Biodiversity Net Gain: Statutory biodiversity credit prices released
In February 2023 the UK Government announced the introduction of statutory Biodiversity Net Gain (BNG). This scheme will require detailed ecological assessment of habitats on land that is due to be developed and oblige developers to enhance this habitat so that it is in a better state than before the development.
The BNG scheme will be mandatory and apply to new housing, infrastructure, and commercial developments of all sizes. Large developments will be subject to the rules from November 2023, whilst smaller developments will be included from April 2024.
How will the scheme work?
The scheme will require developers to demonstrate a minimum 10% improvement in biodiversity over and above what will be lost to an area of land developed. The resulting habitat will be secured for at least 30 years via planning obligations or conservation covenants.
Underpinning the scheme is a method of assessing habitats called the biodiversity metric. This is based on a Microsoft Excel sheet and is designed to calculate how a development will change the biodiversity value of an area of land. Consultant ecologists will carry out assessments on behalf of developers, whilst ecologists working within councils will assess these as part of the planning process.
The currencies of BNG: Units and credits
The biodiversity metric tool will calculate the ecological cost of development on an area of land and generate a number which the developer must compensate for. This compensation currency is called a ‘unit’.
Developers will primarily be encouraged to undertake improvements within the boundary of their development (referred to as ‘on-site’), but where this is not possible (for example where there is not space on site for the development and any area for conservation) improvements can be made off-site.
The term ‘off-site’ in the context of BNG may mean on land owned by the developer, which is away from the development site, or alternatively by purchasing units being sold by third-party land managers who are already in the process of creating new habitats throughout the UK. Type ‘BNG units for sale’ into Google to see examples currently for sale.
The cost of each unit being sold by third party land managers is significant, since it will include management of the land for at least 30 years, monitoring and reporting, ecologist or other experts’ costs, insurance, costs to cover work if the habitat fails, machinery, tools and other staff to carry out the tasks, inflation and market competition costs and the cost of legal administration.
Third parties will take payment from developers for each unit sold.
Developers who cannot use on-site or off-site units to deliver BNG must purchase ‘statutory credits’ from the government. This option is regarded as a last resort and priced accordingly; statutory credit prices are set high to ensure they do not compete with the development of units for sale by private land managers. The proceeds from the sale of ‘statutory credits’ will go towards government-led projects.
Indicative price of ‘statutory biodiversity credits’ released by government
The biodiversity metric tool is currently being developed so that when BNG becomes mandatory later this year, developers can work out how many statutory credits they need, depending on their intended development.
Last month the government announced indicative prices for statutory credits, starting at £42,000 per credit for more common habitats, up to £650,000 for rare habitats. Exact prices are due to be released ahead of November 2023.
A more detailed analysis of the BNG scheme, which discusses the likely benefits and limitations of the scheme is due to be released in the autumn edition of the Association’s quarterly magazine, Landscape News.
Further information