An ambitious scheme to restore England’s nature over coming decades has been undermined after the government inserted a clause allowing it to terminate contracts with only a year’s notice, conservationists have said.

The project was designed to fund landscape-scale restoration over thousands of hectares, whether on large estates or across farms and nature reserves. The idea was to create huge reserves for rare species to thrive – projects promoted as decades-long commitments to securing habitat for wildlife well into the future.

Conservationists have warned these changes, as well as underfunding, will lead to low take-up and less land protected for nature. They say allowing contracts to be ripped up after a year is unworkable, as it would leave landowners with rewilded land they can no longer farm and too little time to reconvert it.

Landscape recovery is the most ambitious part of the environmental land management schemes (Elms), which were introduced by the previous Conservative government to replace EU farming subsidies.

Initially, the schemes were to be split into three strands, with landscape recovery receiving a third of the £2.4bn a year funding pot. But this week, the environment secretary, Emma Reynolds, announced the projects would be given only £500m over 20 years.

Jake Fiennes is the director of conservation at the Holkham estate, one of the government’s first pilot schemes for landscape recovery in 2022. He has been creating more than 2,000 hectares (4,940 acres) of wildlife-rich habitat along the north Norfolk coast, including restoring wetland that has already attracted thriving bird life such as the return of rare spoonbills.

Fiennes said: “£500m over 20 years is sod all. It was supposed to be a third of the [farming] budget – we could have worked with that. If you’re the person in the street, £500m sounds like the most enormous amount of money. But if you understand the environment and food budget is £2.4bn annually, this is a fifth of that over 20 years. A tiny fraction of it for the most ambitious nature schemes.”

Spread across the landscape recovery schemes, it will amount to only a few million pounds a year. But what is being asked of the landowners is incredibly expensive and ambitious, Fiennes says.

“Some of the pilots are asking so much more than that as they understand the value of land, and if you put it into permanent land use change, you permanently remove its value. Then it’s implementing your scheme, like re-meandering a river and completely redesigning a landscape. That costs money,” he added.

The Department for Environment, Food and Rural Affairs (Defra) has claimed the funding shortfall could be topped up with private investment. However, farmers say this is unlikely while schemes remain vulnerable to being scrapped with only a year’s notice.

The president of the National Farmers’ Union, Tom Bradshaw, said: “Defra’s plans for landscape recovery projects under the [environmental improvement plan] involve combining government funding with private investment. However, experience shows that attracting private investment has been challenging, raising concerns about how farmers can confidently engage their businesses in the projects.”

Toby Perkins, the chair of the environmental audit committee, said: “Do the government’s commitments match its ambition? The £500m for landscape recovery is much needed but, at £25m a year, I am very sceptical that it offers anything like adequate funding.”

The government’s environmental improvement plan, announced this week, has watered down the overall ambition for nature on farmland.

Alice Groom, the head of sustainable land policy at the RSPB, said: “In just two years, we’ve gone from needing 65–80% of farmers to manage 10% of their land for nature, to a new target of just 41% of farmers managing only 7%. That is a huge step backwards.

“The science is unequivocal: on-farm habitat must be high-quality, the right mix and in the right places to support thriving wildlife populations. Government is simply wrong to suggest that getting 41% of farms to manage 7% of land under almost any [sustainable farming incentive (SFI)] option will be enough. It won’t. And it risks locking in further decline.

“The falling numbers of species like corn buntings and turtle doves tell us something deeper that pollinators, beneficial insects, soils and climate-resilient landscapes are under stress.”

Farmers and other landowners who signed up to the scheme found that their contracts allowed the government to terminate them for convenience – with no fault attached – with just 12 months’ notice.

Fiennes said he would not sign up to the new schemes yet and hoped to renegotiate with the government.

He added: “Some of the legal advice says don’t sign because the government can end the scheme in 12 months. If you’ve done potentially irreversible land use change, you are up a creek without a paddle. Pension funds, banks – if they know there is a commitment from government for a set period, they will top this up, but at the moment it can be struck off in a year.”

The nature-friendly farming schemes have been beset by difficulties and delays. Under the Labour government, funding was cut by £100m and the SFI was abruptly frozen, locking farmers out. Ministers say they plan to reopen the SFI in the new year.

A Defra spokesperson said: “The £500m for landscape recovery projects is a downpayment which will go a long way to protecting and restoring nature across England.”