Biodiversity Net Gain – opportunities for landowners, obligations for developers

Blog
Published: 6th December 2021
Area: Corporate & Commercial

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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 sites 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 and what does this mean for Developers?

Biodiversity net gain (BNG) sits within the Environment Act 2021 which received Royal Assent in November 2021. The act requires, amongst other things, that all development schemes in England must deliver a mandatory minimum 10% biodiversity net gain which must be maintained for a period of at least 30 years. This is now a legal requirement.

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.

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

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

  3. Onsite restoration – measures taken to restore the habitat involved

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

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 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.

Get In Contact

Amy specialises in agricultural property law, bringing more than 16 years’ experience.

She advises on a variety of matters such as buying and selling farms and estates, agricultural tenancies, easements, bank security work, and advising landowners on diversification projects such as commercial leases and selling land for development.

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