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Natural capital
An introduction to carbon markets for land-based investments
Carbon credit markets are a mechanism for investors in land-based assets to unlock the carbon value from investments in timberland and farmland to help efficiently achieve net zero commitments.
Climate scientists, along with major environmental NGOs, agree that over one-third of the cost-effective, scalable climate mitigation opportunities can come from forests, food and land (e.g., Bastin et al., 2019). These climate mitigation benefits can be realized by investing in nature-based climate solutions (NCS) and offer investors in land-based assets the potential to generate verified carbon credits from their investments. To evaluate investment opportunities in NCS and how carbon can be incorporated into land-based investment strategies, first requires an understanding of global carbon markets. Here we provide an introduction to carbon markets for land-based investments.
Topics discussed
- Overview of carbon crediting mechanisms
- Supply, demand and pricing in carbon markets
- Basic process for generating verified carbon credits from land- based investments
- What this environmental market opportunity means for timberland and farmland investors
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Responsible land stewardship plays a critical role in ensuring long-term productivity and delivering environmental benefits. This long-term perspective underpinned the rationale for combining our farmland and timberland asset management businesses to create Nuveen Natural Capital.
The earth’s natural capital can be thought of as a stock of assets—air, lands and waters and their biodiversity— that yields a flow of benefits or ecosystem services over time. The flow of these benefits includes provisioning services such as food, fiber and timber as well as a broad range of regulating, supporting and cultural ecosystem services that drive the global economy and human wellbeing.
We provide the case for investing in timberland through five key principles, including the inherent carbon benefits of the asset class that further enhance the case.
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