Milestone 05

Spains Hall Estate

Develop Business Case and Financial Model

Project Summary

Spains Hall Estate is a 2,000-acre estate in Essex which has been integrating environmental land management under its current Estate Manager, Archie Ruggles-Brise. In 2022 the Estate embarked on a 50+ year habitat creation programme and has been generating Biodiversity Net Gain (BNG) units for sale to local developers. The Estate plans to generate over 500 BNG units over 100 hectares.

The Estate was part of Natural England’s Biodiversity Net Gain pilot, which gave access to funding and project support including an ecologist to help develop a farm management plan and an external valuer to help with financial planning. The Estate is implementing a variety of interventions to create a diversity of habitat types including ponds, orchards, grasslands and wetlands.


Milestone 1: Initial Project Scoping

Often the initial task is to understand the site(s) you want to use and the land use change needed for nature restoration or creation. This includes considering the goals of the land managers involved, the vision within the wider catchment or neighbouring area, and whether there are permits or planning consent needed for any proposed changes.

At this stage, you can also conduct a high-level assessment to determine which revenue streams can be generated from ecosystem services , e.g. carbon credits, flood reduction cost savings, or biodiversity units, which will be crucial for identifying buyer interest.

Finally, it is useful to have an idea of the costs of the project and potential grant funding that may be available to support initial development.

Milestone 2: Identify and Work with Sellers

Initial ownership of the ecosystem services will belong to the landowners or, in some cases, the tenants of the sites that the project is using. However, these can be passed onto others, such as third-party project developers, with appropriate legal arrangements and compensation. In some cases, there may be a sole seller of the ecosystem services, where the site or landholding is large enough that it delivers the volume of ecosystem services needed to cover the costs of the project and attract buyers.

However, in order to achieve scale and impact, a project will likely involve multiple sellers, such as neighbouring farmers and estate managers. Scale of land is often needed to deliver significant environmental outcomes, and also to attract private finance. Project developers must plan how they initially contact and engage with these sellers going forward, building their wants and needs into the project.

Milestone 3: Baseline and Estimate Ecosystem Services

At this point, you will have understood the vision for the project and identified a particular ecosystem service or set of services to be sold. The next step will be to carry out detailed analysis – baselining each ecosystem service and quantifying what will be able to be delivered from the interventions, as well as planning how to monitor and maintain these interventions. You will need to rely heavily on ecological expertise for this more scientific Milestone.

At this step, standards, verification and accreditation methods will be considered in more depth.

Milestone 4: Identify and Work with Buyers

Based on your earlier market analysis in initial project scoping, you will have identified one or more groups of beneficiaries who may be willing to ‘buy’ or pay for the ecosystem service(s) to be created, restored or maintained. Buyers vary – as do their requirements – but at this step, greater buyer engagement is now needed to develop a deal that channels money towards the nature-positive outcomes that your project wants to deliver.



Milestone 5: Develop Business Case and Financial Model

You’ll have started building your business case and financial model in earlier steps – laying out your project’s vision, the market proposition and estimating costs and income. This step offers a review, in addition to providing details needed to build out the financial model and business case more fully. Both of these key documents will be iterated throughout project development, and will likely be altered during project delivery as new information emerges. These documents are interlinked and, if developed correctly, will ensure your project’s viability and help you with discussions with stakeholders – including sellers, buyers and future investors.

The financial model will also enable you to better understand the type of structure your project may take to attract investment (i.e.a loan, an equity investment, a bond) and what sort of returns you can afford to pay/offer.

Milestone 6: Develop a Governance Structure

A governance structure will inform the way in which the project is run when fully operational and for what purpose. It identifies appropriate decision making processes, who is responsible for what actions, and what controls are in place to make sure that the project is meeting its stated goals, all while abiding by the risk appetite of its engaged stakeholders. The legal entity to host the project will be a key driver in this, and the appropriate choice of entity will be dependent on several factors that are outlined below.

Your governance structure should align with and underpin your business case, as a necessary component of how the project will deliver its environmental outcomes and other strategic targets.

Milestone 7: Identify and Work with Investors

It is important to note that not all projects will need up-front investment, but for those that do, this section provides a framework for thinking around the development of the investment model. This does not constitute financial advice – as the GFI is not licensed to do so. However these considerations are based on the insight offered by project developers and other market stakeholders.

An investor will be a new core stakeholder in your project, and it’s just as important to think of what you require from investors, as much as what they require from you – so that you can build a positive and collaborative relationship with them.

This entails defining the investment ask (in line with the financial model), the strategy for approaching the right investors, and the negotiation of terms that can then be formalised in contract development (Milestone 8).


Milestone 8: Establish Legal Contracts and Closing

When all relevant stakeholders have been engaged and their terms of engagement are clarified as much as possible, this is the time to develop the legal contracts and close the deal. This stage is last because legal fees are expensive, and it is generally advised to determine as much as possible in previous stages before starting to draw up contracts in earnest.

Note: The information in this Milestone does not constitute any form of legal advice but instead serves as practical advice on how to manage engagement with lawyers and the process of contract development.

The Green Finance Institute is not a firm of solicitors or connected in any way with the courts. The information and opinions we provide in this section and across the Toolkit do not address your individual requirements and are for informational purposes only. They do not constitute any form of legal advice. We recommend that appropriate legal advice should be taken from a qualified solicitor before taking or refraining from taking any action.

