Biodiversity Net Gain (BNG), a policy aimed at delivering benefits for nature, is adding further complexity to the development process. While many developers are seeking to achieve BNG by incorporating habitat provision into development sites, better value for developers and outcomes for nature might be achieved through offsite provision of habitat by third parties.
We caught up with Senior Surveyor Christy Wells, a natural capital expert in our agribusiness team, to learn more about why he believes this presents an opportunity for developers to deliver better value through a strategic approach to BNG:
Following its introduction across England earlier this year, the reality of Biodiversity Net Gain (BNG) policy, which requires developers to enhance biodiversity by at least 10% and secure it for 30 years, is becoming clearer.
Addressing BNG necessitates a strategic approach to avoid hindering the development and planning process. Considering the costs of delivering BNG over its 30-year obligatory lifespan is vital. Treating it as an afterthought can lead to delays, additional expenses, and challenges, especially for smaller, constrained sites that may face disproportionately high costs.
The BNG framework prioritizes onsite habitat provision within developments over offsite mitigation. However, constrained sites, particularly those with distinctive habitats, may find onsite creation impractical or cost-prohibitive due to long-term management needs. Additionally, onsite provision does not always yield the best outcomes for nature.
In many instances, offsite provision offers greater potential for creating strategic, less fragmented habitats while enabling developers to better manage their costs. Though offsite provision typically requires third-party land, various emerging options can assist developers in meeting their BNG obligations.
Understanding BNG requirements and exploring available options early in the development process is crucial for managing risks and costs while ensuring the best outcomes for nature.
Nine months into mandatory BNG, the development sector is still adapting to its impacts and processes. Many developers are seeking ‘oven-ready’, fully registered units to immediately discharge BNG conditions. As of now, 33 fully registered habitat banks are listed on the net gain register, but the availability of units remains uneven across regions and unit types. The development sector ideally needs a liquid, competitive market of units to help smooth the planning process.
While many potential habitat banks are at various stages of development, most are not fully registered due to pending legal agreements or market uncertainty. Few providers commit to registration without securing buyers, leading to a potential undersupply of units and constraints, particularly for smaller sites where this has a greater impact on viability.
Developers have three main avenues to secure units:
Firstly, developers can directly purchase units from habitat banks at costs ranging from £25,000 to £35,000 per area-based unit, depending on various factors. However, supply constraints, the novelty of the process, and the need for habitat banks to account for unknowns over the scheme’s lifespan means costs are high. This option mitigates associated risks and allows quick resolution, making it suitable for smaller sites. However, availability remains a challenge. Habitat bank providers range from landowners managing their own banks to third-party operators collaborating with landowners. These third parties offer joint ventures, partnerships, and lease structures, potentially improving unit availability in the future.
Secondly, developers may negotiate agreements with landowners to supply units for specific projects. This reduces risks for the landowner by ensuring they have a known market for their units and allows cost sharing and pricing to be agreed upon upfront. Platforms like Fisher German’s Green Offset facilitate these matches. While bespoke agreements may offer cost savings, they are time-sensitive and better suited for niche requirements. As the market matures, these opportunities may diminish.
Finally, developers can utilize their own non-strategic land for habitat bank creation, unlocking value by delivering units at cost. While this approach involves significant expenses and compliance risks tied to the 30-year obligations of BNG, it can be effective with strategic planning. For developers with available land and anticipated demand, this option has proven viable but requires careful consideration of liabilities and long-term management.
Currently, many advertised units are a mix of the first two options. Habitat banks often complete preliminary groundwork before seeking buyers to justify registration costs. This intermediate approach reflects the early-stage nature of the BNG market.
Developers must understand the available models and evaluate their suitability for specific circumstances. Each approach has upsides and downsides, with much of the risk tied to long-term land management and compliance. Landowners providing long-term management must assess their capabilities and responsibilities over the 30-year period.
While some scepticism surrounds BNG’s opportunities and the scale of the market, offsite delivery often emerges as the most practical choice. With diverse models available, developers and landowners can find cost-effective offsetting solutions tailored to their needs. Although the BNG market is not yet fully liquid, it is growing, and developers that can understand it early will benefit in the long term.
