by Stoker
Above Montrose, Scotland
Many years ago your correspondent had the privilege of receiving some tuition from the late great professor Charles K Rowley, a Hayekian economist with a taste for testing theory against practicality. One story, that he told with some glee, was of the UK’s Sunday Times, barely breaking even, deciding it had to put its prices up for its long-term survival. Nervously it did so; a big hike it was decided, in the hope that quality and the sheer weight of the supplements would keep some readers loyal. After six months the newspaper conducted an audit of readership and found to its delight that readership had barely gone down at all. But, over at the Observer, things were different – it had kept its price steady expecting to pick up many disaffected Sunday Times readers. But far from it, it had suffered a serious decline in circulation. What on earth was going on? It took a while to work out. Then somebody thought of asking newsagents. They reported a constant factor; many Sunday readers took at least two papers (not so much on the telly in those days, and no social media), but when the price of the Sunday Times went up, it was the Observer they decided to drop. Quality, arguably, won over quantity. But Rowley’s point was that economics is an uncertain science and human behaviour can always pulverise a theory.
The Scottish Highlands are likely to become further proof of Rowley’s thesis. The current Scottish government is not known to be especially friendly to the landowning classes and its dislike has grown year by year, no doubt fuelled by its alliance with the Greens and strength in traditional Labour-voting areas. Hence, over the last ten years the market in large farms and those spreads dreamt of by City bankers - the traditional Highland estate, with forests, grouse moors, tenant farms, cottages replete with loyal retainers, gothic lodges, and game larders - has been very weak. Large estates in particular were exceptionally difficult to shift. Prices stagnated and property agents worried about political risk in buyers’ minds. Until the last eighteen months, that is, when suddenly the prices started to shift upwards at a rapid rate.
“Covid” you no doubt mutter to yourself; “the rich want to find a safe place and to commune with nature”. But no. Whilst some of the big houses have been bought by the super fairly-rich fleeing plague-infested cities, the moors, uplands and forests are going to quite different owners. The purchasers are often large investment funds, both UK and foreign-owned. Not because they see a sudden upsurge in farming yields or forestry returns or even in grouse shooting revenues (almost nil at the moment because of a cyclical lack of grouse), but because they need to buy huge quantities of carbon offsets on behalf of clients such as airlines, car makers, and other heavy carbon producers. One way of avoiding the tax on their clients’ environmentally unfriendly activities is to offset it with carbon credits, obtainable on planting trees. These have been around for a long time, but for some reason the men in sharp suits have only recently cottoned on to carbon trading, and the price of suitable land has rocketed, making the owners in ragged kilts suddenly much richer. We exaggerate; most Highland estates are owned by equally sharp-suited businessmen nowadays. The traditional, poverty-stricken laird is no longer that common. Anyway, he is not keen on selling the ancestral lands and is much better at making money out of the recent tourism boom; those charming harled cottages are suddenly useful revenue producers.
But certainly, Highland estates are much more valuable than they were just two years ago, and selling agents are having a wonderful time as carbon-linked buyers seek out suitable land. Suitable means forested, or even better, ready for afforestation. The big houses can be sold off, the lowland tenanted farms bought by the tenants (or the tenants themselves bought out so that trees can cover their former fields), and the grouse can find other homes. In 2021 twenty-two large estates changed hands, and twenty-one in 2020. These are unprecedented numbers; buyers include Standard Life and Aviva, not traditionally seen in the glens. Agents are always discrete about actual prices paid but their smiles say it all – as does the rise in indicative and asking prices. To take just one example, the Pennyghael estate on the island of Mull, nearly 9,000 acres, which has been informally ‘available’ for some time but where potential buyers have been deterred by its run-down condition and derelict lodge, was repriced in 2021 at offers in excess of £5m – considerably more than previously - and is reported to be about to go under contract at more than the asking price. Expect heavy planting machinery and whips (young trees) to be on the ferry from Oban to Mull shortly.
Scotland is rapidly becoming the power powerhouse of the UK. Any driver on the motorway from Carlisle to Glasgow knows they are arriving in Scotland by the enormous arrays of wind turbines that greet them on the first range of upland, and at almost every draughty spot thereafter. There are those that think wind turbines a thing of beauty – your correspondent is not one of them – but even enthusiasts are thinking now there can be too much of a good thing. In any case Scotland shares with the rest of the British Isles that weakness of wind-power economics: either no wind or far too much. This means wind turbines are very inefficient producers of electricity, and, being remote from users of power, tend to lose a lot in the transmission of their product. Carbon capture at least offers a resistance to further upland windmills; wind turbines and forests do not mix terribly well.
The only flaw in this grand tree-planting scheme is that there is increasing doubt as to whether woodland, especially once mature, is a particularly efficient consumer of atmospheric carbon. Certainly, coniferous trees are not good at that role – or indeed much else, apart from guaranteeing an endless supply of knotty wood for DIY types and garden furniture makers. Coniferous plantings tend also to affect the acidity of the soil, making it less efficient for grazing, even down the hill below the planted areas, changing – usually by driving out – the traditional wildlife and birdlife, and as they require little labour once established, killing local employment profiles*.
Recent research suggests grass is also good at absorbing carbon, and so are crops such as sugar beet and potatoes, though not so much by the time the heavy machinery required for cultivation is factored in. Not that the Highlands are good at growing root crops, but then they are not that good at deciduous tree production either – too wet, too cold, and the soil too thin. What grows best, away from the lower lands and the sea, is grass and heather. But to recognise that will require a change of government policy and an acceptance that sporting estates are also carbon-efficient.
Were he still alive Professor Rowley would no doubt be making furious notes on all the wonderful contradictions and creative interpretations of this. Especially the increasingly financially-strapped pensioners who, through their funds, are busy making sporting gents very rich by buying land and planting trees at huge expense that are not much more carbon-absorbent than the grouse moors and sheep-grazing they replace. And the damage done to the traditional Highland economic mix of farming, sporting, and tourism by covering the land with trees. Plus the long-term likelihood of recognition that things were probably greener, and more economically desirable, as they used to be. And most of all, as this all sinks in, the further risk to those poor pensioners’ funds as land values fall back.
*See, for example, Patrick Lawrie’s wonderful, indeed elegiac, book “Native” on the effects of large-scale forest planting on his family’s modest Galloway sheep and cattle farm.