Robust regulation essential for nature recovery to unlock £1bn of investment, report shows

The effectiveness of ambitious efforts to attract over £1 billion annually into nature recovery by 2030 could be undermined without stronger governance and regulatory oversight, according to new analysis from the University of Exeter.

Market-based instruments are crucial for addressing nature degradation and financing gaps, but the current framework risks market failures due to inherent complexities in valuing biodiversity, issues within existing schemes like Biodiversity Net Gain and a lack of robust regulatory control, the study shows.

The voluntary nature of many current initiatives and the reliance on self-reporting can lead to unsubstantiated ecological claims and an inability to deliver genuine ecological improvements. Without clear, enforceable standards and independent verification, the integrity of traded nature credits and investor confidence could be jeopardised.

This study has brought together researchers from the University of Exeter – specifically the Environment and Sustainability Institute (ESI), the Exeter Centre for Environmental Law (ExCEL), and the Land, Environment, Economics, and Policy Institute (LEEP) – and the University of Oxford.

The policy paper is co-authored by Dr Tiago de Melo Cartaxo (ESI and ExCEL Exeter), Katharina Neumann (Oxford), Dr Pedro Henrique Batista de Barros (LEEP Exeter), and Jena Boucat (Exeter).

It makes several key recommendations to strengthen the UK’s approach. This includes the establishment of a centralised, independent regulator to oversee the UK Nature Markets Framework nationwide and the development of unified, science-based metric frameworks to ensure consistent application and ongoing monitoring of outcomes, accurately quantifying biodiversity value.

The report also recommends regulation for corporate biodiversity impact disclosure – mandating companies to assess, disclose, and address their biodiversity impacts, thereby significantly propelling demand for high-integrity nature credits.

The experts call for the establishment of rigorous standards for additionality verification to ensure real, additional gains beyond business-as-usual scenarios and clear guidelines for long-term monitoring and reporting with minimum data standards, reporting frequency, publicly accessible registries, and penalties for non-compliance.

Dr de Melo Cartaxo said: “Our research indicates that while the UK’s commitment to nature markets is commendable and necessary, the current framework shows critical gaps that could prevent it from achieving its full potential. The complexity of nature demands a regulatory approach more robust than what is currently in place. We must learn from the pitfalls of other environmental markets, such as carbon credits, and establish strong institutional foundations from the outset.”

The policy paper stresses that for nature markets to be effective and trustworthy, they need clear objectives, verifiable measurements based on robust science, independent verification, and public data availability. These measures are essential to ensure that private investment genuinely contributes to positive ecological outcomes and to foster long-term investor confidence.

“The degradation of nature is a classic case of market failure, and merely creating a market is not enough to solve it. We need more guidance, ensuring accountability, scientific rigour, and transparency at every step,” added Dr de Melo Cartaxo. “By integrating these recommendations, the UK can lead the way in demonstrating how private capital, coupled with sound governance, can genuinely drive nature recovery and contribute to global environmental goals.

“The findings are particularly relevant as the global community increasingly looks to market-based solutions for environmental challenges, with the EU also developing its own roadmap towards Nature Credits. The UK has an opportunity to set a gold standard for these emerging markets.”