Biodiversity Net Gain & habitat creation
The next iteration of Biodiversity gain is Biodiversity Net Gain (BNG). BNG within the Environment Act 2021 (the ‘Act’) is a ratcheting up of this process demanding not only the replacement of habitat but an increase in biodiversity before and after a development of at least 10% with some local authorities requesting a 20% increase.
Landowners may wish to create biodiversity units on their land either for sale within the BNG market or outside this regulated environment.
The creation of BNG sites will result in tradeable accredited units. With BNG units only being required at the point of achieving planning permission, most of these trades will be on an Option basis rather than an outright sale and because of the way Defra’s Biodiversity Metric calculates BNG, until the donor site is identified and the specific development is permitted, the actual calculation of BNG cannot be finalised.
See our latest research piece about those local authorities where BNG policies have been adopted.
How is biodiversity value calculated?
There are a number of ways that biodiversity can be calculated, from direct on site counting of flora and fauna through to high level web-based assessments including the use of the Defra Biodiversity Net Gain 3.1 Metric as a proxy which equates habitat type and distinctiveness with biodiversity.
Where we are asked to value the existing biodiversity of a site, there are a number of different calculation basis that can be used. The approach we have adopted is to use the Defra Biodiversity Net Gain metric and the nascent market values within this arena to provide a proxy value. It should be noted that this element of the green puzzle cannot yet be traded but could be used by some entities to describe the monetary value of the biodiversity on their property. The value of a BNG unit within the market created through the Act will depend on a number of factors. Such as the location of the site in relation to the development and the number of other sites available within the locality. This will drive price.
Timescales
In accordance with the Act, biodiversity projects will be for a 30 year period minimum, which include arrangements to bind the land for the agreed use. Those purchasing the units within the market usually pay an option arrangement fee and the balance of the agreed sum on receipt of planning permission. Outside of this market there would be a private contractual arrangement between the parties. Those land managers entering the biodiversity market should be aware that their land will be bound into the specific land use for a minimum of 30 years, with this being secured on their land title via a Land Charge registered at the Land Registry.
Trade
It will be possible to trade the additional biodiversity that is created by improving habitats - either by a private contract between the buyer and seller or within the regulated BNG market that has been created through the Act. Within this market where it is possible to identify a donor site now, we will create an Option based relationship between the donor and developer so that the planning application can progress with certainty over the off-site provision. This is fundamental for the planning permission.
Do you have land that could be used to provide BNG units either within the market or outside of it?
The Natural Capital Exchange allows you to register that site with us so that when we get a requirement within your locality, we can match the two together.
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