How can high quality habitats be rewarded?
Off-site BNG is driven by development needs, where most greenfield sites require compensation for removing low-medium distinctiveness habitats such as cropland and grassland. Furthermore, the BNG market currently favours basic habitat types like ‘other neutral grassland’ and ‘mixed scrub’ due to their ease of implementation and lower delivery risk which the metric awards a higher biodiversity unit yield than habitats with higher risk factors. We may find that Nationally Significant Infrastructure Projects (NSIPs) increase the need for such higher distinctiveness habitat types when they are mandated to deliver 10% BNG from November 2025.
So how can we incentivise habitat banks to create high quality habitats and get developers to purchase them? This comes back to the functionality of the metric where the risk multipliers could be manipulated based on the conditions of the habitat bank in question. Where a site’s geology and other characteristics lend themselves to a higher distinctiveness habitat, such as lowland calcareous grassland, the difficulty risk should be reduced allowing for the full value of the biodiversity uplift potential to be accounted for. This can only work where ecologists are being ambitious yet realistic in what is achievable given the resources that will be available for the physical delivery of the scheme. The metric should also recognise the additional value when better ecological outcomes are achieved than those initially targeted. Furthermore, to incentivise developers to purchase these higher distinctiveness habitat units, the metric could change the quantity of units required where trading-up occurs, so developers impacting low-medium distinctiveness habitats can offset through delivering high-very high distinctiveness habitats at a ratio of 1:0.8, for example, rather than 1:1. This would help offset the expected higher cost of these higher quality habitat types.
Policy should go further in distinguishing between amenity greenspace and biodiversity outcomes. Where an area is lacking in accessible natural greenspace there is undoubtedly significant benefits to prioritising the delivery of habitat creation in that area and new developments implementing BNG on-site can serve this purpose. However, it is important to recognise that this is not principally delivering benefits for biodiversity. To truly maximise biodiversity we turn to the Lawton Review published in 2010 which emphasises the importance of more, bigger, better, and joined up areas for nature. The upcoming Nature Recovery Network (NRN) and Local Nature Recovery Strategies (LNRS) have been developed to provide a roadmap for the optimal delivery of nature recovery across England and are expected to influence the delivery of BNG, though perhaps policy could go a step further to promote the benefits of habitat banks whose primary objective is enhancing biodiversity. Only by aggregating resource to fund more cost-effective landscape-scale initiatives in strategic locations can the best outcomes for nature be achieved.
Managing risk
The main risk in delivering BNG is likely to be the landowner's failure to implement plans correctly. The complexity lies in determining how far a landowner can reasonably be expected to go to achieve the habitat outcomes through adaptive management during the 30-year scheme period. It is worth noting that the science of habitat creation is not well-advanced, so predictions are uncertain, and a buffer is needed to account for these uncertainties.
It is difficult to provide insurance for 30-year policies as the external risks need to be quantified and many can be unforeseen (e.g. colonisation by novel invasive species). Insurance needs to carve out anything that would be due to landowner failure and there needs to be a mechanism to deal with unforeseen events.
Additionally, the timing of an incident during the scheme should be accounted for. If habitat establishment is successful for 27 years but fails in the 28th year a reasonable resolution should be agreed that does not involve re-starting the scheme from the beginning to ensure cost implications to the landowner are proportionate and recognise the extent of time habitat delivery was successful.
Another key issue is not having robust legal agreements for the implementation of off-site BNG. It is the s106 or Conservation Covenant that will set out what is deemed failure of habitat delivery and detail the enforcement measures, which is currently bespoke to each habitat bank scheme.
More government guidance is needed on managing risk, insurance and enforcement specifically for BNG schemes.
The complexities of trading biodiversity units
The biodiversity metric and national Biodiversity Gain Sites Register are not built for trading biodiversity units and at present habitat bank providers are fully accountable for such trades, which presents an issue for scheme credibility.
Habitat banks spanning multiple Local Planning Authority (LPA) areas and National Character Areas (NCAs) are administratively complex for biodiversity unit trading. The habitat plans and metrics must account for these boundaries to ensure the spatial risk multiplier is used correctly when allocating units to developments. Furthermore, schemes creating habitats in advance of allocations need to account for the temporal multiplier in the metric as the scheme progresses, only applying the additional uplift awarded by the metric for those areas where units have not yet been allocated. There needs to be a standardised system for this administration to prevent errors in tracking biodiversity unit capacity within schemes and issues with double counting.
Another issue is where funds from biodiversity unit sales should be held. Legal agreements that seek to hold funds in escrow or bonds have a significant implication on the financials of a scheme. Where a habitat bank provider has a high covenant strength this should be acknowledged, and they should be able to hold the funds themselves. Furthermore, providers whose principal objective as a business or charity is to implement environmental enhancement should be permitted access to the funds immediately, without the need to draw down funds over the scheme period, in the knowledge that this is what the funds will be used for.
Additionally, some LPAs/responsible bodies are requesting that the allocation of biodiversity units from habitat banks is ceased if there has been a breach in the s106 agreement/Conservation Covenant. However, this could have significant negative implications on scheme delivery due to a lack of funds. There needs to be more guidance on appropriate and reasonable enforcement measures.
Some habitat banks are unable to get to the point of physical habitat delivery and biodiversity unit trading due to a lack of capacity within LPAs resulting in their inability to enter s106 agreements. Responsible bodies present an alternative solution, however due to this being a novel role there is concern over the speed at which a Conservation Covenant can be agreed, and the cost involved which are significantly higher than the s106 route with LPAs.
To address these challenges comprehensively there needs to be more government guidance.
