How to turn your farm’s natural capital into opportunity

Making sense of farming your natural capital

At its simplest, natural capital is described as the “stock of environmental resources” on a farm, from soil and water to hedges and biodiversity. Laura summarises it as “putting a pound sign on nature”, helping farmers and wider industry recognise its true value within a business. 

This shift in thinking reflects the broader move away from direct payments towards rewarding public goods, placing farmers at the centre of delivering climate resilience, clean water and food production all at once.

Why natural capital matters for farm businesses

For many, this presents both opportunity and uncertainty. Laura says nature has historically been “invisible in all of our businesses”, yet it underpins everything from crop growth to livestock performance. Strengthening this natural foundation is not optional, she argues, but essential for long-term productivity and resilience.

Jonathan brings this to life with a practical example from his own farm. Managing around 850 acres with more than 70 kilometres of hedges, he has focused on improving soil health through herbal leys and reduced ground disturbance. 

“It has probably taken… five, six years… to really start to see a difference coming through,” he explains, pointing to improved soil structure and water infiltration. His experience underlines a central theme of the episode: meaningful change takes time, but the benefits can be significant.

Farm income diversification and new markets

The conversation also tackles the financial side, including biodiversity net gain and other emerging environmental markets. These could offer new routes for diversifying farm income, alongside schemes such as SFI, but there are barriers. 

High upfront costs, long-term commitments and uncertainty around policy all make entry challenging, particularly for smaller farms. Collaboration is seen as a way forward, allowing farmers to share costs and access expertise.

There is a balance to strike between risk and reward. Supply chains, retailers and banks increasingly depend on environmentally resilient farms, creating pressure but also opportunity. Laura suggests “environmentally resilient farms are a business-critical strategy” across the supply chain. 

Balancing food production with environmental delivery

Despite the complexity, it’s clear environmental markets and policy are unlikely to reverse, meaning farmers are encouraged to act now, building resilience into their systems while support is still available. Crucially, this is not about replacing food production but strengthening it.

Every farm already holds natural capital. Understanding it, valuing it and investing in it could prove vital not just for future income, but for the long-term viability of the business itself.

Episode showstoppers

1.      There is much-needed natural capital on all farms, and it provides a valuable ‘ecosystem service’.

2.      Natural capital on farm can be used to mitigate the risks faced by others in the supply chain.

3.      Natural systems take time to build so acting now is essential for strengthening both environmental and financial resilience.

Listen to the full episode below - also available via Spotify and Apple podcasts.

About our guests

Dr Laura Underdown is an agricultural scientist working at AHDB as a senior knowledge transfer manager designing programmes to turn scientific evidence into practical on-farm decision making.

A trained vet, Jonathan Chapman farms near Bude in Cornwall, running the pedigree Atlantic Angus Herd. He was named both Beef Farmer of the Year and Environmental Champion of the Year in the 2025 Farmers Weekly Awards.