When we talk about Biodiversity Net Gain in relation to development, it means managing land to leave biodiversity in a measurably better state than before the development took place.
Recently adopted statutory requirements mean that almost all developments need to provide a 10% uplift in biodiversity on completion of the development.
To measure Biodiversity Net Gain, ecologists use a metric produced by DEFRA. https://www.gov.uk/government/publications/statutory-biodiversity-metric-tools-and-guides
This looks at Habitat type, condition, area and strategic significance (e.g. local importance, protected species etc.). A direct comparison is made between the site as it is and the site as it is proposed to be following completion of the works.
Rules, referred to as trading rules, set out the type of replacement habitats which can be used in place of existing habitats.
A habitat unit score is assigned to each type of habitat, and once the metric has been completed a final unit and percentage score is provided.
If it is impossible to provide BNG on site, developers can provide off site areas themselves or purchase credits in off-site enhancement areas. If buying credits, they agree to a ‘stake’ in land owned by someone else. That other person then needs to undertake to manage the habitat to ensure that the gain is achieved for at least 30 years.
There is an opportunity for landowners to generate income from land where development options have been ruled out, for example where it is located in the Green Belt and/or with landscape character sensitivities which would otherwise be unsuitable for development and/or contrary to planning policy.
Some of the advantages of offering biodiversity credits on your land include;
Significant revenue – BNG units typically sell for £20k – £100k depending on the habitat you are creating or enhancing. The market is liable to change but at the moment demand far outstrips supply so prices are high and are likely to be for some time.
Diversify your income – Compatible operations can run alongside the ecological enhancements, as long as you are providing and maintaining the habitats you have committed to.
An alternative to farming – For those looking to move away from farming, habitat management is generally considered to be less labour intensive, and does not rely on subsidies or grant funding. There are companies who will help with the management for a fee or profit share, or who will lease or buy land from you.
Make your land work for you – When options for development have been ruled out, your land doesn’t need to be a drain on resources. Creating biodiversity units is especially helpful for those with land in the green belt, areas at risk of flooding or where options for development have been ruled out due to land or planning constraints
What will I have to do
As a minimum, you would need to do the following;
Our research shows that payment for BNG units are currently between £20,000 and £100,000 on average depending on category of distinctiveness and location. 1ha of land could yield multiple biodiversity units depending on the habitat created or enhanced. Your ecologist can advise further as it will take more time and money to create a more distinctive habitat, but this could result in higher payments.
This will depend on your agreement with your developer and will usually be either in a lump sum or phased with payments at agreed intervals or trigger points.
If you have a willing developer and an appropriate contract (which your legal team will help to draft) then the units can be sold before the habitat is created so if you do not get any buyers, you do not have to proceed with the enhancements. This type of arrangement will naturally reduce risk although developers will be looking to get as much certainty as possible before they enter into an agreement to buy the credits.
There are likely to be some upfront costs for ecologists, planning and legal experts. Beyond that, the timing of major costs will depend upon whether you provide the habitat enhancement before the sale of the units (see above FAQ ‘when will I make money’).
Once you have sold the units, the revenue from the sale will need to cover some or all of the following (these are main costs, and this is not an exhaustive list);
You will have to cover some upfront costs in respect of professional fees. Once you have an agreement with the authority, it could be that there is no interest in buying credits in your site. A lot depends on the habitats on offer and the habitats which are needed by developers, but this should hopefully have been covered by your ecologist.
You will also need to make developers aware of the credits you are offering but allocations in local plans and/or in nature recovery strategies will provide some exposure.
If you choose to manage yourself there is naturally more risk than outsourcing because you will have to source your own expertise (usually an ecological consultant) and cover their costs. You will be responsible if anything goes wrong and will need to commit to managing the habitat for a minimum of 30 years. If you sell your land, your buyer will need to take the obligations on.
You can use a broker of some kind to help you manage the habitats. This will often involve a fee or profit share so you will make less money but in theory will have more expertise on hand (depending on who you decide to work with).
There is often less risk in setting up a lease (often a farm business tenancy) for a company such as the Environment Bank to deal with everything for you, but this will potentially restrict your income. Also, you will need to choose a suitable (stable) habitat bank because if that company fails you might be left liable. It can be hard to know what to choose at the moment, but we will be keeping an eye on the market as it develops.
There are many habitats which can be created and enhanced alongside existing agricultural activities including restoration of ponds and hay meadows, but others will require a change in practices. Your ecologist will discuss this with you in the early stages when you are deciding what habitats you can provide.
You will have to cover some upfront costs in respect of professional fees. Once you have an agreement with the authority, it could be that there is no interest in buying credits in your site. A lot depends on the habitats on offer and the habitats which are needed by developers, but this should hopefully have been covered by your ecologist.
You will also need to make developers aware of the credits you are offering but allocations in local plans and/or in nature recovery strategies will provide some exposure.
If you choose to manage yourself there is naturally more risk than outsourcing because you will have to source your own expertise (usually an ecological consultant) and cover their costs. You will be responsible if anything goes wrong and will need to commit to managing the habitat for a minimum of 30 years. If you sell your land, your buyer will need to take the obligations on.
You can use a broker of some kind to help you manage the habitats. This will often involve a fee or profit share so you will make less money but in theory will have more expertise on hand (depending on who you decide to work with).
There is often less risk in setting up a lease (often a farm business tenancy) for a company such as the Environment Bank to deal with everything for you, but this will potentially restrict your income. Also, you will need to choose a suitable (stable) habitat bank because if that company fails you might be left liable. It can be hard to know what to choose at the moment, but we will be keeping an eye on the market as it develops.
