While modest in its requirements, November 2023’s Biodiversity Net Gain (BNG) legislation, tied into the amended Town & County Planning act, will set the ground for a transformation in the way developers (and industrial sites) approach the use of England’s natural resources.
At its core, the legislation simply requires that developers leave nature in a better state – at least 10% better – than when they found it.
Fitting into existing legislation, BNG will require planners to submit plans for how they will preserve, restore and create new habitat, and then deliver on that plan for a minimum of 30 years.
Natural England has spent the past five years developing a metric, complete with scoring system and calculator, that will become the statutory method for assessing the biodiversity value of the land to be developed.
Previously developed areas, and – very likely – brownfields sites will be exempt, given their minimal biodiversity value.
FAMILIAR
Many developers will already be familiar with BNG, according to Rob Wall, assistant director of policy for sustainability at the British Property Federation, as around a third of local authorities have some kind of BNG policy in place already. The new amendment will merely codify existing arrangements into a simplified, universally applicable set of requirements, and provide resources – not least an off-site credit market – to deal with changes that many authorities have already put in place.
“Developers will need to factor BNG into their applications from the very early stages of planning schemes to ensure they are compliant,” says Wall.
For less organised developers, the legislation will finally mean the practical application of work that too often remained purely theoretical.
Rebecca Mushing, associate for planning development and securitisation at law firm Wright Hassall, explains: “Developers have always had to at least consider the concept of biodiversity net gain,” she says. “Under the new regulations, however, it will become mandatory, with minimum requirements.”
It is important to note that the November start date will not apply to all developers. Builders on smaller sites, classed as anything below 10 dwellings on a site below one hectare for domestic developments, or less than 1,000m2 of build or less than a hectare of the total site for industrial developments, have been given a five-month reprieve to April 2024. Smaller sites will use a watered-down version of Natural England’s metric, except for those on priority habitat areas.
Developers of nationally significant infrastructure projects have likewise been granted a 12-month delay to November 2025 to prepare for the legislation.
GROUND RULES
So far so good: anyone wanting to build for humans needs to build for wildlife too. In practice, matters are a little more complicated.
In the first instance, it means developers have a more extensive – and more expensive – planning application process. Not only will developers have to engage local ecologists for initial surveys and advice, if they’re having to achieve off-site gains, they will have to engage with brokers and providers in a biodiversity credit market that might – rather optimistically – be called ‘nascent.’
Mushing advises that developers get their ducks in a row early. She says: “If BNG is considered at an early stage, it should not delay projects, but it may result in increased project costs.”
If developers can’t make on- or off-site gains, then they’ll have no choice but to buy their credits from the government, which has announced it will be charging companies twice for each unit to be compensated.
Even for land with the lowest biodiversity value, that comes to £84,000 per biodiversity unit – plus VAT. Riverland habitats could set developers back £460,000 plus VAT per unit.
Developers had better choose their location wisely. With location and plans in mind, they will first be required to submit a BNG statement. This is essentially a truncated form of the more in-depth ‘BNG Plan,’ but allows some room for the applicant to flesh out details further down the line. The BNG Plan itself is the really vital document, and will doubtless win or lose some developers significant sums of money. BNG Plans will cover how developers will minimise adverse effects on habitat; then pre- and post- development biodiversity values of the on-site habitat; the value of any off-site habitat; and whether they have purchased any biodiversity credits. The plan will also cover how developers will manage and enhance the habitat over the next 30 years. Defra has mercifully promised to provide a standard template, a working draft of which is available online.
Developers should, however, note carefully the distinction between on-site, off-site, and purchased ‘credit’ biodiversity gains. The legislation values on-site gains more than any other, second only to mitigation or avoidance of habitat destruction. The logic behind this is that the occupants of new developments – for most are, by and large, housing – should benefit from nature restoration efforts.
It’s hard to argue with the government’s logic: otherwise, developers might as well slap new housing down in a depleted nature zone, create some shining suburban nightmare with two species of grass and a handful of crows – while, hundreds of miles away, the Eden the occupants have funded goes unseen and unheard. To further this aim, Natural England has factored a ‘spatial multiplier’ into its BNG metric. Essentially, the further from the development any off-site gains are made, the weaker they become – and the more you have to buy to make up your 10% gain.
There is a chance, however, that Natural England will not apply the spatial multiplier in the early stages of BNG, while the market for off-site biodiversity units gets to its feet.
To help the biodiversity unit market gain traction, Defra has been encouraging at every stage the pre-emptive regeneration of habitat, known as ‘habitat banking.’ Any regeneration or creation of habitat relative to 2020 levels counts – so developers could theoretically immediately start regenerating their own habitats to prepare for future demand. Wall says: “In our experience, the more aware developers are actually thinking about holdings that could provide biodiversity net gain units, or ‘credits,’ as well as thinking about the impact on individual developments.”
And because ‘additionality’ – or the stacking of environmental benefits, like receiving payment for both carbon sequestration and biodiversity – is encouraged, canny developers might even be able to run a steady income from these investments.
The third option for gains – credits – is obviously the most expensive and the government is keen to label them a ‘last resort option.’ It may occasionally be unavoidable, however, according to Mushing. “It will not always be possible to achieve on-site mitigation, particularly if a council requires a greater percentage,” says Mushing.
As of April 2023, some 14 authorities had already elected to pursue higher targets, including Birmingham, Kent and Greater Cambridgeshire. “Off-site mitigation and/or the purchase of credits will therefore need to be available to fill the gap, and will be commonplace,” she says.
For all this policy, it remains to be seen whether the legislation will be successful in reversing the centuries of accelerating devastation that have culminated in a quarter of mammals and nearly half of UK birds being in danger of extinction.
For Ian Bateman, professor of environmental economics at the University of Exeter, the legislation is both desperately needed and exasperatingly put together. “The actual legislation is good, and vital to address [biodiversity loss],” he says. “Implementation is the big problem. It is of course true that on-site or site- adjacent BNG compensation projects are better than nothing, so that is an improvement. However, on-site or site-adjacent BNG is massively inferior to using those funds to restore biodiversity in the places that wild animals need it.”
Nature, he said, is far better served by the creation of larger, contiguous zones of habitat. These larger habitat zones simply don’t fit with the government’s prioritisation of smaller on-site mitigation and creation schemes, something which Bateman says will achieve ‘far less’ improvement than if restoration efforts were targeted at areas best for wildlife.
The government’s approach is not at all hopeless, however. Firstly, the exemption of developed land – and probably brownfields sites, too – will prioritise these sites; mitigation, likewise, is emphatically placed at the top of the legislation’s hierarchy of requirements.
So too the legislation sits alongside the development of Local Nature Recovery Strategies (LNRSs), which will map priority areas for biodiversity gain throughout England. From their introduction in 2025, biodiversity gains made on LNRS sites will benefit from a substantial boost to their score in Natural England’s BNG metric; this, and the emergence of an off-site gains market, may yet deliver the kind of joined-up sites that are so valuable for biodiversity.
Strategic-minded developers might even consider the significantly higher potential of well-planned off-site gains compared to coaxing small gains out of a freshly built-on plot.