Biodiversity Credits Open Up a New Market for Landowners

The Biodiversity Net Gain (BNG) concept offers landowners the opportunity to sell biodiversity credits to developers needing to offset their environmental impact. 

The Government has pledged to increase housebuilding to 300,000 houses a year by the mid-2020s, however, it is also committed to protecting biodiversity, stating its aim to: `leave the environment in a better state than we found it, and pass on to the next generation a natural environment protected and enhanced for the future.’ These aims can appear to conflict, and the Government has created BNG in an effort to redress the balance.

BNG means that a developer must create additional biodiversity improvement at a site rather than comply with the previous `no new loss’ principle. If an environmental scheme cannot be created on site, alternative areas may be identified offsite including on farmland. Implementing the scheme looks set to open a new market for landowners who can provide suitable land. 

The Environment Bill, currently progressing through parliament this autumn, contains provisions that developers in England will be required to demonstrate a BNG of 10% as a requirement of planning permission. BNG will be implemented when the Environment Bill is passed and is expected to be rolled out in 2023.

How the scheme will work

To attain planning consent, an assessment must be made of the pre-developed site with the number of biodiversity units calculated according to Defra’s Biodiversity Metric 3.0. The developer must then demonstrate how they will contribute the total units required by creating improved habitat and maintaining that area for 30 years. 

Local planning authorities will only approve planning applications where the biodiversity value of the finished site exceeds the pre-development value by 10% or more. In cases where it is impossible to deliver BNG on a development site, a developer could work with a landowner offsite to ensure delivery of BNG via an individual contract, or they could purchase biodiversity credits from the government.  

As the costs of environmental schemes will be lower off-site, it is anticipated that a large percentage of the gains will be realised in this way. Developers will be able to source land themselves for offsetting or buy credits from intermediaries who can identify suitable sites and draw up agreements with landowners. 

Biodiversity Gain Sites

Sites generating biodiversity units are called Biodiversity Gain Sites and they must be recorded on a national public access register being set up by Natural England and Defra. Farmers and landowners keen to participate in the Biodiversity Credit scheme must register land which they think would be suitable to the scheme, along with baseline figures from the Biodiversity Metric. In practice, the Government buys the biodiversity credit from the landowner and then sells it to a developer on the BNG marketplace.

Suitable farmland schemes 

Credits could be gained from making small changes to land use such as sowing a different grass mix to include wildflowers which attract pollinators, or from larger schemes involving wetland management or habitat creation. It may prove attractive to some landowners to implement schemes on marginal land.

Once agreement is reached, the landowner could receive regular payments to maintain the area; it may be advisable to consider future support payment claims before signing up to a scheme. As land under a BNG agreement will have to be maintained for a minimum of 30 years, tenant farmers keen to get involved would need to negotiate an agreement with their landlord. 

Environment Bank

An Environment Bank is being established which will sell credits to developers, pay landowners a capital amount to establish habitat and a regular amount for annual management. It is anticipated that payments will take inflation into account. The price for biodiversity credit units has not yet been calculated.

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