Community Engagement

Community engagement is highly advisable for any project that aims to sell ecosystem services, to ensure fair outcomes for local communities and the long-term success of the project. Project developers can build connections with local stakeholder groups early on to spot both risks and opportunities.

Policy and Regulation

Project developers and enterprises will need to keep a continuous check on how current and future policy may affect the project, and also opportunities for the project to inform policy. The role of private finance for nature across the UK is being encouraged by the UK government and its devolved administrations, and new rules, standards and markets are being developed.


With thanks for his time and insight for this case study:

Archie Ruggles-Brise Farmer, Estate Manager

Published 10/04/2024

Next Milestone

How did Spains Hall Estate create a budget for the lifetime of the project?

To create a budget and financial model for its BNG projects, Spains Hall Estate, as part of Natural England’s BNG pilot secured the services of an external valuer (Charles Cowap) who created a framework to calculate expected tax liabilities alongside estate-derived operational costs. Inflation was calculated after working out a 30-year rolling average which resulted in the Estate applying 8.5-9% inflation on project costs.

The estimated investment radiness costs for the Estate’s project was estimated at £1000 to £1500 per hectare. Operational costs for establishment and maintenance vary by habitat and by area. Ruggles-Brise reckons that around 40%-50% of 30 year operational costs are likely to occur within the establishment phase . Monitoring costs pose a challenge given the uncertain nature of reporting and verification requirements with the new policy. The Estate acknowledges the potential expense of advanced monitoring technology like eDNA or bioacoustics, emphasising the importance of budgeting for such tools in future deals, but cautioning that benefit to cost should be considered carefully, particularly where there is still a lack of clarity as to whether such data will be accepted within mandatory reporting frameworks. The Estate’s monitoring and reporting plan aligns with Natural England’s proposed frequency — bi-annually for the first five years, followed by monitoring and reporting every five years (1, 3, 5, 10, 15, 20, 25 and 30).

To mitigate risks associated with habitat failure, the Estate incorporated a land or units buffer into its budget. Recognising the difficulty of implementing this buffer in smaller deals,  a ‘lift and shift’ clause in contracts was introduced. This clause allows the Estate to identify alternative land at its own risk and expense if the initially identified land fails to perform or generate sufficient units. While the scale of the Estate aligns well with the lift and shift approach, smaller farms might encounter difficulty finding alternative land and may benefit from placing greater emphasis on a credits buffer in their deals, says Spains Hall Estate manager, Archie Ruggles-Brise.


Image by William Joshua Templeton



What is Spains Hall Estate’s selling strategy for BNG units?

Although Spains Hall Estate’s overall habitat management plan includes generating around 500 BNG units, the Estate is not beginning to establish all habitats and sell all its units in advance. If a plot of land which has been committed to BNG is already earning income, then the Estate will only begin establishing the habitat once a deal is in place. In areas where land is not being farmed (or used for agri-environment schemes) then BNG establishment work has often begun prior to a deal being secured. This approach ensures that the BNG income will substitute for income lost from changes in land management. The estate is therefore able to pursue a split-risk marketing strategy designed to harness the benefits arising from the temporal risk multiplier in the metric where appropriate, whilst also minimising upfront commitment and cost in other areas.

Ruggles-Brise found that the timings of payments that buyers prefer can vary depending on the size of the deal. For smaller deals, buyers typically prefer to pay upfront in a lump sum to discharge their planning obligations, whereas with larger deals, some buyers might consider an initial lump sum upfront followed by phased payments across the 30 year period. The Estate discusses buyer preferences when negotiating payment terms.



How does the project fit within longer-term planning for the farm?

Ruggles-Brise believes that engaging in nature markets projects now will provide both environmental and financial benefits to the wider farming business by increasing resilience to climate change, improving profitability of low-productivity sites and reducing the risk of creating negative externalities (unintended negative impacts) which could be taxed or enforced in the future.

Some farmers might be concerned about leaving their successors with obligations to nature areas that negatively impact their cash flows. Ruggles-Brise views the Estate’s BNG areas as being beneficial to his successors by increasing environmental resilience of the land while providing an additional income stream. Many of the BNG habitats can also still be managed agriculturally to some extent which helps maximise potential to remain eligible for Agricultural and Business Property Reliefs depending on the specific circumstances.


Lessons Learned

Ruggles-Brise shares that the highest BNG value habitats are not necessarily the best way to approach BNG project design even if they have potential to generate the most income. Rather, he says farmers should choose the changes that will produce an outcome that is environmentally appropriate, and will therefore allow land managers to be confident they can maintain them in the long term. Selecting habitats based on the amount of BNG units that can be sold raises the risk of committing to unachievable outcomes.

He also advises farmers to find a trusted ecologist who knows the land or similar land to determine appropriate changes which will benefit the wider farm. Technology can play a big part in planning and monitoring BNG projects, but experienced ecological boots on the ground remains a vital component.

Finally, he says if as a farmer you are interested in BNG, make sure you would be comfortable with permanent land use change to the plots you are considering, as it’s still not clear what happens at the end of a 30 year BNG agreement. A good way to test this is to consider whether you would be willing to plant a woodland in your chosen plot. If you are comfortable with that sort of permanent land use change, then BNG may be a good option for you.


Image by William Joshua Templeton