Pilot Natural Capital

What is Going On?

The report The Hidden Bill demonstrates that the current agricultural system fails to account for the costs of maintaining biodiversity, soil health, and water quality. As a result, products appear cheap. In reality, however, unpaid bills are piling up, and we are slowly destroying our natural production system. By now, we truly know that nature is neither free nor inexhaustible.

We also know what needs to be done: maintenance! Just like any homeowner. They know that while postponing repairs might save money in the short term, in the long run, the structure collapses and value is destroyed. It’s simply unwise.

A New Paradigm

This is where we hit a structural flaw. Currently, the efforts a sustainable farmer makes to maintain the production system (biodiversity, soil, and water quality—also known as ecosystem services) must be treated as costs from an accounting perspective. This means they are directly factored into the cost price of the harvested products.

But what if we view expenditures for improving system resilience as an investment that can be activated on the balance sheet? This creates a new economic perspective where nature is valued as critical production infrastructure: "Natural Capital." This is a new paradigm that is now widely recognized across the financial world, the sustainability movement, and academia.

The Pilot

To realize this paradigm shift, there are several things we still need to figure out. For example: how can we objectively measure an increase in "natural capital," preferably in a way that doesn't create more work for the farmer? Furthermore, how can we ensure that this increase is financially valued and reflected in contracts that comply with prevailing accounting principles? Finally, the challenge is to ensure that this newly created value results in more capital flowing toward nature restoration—and thus to the farmer who created that value in the first place.

Starting with Investors

Measurement methods and new contracts are important, but funding is the most critical factor—and often the bottleneck for long-term, large-scale nature-inclusive farming. That is why we are starting the Natural Capital Pilot by identifying potential private investors who have a vested interest in maintaining or improving natural capital.

Consider, for example, water companies that currently incur high costs to filter pesticide residues from drinking water. Following the principle that "prevention is better than a cure," they fundamentally have a strong business case to invest in farmers who grow crops without the pesticides that end up in groundwater. They might even collaborate with regional partners interested in other elements of natural capital, such as new landscape features.

Another example is large landowners who lease agricultural land. They have a vested interest in ensuring the land isn't "farmed out," but rather that its long-term production capacity and resilience to extreme weather are maintained or even improved.

The Need for Philanthropic Funding

The development of our Natural Capital Pilot aligns with transition theory as developed by DRIFT. This theory assumes that challengers develop prototypes of the "new normal" on a pilot scale, which gradually gain momentum while established practices are phased out, allowing the pilots to grow into the standard.

The underlying concept of Natural Capital is compelling, but significant work is still needed to prove it works in practice. In this pioneering phase, philanthropic funding is essential to absorb risks, develop methodologies, and establish a "proof of concept." This is not about subsidizing individual farmers, but about enabling systemic innovation.

The Result: Truly Affordable Sustainable Food

Finally, the icing on the cake: if the farmer is paid for the ecosystem services they maintain and improve, and if these expenditures are no longer a cost but an investment, the cost price of sustainably grown products can actually go down. This levels the current uneven playing field where organic farmers must compete with conventional colleagues. In doing so, sustainably grown and healthy food becomes accessible to everyone.