Changes to planning and development controls could give land managers the opportunity to make some extra cash by offsetting the impact on biodiversity from new housing and other developments.
This comes after the Environment Act, passed in November 2021, made it law that most developments in England will be required to deliver a minimum of 10% biodiversity net gain (BNG) to offset damage caused by building works.
Defra says this focus on wildlife and nature aims to ensure new developments are ‘nature positive,’ protecting and improving England’s natural environment, while delivering the homes the country needs.
In January 2022, it launched the Consultation on Biodiversity Net Gain Regulations and Implementation – the results of which will determine the details of how BNG will be delivered.
Given the cost of development land versus farmland, paired with the fact areas of habitat are less likely to thrive on a busy housing estate, both economically and ecologically, taking BNG off-site makes more sense.
Habitat This means landowners or managers who create or enhance habitat on their land will be able to sell the resulting biodiversity ‘units’ to developers.
And with the new law meaning developers must commit to management funding for 30 years, it could create long-term income streams at higher payment rates than Countryside Stewardship.
Defra predicts BNG will create a requirement for 6,200 off-site biodiversity units annually, with an estimated national average unit price of £20,000, suggesting a biodiversity market value of £135 million a year.
Giving an example of payments, Prof David Hill, chairman and founder of the Environment Bank, says landowners could expect to receive up to £900 per hectare per year, depending on the habitat type and location.
“In Greater Manchester, 1,463ha are likely to be required to offset credits, or 37 separate 40ha habitat banks.
The Cambridge Oxford Arc Development, which includes one million houses, is likely to need 14,500ha of habitat banks, so there is a lot of opportunity for landowners.”
Farmers on the urban fringe, or in parts of the country undergoing rapid growth, such as the Cambridge area, are at a particular advantage because BNG units normally need to be traded between developers and landowners within the same local planning authority (LPA).
However, at the start, there is expected to be a shortage of off-site units available, meaning developers may have to invest outside their local area.
Angus Collett director of business development at BNG Partnership, which links up landowners with developers, and maps, manages and monitors the BNG trading process, says: “In most of the country there is real opportunity for landowners to submit less productive parcels of their land for BNG.”
The amount of biodiversity units a parcel of land will produce is widely variable depending on factors including current ecological status, whether the land is in crop production and what kind of habitat will be established.
“Per hectare, we are looking at anywhere between three to five units,” says Mr Collett.
Unit payment rates currently vary around the country and are set by each local planning authority.
“We think the consultation will favour heading towards private markets whereby units and value will be decided.
Currently, we are able to offer landowners up to £850 annually per hectare that is used for biodiversity net gain.
We believe using land for biodiversity and habitat creation will become a big part of regenerative farming and the financial gains from BNG are far higher than any other scheme out there.”
There is not a minimum area of land that can be submitted towards BNG – it all depends on supply and demand and the number of units needing to be offset.
Larger parcels of land can be split up and sold to provide units for different developments as well as using several different offset sites to offset a single development.
“We see there being a large demand when the 10% becomes mandatory across England,” says Mr Collett.
With this expected surge in demand, a key update in the consultation is the proposal that land managers can start creating BNG units now, despite the obligation for developers not expected to come into force until November 2023.
Alasdair Squires, of Townsend Chartered Surveyors, says: “Habitat banking, whereby biodiversity units are created and held before a sale is agreed with a developer, significantly helps supply as it allows landowners to begin producing BNG now.
“This will be retroactive, meaning habitat that was enhanced or created from January 30, 2020, will be eligible for BNG agreements.
This provides confidence that work can begin on a habitat without inadvertently raising the biodiversity baseline.”
Land managers should also be conscious of potential restrictions – features such as pond creation may require planning permission, or consent if the land is in a Site of Special Scientific Interest.
It is currently unclear whether BNG payments could be stacked with ELMs, but it is expected the same parcel of land may be used for increasing biodiversity and offsetting nitrates for example, as long as there are distinct outcomes and benefits.
Defra says it is working to produce clear guidance on the implications of committing land for habitat creation or enhancement affecting eligibility for Agricultural Property Relief and Business Property Relief.