoods. And all stakeholders would share those three objectives,” he says.


Triodos Bank UK began working on nature-based investments five years ago and sponsored the UK’s first conference on the concept in 2018. This is not about exploiting nature but seeing nature at the heart of a truly circular economy that is key to our own prosperity and wellbeing.

The concept of nature-based investing is still in the early stages of development and Triodos is working on many projects in the UK and has made its first investments internationally. It is a topic that is receiving a lot of focus at present and a significant scale-up of the development support, action and policy initiatives will be required to really deliver the change signalled by the Dasgupta Review.