Biodiversity Net Gain & Habitat Creation

The next iteration of Biodiversity gain is Biodiversity Net Gain (BNG). BNG within the Environment Act 2021 (the ‘Act’) is a ratcheting up of this process demanding not only the replacement of habitat but a net increase in biodiversity after a development of at least 10% with some local authorities requesting a 30% increase.

How is biodiversity calculated?

In the context of the statutory BNG regime habitat type, condition, distinctiveness, and location are used a proxy for biodiversity. This is because it is much easier to consistently measure changes in habitat than changes in biodiversity. Defra and Natural England have created the Statutory Metric which is used to calculate biodiversity on a site. Information about the type, condition and location of habitat are entered into the metric and it produces the number of Biodiversity Units (BU) the site has.

These BUs can be created anywhere in England and can be bought by developers to offset the impact of their development.

Habitat Banking

The Act has brought in the concept of Habitat Banking. This is where a landowner either enhances the existing habitats on their land or creates new habitats to increase the number of BUs on the land and enters into a legal agreement which results in a Land Charge on the land. The agreement is to monitor and maintain that change for a minimum of 30 years.

The resulting additional BUs can be sold by the landowner to developers who cannot deliver the required BNG on site. The Act has created this market for BUs and has underwritten it with a state Biodiversity Credit scheme as a provider of last resort to ensure the market will work. Those land managers entering the biodiversity market should be aware that their land will be bound into the specific land use for a minimum of 30 years, with this being secured on their land title via a Land Charge registered at the Land Registry. In addition to this a Habitat Bank will need to be added to the National Register as BUs are allocated to a development by registering this on the National Register.

Trading BUs

Landowners may wish to create biodiversity units on their land either for sale within the BNG market or outside this regulated environment.

The creation of Habitat Banks will result in tradeable accredited units. With BNG units only being required at the point of implementing planning permission, it is likely that , most of these trades will be on an Option basis rather than an outright sale and because of the way the Statutory Metric calculates BNG, until the donor site is identified, and the specific development is permitted, the actual calculation of BNG cannot be finalised.

Do you have land that could be used to provide BNG units either within the market or outside of it?

The Natural Capital Exchange allows you to register that site with us so that when we get a requirement within your locality, we can match the two together.