Biodiversity Net Gain (BNG) requirements will come into force in November this year and will require developers to deliver a BNG of at least 10% on new developments.
The steps required to achieve this will vary significantly between projects. For example, a site with relatively low biodiversity, such as arable farmland, that is being developed into a small housing development, will likely be able to reach the threshold on-site through gardens, trees, bodies of water and open spaces on the development. Whereas a site that has a higher baseline level of biodiversity may need to purchase off-site biodiversity net gain units.
Opportunities for Farmers and Landowners
BNG can be considered a form of diversification for farmers and landowners, as it can provide an income stream that’s rooted in land stewardship that’s relatively long term and resilient.
Where it isn’t possible to achieve the 10% BNG uplift on a site, developers may look to purchase BNG units from farmers and landowners, who can implement measures on their own land to increase biodiversity and receive a payment from the developer.
Landowners will be able to deliver BNG through a variety of means, such as restoring species-rich grasslands or peatland, woodland creation or wetland creation.
BNG units can be delivered alongside existing farming or land management practice and can be complementary to existing and future farming payments. It therefore provides a good opportunity for farmers and landowners to build long-term income into the farm business.
Landowners will be able to take advantage of the sale of biodiversity credits through an agent or broker who has existing relationships with developers and knowledge of local demand.
Calculating the value of habitats
BNG is measured using the Defra Biodiversity Metric. This tool should be used by a competent person, ideally an ecologist. It calculates changes in the extent and quality of habitats, and compares the habitat found on a site before and after development or a management intervention.
There are four key factors underpinning this comparison:
- Habitat size – how large or small is the habitat?
- Habitat condition – does it compare to the best examples of its kind?
- Habitat distinctiveness – is the habitat of particular ecological importance?
- Strategic significance – is the habitat a local priority or located in a priority area of habitat creation or enhancement?
Farmers and landowners can create BNG units in a multitude of ways such as:
- Restoring meadows on arable land (this may be particularly appealing where there are awkward areas of the farm or where yields are poor or uncertain)
- Planting woodland or hedgerows
- Reducing livestock intensity and / or changing livestock breeds on pastures to create uneven swards with more plant speciesBNG EconomicsThe pricing of biodiversity units will be set by the market. Farmers and landowners will want to ensure that the price is competitive and that it’s sufficient to cover the cost of habitat management for the minimum 30 years. Predictions for biodiversity unit prices vary widely and initial forecasts were in the range of £9,000 to £15,000 per unit. However, revised forecasts indicate that prices of £25,000 per unit may be more common, and in some areas will be higher.
As a very broad guide, an average grassland site might generate two units per hectare, whilst converting arable to meadows can generate closer to 10 units per hectare. At a unit price of £25,000, that would equate to between £1,650 and £8,333 per hectare each year over the 30 year term.
Stacking of Payments for Environmental Services
Farmers and landowners will be able to receive BNG payments on the same piece of land for which they already receive payments or grants, as long as the BNG units are being generated on top of any other obligations. The latest consultation response from DEFRA on how BNG and nutrient mitigation can be stacked and how they can be combined with other schemes is as follows:
“The first phase of guidance will run until March 2025. Land Managers will be able to sell both biodiversity units and nutrient credits from the same nature-based intervention, for example the creation or enhancement of wetland or woodland on the same parcel of land. Land managers should not sell credits for other ecosystem services (such as carbon credits) from the same nature-based intervention if they are also selling biodiversity units and/or nutrient credits.
“Biodiversity units may be generated on top of an existing obligation or grant payment if the land manager is able to further enhance a habitat and can establish a clear and verifiable baseline from what the existing payment or obligation has achieved.”
Nationally Significant Infrastructure Projects (NSIPs) and BNG
The government is also applying BNG to NSIPs and will use the same broad approach to create consistency between different types of projects. This will reduce the scope for confusion and the need to define requirements in reporting.
Due to the significant scale and complexity of NSIPs, the government will ensure that developers have sufficient time to incorporate BNG into their designs. It will produce a draft biodiversity gain statement for NSIPs later this year and begin to consult with industry and wider stakeholders, with the requirement set to be in place no later than November 2025.
How to Get Ready for BNG
Natural England recommends landowners and farmers who are considering delivering habitats for BNG start to think about the actions that can be done now, to be one step ahead before it becomes mandatory.
Habitats created or improved in advance of sale can generate more biodiversity units so starting habitat works early could deliver benefits in the long term. Even if you’re not yet able to start creating or enhancing habitats, there are still steps you can take. Such as starting to establish baselines for your land or using Biodiversity Metric to explore future possibilities.
It would also be beneficial to start talking to people in your local area, including your LPA, environmental organisations, land agents, and us at Engain, to understand what the local priorities for nature recovery might be and what types of habitats developers might need to achieve BNG.
To find out more about the opportunities available to you and the various BNG revenue streams available, call us on 01225 459564 or email enquiries@engain.com