There are many habitats which can be created and enhanced alongside existing agricultural activities including restoration of ponds and hay meadows, but others will require a change in practices. Your ecologist will discuss this with you in the early stages when you are deciding what habitats you can provide.
You will also need to make developers aware of the credits you are offering but allocations in local plans and/or in nature recovery strategies will provide some exposure.
If you choose to manage yourself there is naturally more risk than outsourcing because you will have to source your own expertise (usually an ecological consultant) and cover their costs. You will be responsible if anything goes wrong and will need to commit to managing the habitat for a minimum of 30 years. If you sell your land, your buyer will need to take the obligations on.
You can use a broker of some kind to help you manage the habitats. This will often involve a fee or profit share so you will make less money but in theory will have more expertise on hand (depending on who you decide to work with).
There is often less risk in setting up a lease (often a farm business tenancy) for a company such as the Environment Bank to deal with everything for you, but this will potentially restrict your income. Also, you will need to choose a suitable (stable) habitat bank because if that company fails you might be left liable. It can be hard to know what to choose at the moment, but we will be keeping an eye on the market as it develops.
Generally, BNG credit sites are managed in the following ways;
The legal agreement will bind future landowners too. You may be required to notify the Council under the agreement when the land is transferred and may also be required to include specific provisions in the sale contract. Your lawyer will advise you of any terms to this effect.
BNG and Nutrient neutrality credit sites can be provided together with credits for each being sold in relation to the same parcel of land. For other regimes such as agri-environmental schemes or voluntary carbon codes you will have to satisfy certain criteria and provide additional enhancement; credits will not be able to count for more than one regime. Your ecologist and/or legal advisor will be able to review this in more detail for you if relevant.
Different authorities will have different requirements. As a minimum, the information is likely to be as follows;
If the land you are considering for enhancement is in agricultural, forestry or horticultural use then the creation of habitats would not ordinarily need planning permission. The exception would be if engineering operations are required to create wetlands (one of the types of habitats developers will need to demonstrate 10% gain in). Permission may also be required if the enhancements are part and parcel of a development which itself requires planning permission (such as a tourism related scheme which includes additional woodland enhancements over and above the 10% which would be required as standard).
The agreement with the Council to provide, manage and monitor the site will require you as a minimum to
A covenant is likely to be included in the legal agreement which requires any sale of the land during the 30 year period to be subject to the terms of the legal agreement to ensure that new owners will carry on the obligations. However the agreement will be set up to run with the land anyway.
Some local authorities have example agreements on their website. Examples for Devon County Council can be found here https://www.devon.gov.uk/environment/wildlife/biodiversity-net-gain but there are others
Your lawyer will talk you through the terms of the agreement in more detail.
There will also be some form of contractual arrangement between you and the developer. This could be in the form of an option agreement which mirrors any option agreement they have over the development site. They may wish to do this so that they have exclusivity over a specified number of units, at least for an agreed period. The price will be fixed from this point but may be subject to indexation. Once again, your lawyer will talk you through this if applicable.
This increases the chance of developers seeing that your site is available and should generate more interest in buying credits. It also means that your habitat can be included as part of a network of sites designed to improve biodiversity in the local area.
Also, it is useful to have Council support from the outset. An ideal time (but not the only time) to commence discussions is during consultations on local or neighbourhood plans because it will ensure the Council considers the suitability of the site carefully and will discuss its requirements at an early stage.
From the Council’s perspective, it will mean they can provide a sufficient supply of sites in their area to avoid off site mitigation being provided further afield.
Getting involved at the local plan stage give you a chance to have a say about the wording of any biodiversity net gain specific policies, including the information which might be required to secure biodiversity units. We can also work with the Council if they are considering preparing a specific supplementary planning document outlining the requirements in more detail, where this would assist.
All ecologists are developing their experience and expertise in this area, but we work with a number of ecologists on a regular basis and can make a recommendation, should this help you.
You don’t have to use a habitat banking organisation to manage your land, you can do this by yourself or under guidance from others. They are an attractive option if you would like to be completely hands off and have a regular income over the 30 year period, subject to contractual/lease arrangements but you are then entrusting the use and management of your land to a third party.
Often, organisations such as the Environment Bank look for larger parcels of land over 10ha but you would need to discuss with the organisation directly.
As soon as you have an idea of the types of habitat you can provide on the site. Ideally you will be some way in to getting the legal agreement signed but you don’t necessarily have to wait and can conduct commercial negotiations in parallel
Please see our flowchart for more information.
After the 30-year period is complete, the land does not need to be kept for biodiversity improvements, but you may consider it worth doing.
DEFRA’s advice is as follows;
At the end of your agreement, you could agree to enhance the habitat further and sell those benefits as biodiversity units. To re-enter the site into the off-site BNG market, you would have to re-baseline it at the 30-year mark using the metric, work out the enhancements you want to make and then follow the usual BNG process of legally secure the habitat and registering the units.
You can find out more information here: https://defraenvironment.blog.gov.uk/2023/10/10/off-site-bng-what-can-you-do-after-30-years/#:~:text=Keeping%20the%20land%20in%20BNG&text=To%20re%2Denter%20the%20site,habitat%20and%20registering%20the%20units.
It is possible that DEFRA will start to offer more incentives to retain as habitat as 30 years approaches.
Please see our flowchart for more information.
