Natural Capital – a matter relating to land in Scotland

The much discussed and debated Land Reform (Scotland) Act 2025 (the “2025 Act”) received Royal Assent on 16 December 2025, with the provisions of the 2025 Act to be brought into force by regulation over the course of the coming months and, likely, years.

Among the first of three provisions which have now commenced is Section 8 (Functions of the Land Commissioners: natural capital markets), which came into force on 16 March 2025.

The commencement of this provision marks a discreet but important change to the approach to natural capital in Scotland, and the way in which the Land Commissioners must consider and advise the Scottish Ministers on matters relating to land.  Section 22 of the Land Reform (Scotland) Act 2016 (the “2016 Act”) sets out the role of the Land Commissioners in relation to any “matter relating to land in Scotland.” Broadly, this means they can review and advise on laws and policies affecting land, gather evidence, carry out research, prepare reports, and provide guidance. They must also consider and advise on any matters referred to them by the Scottish Ministers. The term “matter relating to land in Scotland” is defined in Section 22(5) of the 2016 Act, as including:

1. ownership and other rights in land,
2. management of land,
3. use of land,
4. the land use strategy prepared under section 57 of the Climate Change (Scotland) Act 2009.

However, the commencement of Section 8 of the 2025 Act introduces a modification to the 2016 Act so that the term “matter relating to land in Scotland” now includes:

   e. the effects of natural capital markets in relation to other matters relating to land in Scotland.

The consequence of this discreet modification to the 2016 Act is to introduce an obligation on the Land Commissioners to take into account (in their considerations, research, recommendations and guidance to the Scottish Ministers) the effects of “natural capital markets”, which are defined as “the trading of units or credits which are generated through a registration scheme for projects to restore or improve the natural environment”.

Although the carbon credit market (and other biodiversity credit markets) remains in its infancy across Scotland, it is showing signs or maturing, and this legislation marks a key step change in the way in which the natural capital markets are now be considered by the Land Commissioners – and by extension, the Scottish Ministers – going forward. This provides as clear an indication as any of the likely direction of travel when it comes to natural capital markets in Scotland. For further detail on how carbon credits operate in practice, see our recent insight here.

If you would like to discuss anything raised in this article, please get in touch with Alan Gibson or your usual Burness Paull contact.

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