Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

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Published: 11th April 2022
Area: Real Estate & Planning

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With the ink still wet on some of the policies and agreements to come out of COP26, sustainable development is high on the political agenda.  Improving biodiversity is a major issue for landowners, developers and planning authorities and biodiversity net gain is a method utilised to improve a site's value – the higher the biodiversity net gain, the potentially higher the value, and who doesn’t want that?

What is meant by biodiversity?

The biodiversity of an area is the variety of plant and animal life in a particular habitat.  A high level of biodiversity is considered to be desirable and important.

What is biodiversity net gain?

The act requires, amongst other things, that all development schemes in England must deliver a mandatory minimum 10% biodiversity netgain which must be maintained for a period of at least 30 years.   

Biodiversity Net Gain follows a mitigation hierarchy – four steps designed to result in a win- win situation. Wins for the environment and wins for the developer. 

The four steps 

Avoidance – avoiding any impact completely such as changing the location of development 

Minimisation – reducing the time, extent, impact, intensity of the development. 

Onsite restoration – measures taken to restore the habitat involved.  This step is particularly necessary if avoidance and minimisation were not possible in the first instance. 

Offset - measures taken to compensate for the adverse impacts after the previous three have been explored in full. 

What does this mean for land developers?

Local planning authorities have required similar mitigation measures from developers via the local plan system for a number of years. However, the new Act will bring the existing requirements of the planning system into statute, giving some form of certainty in terms of what is required. The preference is for mitigation measures to be provided on-site, but where this is not possible, the developer should aim to provide and secure mitigation measures in terms of local habitats.

The key for developers with this new law is to ensure that any proposals are brought forward with BNG in mind. Measures should be factored in and accommodated from an early stage, to avoid pitfalls further down the line. Creative thinking and additional planning throughout the process will prevent pitfalls further down the line. Engaging with the local planning authority during the process will also demonstrate that the BNG process has been thoroughly engaged with.

What does this mean for landowners?

By 2028 the farm subsidy, known as the Basic Payment Scheme will be eradicated and in its place (to a degree) the new Environmental Land Management Scheme (ELMS), set under the Agriculture Act 2020, will be fully integrated. The ELMS is based on the philosophy of “public money for public goods”, and biodiversity (along with all natural capital considerations) will play a huge role within the various schemes planned.  What we don’t know at this stage is how the private sector contracts between developers and landowners will sit with the ELMS and whether there will be the ability to benefit from both. (‘Stacking’ is the issue of whether the same land can ‘stack’ one payment upon another).

It would appear that there is an opportunity for landowners and farmers to take advantage of developers offsetting their BNG requirements, by adding a new revenue stream for any farm business or landed estate, which may be more lucrative than what the ELMS have to offer. However, a word of caution. All businesses will need to consider their own carbon footprint before embarking on entering into any offset BNG contracts, to ensure they can reach their own net zero carbon target.

Furthermore, as this is still a new concept, values need to be carefully considered. With land needing to be set aside for BNG for a minimum of 30 years (with the Secretary of State having powers to increase this as it sees fit), it might have the negative effect of reducing the capital value of the land. This needs to be compensated by the offset contracts between landowners and developers. Tax planning for future generations also needs to be considered for landowners.

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Anna has 15 years’ experience advising on all aspects of planning, compulsory purchase and highways law, acting for a variety of public and private sector clients throughout her career including landowners, promoters, developers, local authorities, central government agencies, regional development agencies, and various NHS Trusts.

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