Soil health is emerging as a factor in farmland values, rents and tenancy negotiations as regenerative farming and environmental markets change the economics of land management.
Agricultural valuers increasingly need to assess soil as both a productive asset and a source of environmental value, says regenerative farming adviser Harry Epsom, of the Central Association of Agricultural Valuers. The soil health can be measuring and reflecting the value of soil health in professional valuations is a topic discussed by Mr Epsom in a Centenary Scholarship he has written for the CAAV.
“We have been destroying our soils slowly for years; our high input, high output focus has created these problems,” he says. “But soil can be healed quite quickly, which presents us with an opportunity.”
Measuring value
The challenge is establishing what healthy soil is worth. Measurements can include compaction testing, worm counts, organic matter, carbon, nutrient analysis and plant health assessments.
Value also depends on who is asking. For farmers, better soil could improve profitability and resilience. A landowner might benefit from higher rents, while wider public value could include flood mitigation, biodiversity and water management.
“We can’t give the right advice if we don’t understand the vision, landscape, skills, soil, climate, social, financial and regulatory context,” says Mr Epsom.
Different objectives
The same field could therefore attract different valuations. Healthy soil might command a premium when farmland is sold because of its productive condition.
But degraded land could be more attractive to an organisation seeking to sequester carbon or increase biodiversity because it offers greater potential for measurable improvement. Soil condition is also becoming more relevant to rent reviews, tenants’ improvements and dilapidations. That increases the importance of establishing a baseline before changes are made.
Contract terms
Land managers will need evidence linking management decisions with subsequent soil improvements, particularly where payments or liabilities depend on environmental outcomes.
Contracts should therefore establish responsibilities and rights from the outset. “What rights are you granting or reserving, and what compensation will be paid over what period of time? There’s a lot to be thought through at an early stage.”
The growth of carbon credits and biodiversity net gain is adding urgency. Yet valuers are working within legislation largely written before these markets emerged.
“Regenerative farming is driving changes, and farmers are now being paid to provide carbon and other ecosystem services,” says Mr Epsom. “But we’re operating within legislation written decades ago – I wanted to create a guide on soil principles and valuing soil health.”