For peat’s sake: How we can turn Europe’s bogs and fens into investable green infrastructure for the future

Europe is sitting on a climate asset hiding in plain sight.

It is not a new technology. It does not require rare earth minerals, a breakthrough in AI or a decades-long planning process. In many cases, restoring it can be as low-tech as blocking drainage ditches and waiting for it to rain.

The asset is peatland: the wet, boggy, plant-rich landscapes found under many of Europe’s hills, forests and farms.

Peatlands rarely get the attention lavished on forests. They do not have the same visual glamour as tree planting. But they are environmental heavyweights. Globally, peatlands store more carbon than all the world’s forests combined. In Europe, they cover around 6% of the continent’s landmass — roughly an area the size of France. When healthy and wet, they lock away carbon, regulate water and support rare biodiversity.

Peatlands rarely get the attention lavished on forests. They do not have the same visual glamour as tree planting. But they are environmental heavyweights.

But in Europe, peatlands today are often not healthy. They have been damaged by centuries of drainage for farming, forestry and peat extraction. Long-sequestered carbon is leaking back into the atmosphere. Water runs off faster. Soil erodes. Habitats decline. What should be natural infrastructure can be a source of climate risk.

Restoration has begun to roll back the centuries of damage, helped by public grants, philanthropy and conservation programmes, often initially centred on national parks and protected areas. But the pace is nowhere near the minimum required, let alone the scale possible.

In a recent report for the Landscape Finance Lab, Financing European Peatlands: A roadmap towards an institutional asset class, I argue that public and philanthropic funding alone is too scarce, too short-term and too contested to carry the whole job. Peatland restoration needs private capital too. I estimate that several billion euros of private capital is needed, just across eight sub-sets of European peatland, on very conservative assumptions, and over the next decade alone. 

That raises the obvious question: why would private capital invest in bogs?
 

The market potential of restored peatlands

The answer is not that investors have suddenly become sentimental about sphagnum moss. It is that restored peatlands can generate real, measurable ecosystem services — and some of those services have economic value to identifiable buyers.

Carbon is the starting point. Voluntary carbon markets are already facilitating the purchase of credits from peatland restoration projects in the UK, Germany and the Netherlands, through schemes such as the UK Peatland Code, MoorFutures and Valuta voor Veen. These markets have helped to create a revenue language investors understand: a restoration project incurs upfront costs, generates verified environmental outcomes and sells those outcomes over time.

• Explore: Building a market for nature: the finance innovators racing to save our ecosystems

In lowland fen and polder landscapes — think Holland, Germany and the East of England — drained peat soils can emit a lot of carbon per hectare. Here, carbon revenues alone may be enough to support investable restoration projects. But carbon will not be enough everywhere. Upland blanket bogs and forested peatlands often need additional revenue streams to become investable.

That is where I think water comes in.

Peatlands are not just carbon stores. They are water infrastructure. Restored peatlands can improve raw water quality, reduce dissolved organic carbon and sediment, slow runoff, lower and delay flood peaks, and improve resilience during dry periods. These are not abstract benefits. They are services for which society already pays — usually through expensive grey infrastructure.

Water companies spend money treating poorer-quality water. Infrastructure operators spend money managing flood risk to roads, railways, power assets and telecoms. Reservoir operators, ports and catchment authorities spend money dealing with sediment. Insurers carry the cost of rising flood liabilities. Data centres and other water-intensive industries increasingly care about long-term water security.

In other words, the beneficiaries exist. The costs they face are real. The missing piece is a market mechanism that allows them to buy nature’s services in a reliable way.

And here is the big opportunity my report identifies: long-term water-benefit offtake contracts.
 

Building scalable markets with offtake contracts

The idea is relatively simple. Instead of giving a peatland project a grant, a buyer contracts to pay for verified water outcomes over 10, 15 or 20 years. It could be cleaner water, reduced flood risk, improved storage, lower sediment or a combination thereof. Payments would be linked to defined benefits, measured against agreed methodologies and delivered within a catchment where the buyer has a real exposure.

That shift sounds technical, but it is profound. Grants fund projects, but offtake contracts build scalable markets.

A grant can help restore a site. An offtake contract can make future revenue predictable. Predictable revenue can support upfront investment. Upfront investment can pay for restoration before all the benefits have materialised. Once that happens, investors can begin to treat peatland restoration like a green form of infrastructure.

This is how many renewable energy markets scaled. Wind and solar were not financed because investors liked turbines. They were financed because contracts, subsidies, regulations and market structures made future cashflows bankable. Nature finance needs its equivalent market plumbing (excuse the pun).

• Read more: Nature-based solutions: the challenge of scaling green initiatives that address the world’s challenges

There are early signs of what this could look like. The Wyre Catchment Natural Flood Management project in the UK has shown that it is possible to partially structure payments around flood-risk outcomes, and to do so via a project vehicle. One major transport infrastructure operator is close to contracting for similar outcomes from another nature restoration scheme. Large technology companies have backed peatland restoration in Ireland. But these examples are still bespoke, labour-intensive and hard to replicate.

My report sets out a roadmap of actions that can move peatlands from where they are today towards investable green infrastructure tomorrow. Five of the priority actions include:

1. Better standards for water benefits. Carbon markets have spent years building methods for measuring and verifying emissions reductions. Water needs the same discipline: clear units, baselines, attribution methods, verification and valuation approaches. There is already work to build on, including volumetric water benefit and water quality benefit accounting, but it needs to be advanced and made usable for real transactions.
2. Model contracts. Buyers should not have to invent a peatland offtake agreement from scratch every time. Standardised contracts would reduce legal costs, speed up transactions and give investors more confidence.
3. Aggregation models. Individual peatland projects are often too small and too bespoke for institutional capital. Catchment-scale or landscape-scale vehicles could bundle projects, spread risk and create portfolios large enough for pension funds, insurers and infrastructure investors.
4. Regulatory catch-up. In the UK, water companies are not yet naturally incentivised to buy long-term water outcomes from third-party nature projects, even where those projects may be cheaper or more resilient than concrete alternatives. If regulators want utilities to invest in nature-based solutions, they need to make those payments recoverable, comparable and legitimate.
5. A mindset-shift in public and philanthropic capital. It should be used less as one-off project subsidy and more as market-building capital: funding standards, underwriting early risks, providing price floors, supporting aggregation vehicles and helping first-of-a-kind transactions to happen.

The prize is not simply more restored bog. It is a new category of green infrastructure: landscapes that store carbon, hold water, reduce flood risk and support nature, financed not only by grants but by the organisations that benefit from those services over decades.

Peatlands have spent centuries being drained because the economy valued the wrong things. The next task is to build a market that values what they do when they are wet.

Matt Robinson is a senior adviser to the Landscape Finance Lab and an adviser to Social Finance UK. 

Header image: Coir bales used for peatland rewetting in Ireland. Copyright Guaduneth Chico Leon. Reproduced with permission. Image of stone dam copyright North Pennines National Landscape. Reproduced with permission. Image of wet farming in the Netherlands by Danielle Eibrink Jansen on Unsplash.