As we reach the first anniversary of mandatory biodiversity net gain requirements for most planning applications of England, Samantha Willis, senior biodiversity consultant at Ramboll, looks at the impact of the regulations and where the market will go next
February 2025 marks the one-year since biodiversity net gain (BNG) became mandatory for most planning applications under the Environment Act 2021, with developers in England required to deliver a minimum 10% net gain on their developments, through on- or offsite mitigation or via biodiversity credits.
The metric that underpins the BNG process was created in 2012 and has been applied to developments voluntarily by various developers for many years since. The Statutory Metric is therefore built on years of knowledge, trial and lessons learned, giving mandatory BNG a solid start backed by years of application.
Since the onset of mandatory BNG, Natural England has reported that local planning authorities are engaged and upskilling on the BNG process, and that 19 net gain sites are already established on the Natural England BNG register (land managers must register gain sites to show how and where developments are improving biodiversity offsite).
Increasingly, there are positive news stories highlighting projects that are on track to achieve significant net gain. As mandatory BNG is relatively new, there are challenges around its governance, guidance and application to overcome.
Currently, the statutory process is under “active review” by Defra, which is examining whether the process is “working the way in which [Defra] intended”.
This review provides an opportunity for positive change and clearer and more stringent guidance to ensure BNG continues to achieve positive results for biodiversity.
Biodiversity Credit Markets
By creating a demand for biodiversity units, mandatory BNG is a catalyst for creating a new market for conservation covenants.
As more developers require offsite biodiversity units to supplement their onsite biodiversity gains, landowners can diversify their income, while managing their land for the benefit of biodiversity.
Further investment opportunities have also been created via habitat banks, with the Environment Bank reporting over 6,500 acres of habitat creation in progress.
Habitat banks function as repositories of ecological value, and the growth of habitat banking should lead to the rehabilitation and restoration of degraded and damaged
habitats, the strengthening of Nature Recovery Networks and the protection of more habitat.
Defra has encouraged the growth in offsite biodiversity unit availability by marking up their biodiversity credit prices. They estimate that, once established, the market for offsite units will be worth between £135m–£274m annually.
This enhanced valuation of biodiversity will further encourage developers to incorporate BNG into their planning and development processes earlier and more intensely.
The availability of biodiversity offsetting units or credits will support developers facing issues such as site constraints. However, regulation requires that the principles of BNG should be followed stringently and evidenced when applying offsite offsetting.
It is important to ensure that the cost of biodiversity units does not unfairly penalise small developers over large developers, who will have more financial ability to purchase biodiversity units, and to ensure that the market-driven approach to offsites does not lead to a preference of purchasing credits over onsite mitigation, which can lead to negative impacts environmentally and socially.
The correct application of offsite offsetting can be enforced by local planning authorities (LPAs) applying their knowledge of the mitigation hierarchy to planning applications and further emphasis on the good practice principles that underpin the BNG process.
In addition to supporting a biodiversity market, the mandatory BNG process also protects high-value and irreplaceable habitats by pushing developers to follow the mitigation hierarchy by avoiding impacts to these habitats where possible, and providing bespoke mitigation where losses cannot be avoided.
A potential hurdle to overcome is the availability of rare habitats within the biodiversity unit market. Purchasing units for habitat types such as lowland mixed deciduous woodland or open mosaic habitat could become a challenge for prospective buyers, as preference has been shown to habitats such as other neutral grassland and mixed scrub, which are generally easier to create and have a higher unit yield per hectare over rarer habitats, which are trickier to manage and take longer to establish.
It is therefore important for governance to further incentivise habitat banks and landowners to create rare and irreplaceable habitats where the land allows. This would potentially lead to an increase in rare, high value habitats across the country, benefiting biodiversity and local wildlife.
Governance and regulation
The introduction of mandatory BNG has been a vital step in ensuring that BNG application is regulated and monitored. LPAs are tasked with ensuring planning applications meet BNG requirements, reviewing BNG plans and monitoring compliance.
This applies important pressure to developers to ensure they are carrying out BNG appropriately, and that their BNG process is undertaken by persons with the necessary qualifications.
As of now, there remains uncertainty around how BNG will be enforced post-planning permission, although the government has provided guidance, funding and resources to LPAs to support the transition into mandatory BNG.
Already, councils have produced thorough BNG policies and approaches around the application of BNG.
The review of the Statutory Metric may provide opportunities to tighten regulation where there are gaps in guidance, to ensure a consistent approach from all LPAs. For example, the statutory BNG guidance around irreplaceable habitats states that bespoke mitigation must be agreed upon.
While LPAs get up to speed on BNG, it is possible that the interpretation of this guidance may vary between LPAs and lead to an uneven response to irreplaceable habitat loss.
The review of the mandatory BNG process also provides the opportunity to add additional guidance on how to achieve the more complex principles, for example, how to account for additionality, how to enhance ecological connectivity and optimise sustainability.
The inclusion of guidance on how to enhance biodiversity qualitatively, such as through creating habitats for local wildlife species onsite, into the mandatory process could also lead to additional biodiversity “wins” for developments and wildlife across the country.
So far, the statutory process has been recognised as a robust method of protecting and enhancing biodiversity and mitigating losses of habitats, demonstrated by adaptations of the Statutory Metric being used on a global level to further sustainable development.
