Biodiversity Net Gain – Key considerations for developers
Biodiversity Net Gain (BNG) is on its way, and now is the time to understand and start planning for its impact on development!
BNG represents a fundamental change to the planning system and, once in force, will be a mandatory requirement for the majority of development proposals. Getting an efficient, transparent, and accountable BNG system up and running nationwide will be no easy task. In practical terms, it will require new secondary legislation. More significantly, BNG will also require the creation of an entirely new market where biodiversity units can be created and sold, as well as developing the skills and resources across the sector needed to implement the requirement.
DEFRA has recently concluded their consultation on BNG Regulations and Implementation. Until the Government issue their response, there remains some uncertainty regarding the details of how BNG will work when it is introduced in November 2023 following the transition period. Nevertheless, it is important that all those involved in the planning process seek to use the intervening period to get to grips with the challenges and opportunities presented by BNG. Here we briefly outline how BNG is likely to work, and highlight some of the specific considerations for developers.
What is BNG?
BNG is a mandatory requirement introduced by the Environment Act 2021 that requires developers to ensure new proposals feature at least 10% improvement to biodiversity. The Environment Act, and therefore BNG, only applies to England.
Biodiversity Net Gain (BNG) is ‘an approach to development, and/or land management, that leaves nature in a measurably better state than beforehand’. The key word here is measurable. BNG takes a standardised, quantifiable approach to habitat enhancement based on a biodiversity metric and the approval of a Biodiversity Gain Plan. Any BNG must be guaranteed for 30 years, which will be secured by a Section 106 agreement or ‘conservation covenant’. Importantly, any BNG requirement will be paid for by the developer.
Which development will need to provide BNG?
It is currently proposed that almost all applications in England will require BNG, including small sites. Exemptions are likely to be limited to:
– Developments impacting habitats below a de minimus (minimal) threshold
– Householder applications
– Change of use applications
Permitted development (PD) is also exempt (which may be an influencing factor in deciding whether permission for a proposal is sought via the PD or planning application route).
It is currently proposed that brownfield sites will be subject to BNG. However, there are calls (including from the RTPI) for the Government to exempt brownfield sites as the requirement may deter regeneration efforts. In some cases, the biodiversity value of a brownfield site can be surprisingly high, particularly if a site has laid vacant for several years and flora and fauna have become re-established. There are also likely to be limited opportunities for on-site or nearby off-site biodiversity compensation in urban areas.
It is currently proposed that smaller developments will remain within the scope of BNG (albeit subject to a simplified biodiversity metric). However, DEFRA have sought views on this and there may yet be changes, with possibilities such as a longer transition time being considered.
When will BNG come into force?
Mandatory BNG is set to come into force for all applications submitted in England in November 2023 (with the exact date to be confirmed). The transition period for Development Consent Orders (DCOs) is longer and will take effect in November 2025.
November 2023 is only 18 months away and, for many proposals, particularly larger scale ones, developers may already be assessing potential sites and/or in the early design stages of a project. It is therefore important that BNG is considered now as there may be a need to secure additional land and/or account for the cost of purchasing credits.
Furthermore, as BNG is already encouraged in the National Planning Policy Framework (NPPF), and an increasing number of local authorities have their own Local Plan policies in place (in some cases, these local policies exceed the statutory 10% requirement), we are finding that BNG evidence is being requested more frequently by LPAs to inform planning applications.
How BNG works
At the heart of BNG is the mitigation hierarchy. Developers should do everything possible to first avoid and then minimise impacts on biodiversity. Only as a last resort, and in agreement with the LPA where possible, should developers seek to compensate for losses that cannot be avoided.
It is particularly important to avoid any impact on ‘irreplaceable’ biodiversity, as the Environment Act includes provision to exempt irreplaceable habitats from the mandatory BNG requirement. The NPPF already includes a list of ‘irreplaceable habitats’ such as ancient woodland and blanket bog, but this list is not exhaustive. Natural England is therefore expected to issue draft guidance on what is considered a definitive list shortly (by Summer 2022). Clearly, if a potential development site includes any irreplaceable habitat, this should be highlighted as a planning risk at the site selection stage.
Biodiversity compensation for any loss as a result of development can be delivered on-site, off-site or via a new statutory biodiversity credits scheme (the latter being set up by the Secretary of State).
The priority will always be for on-site delivery. This is likely to have implications in the design and viability of any scheme, so should be considered at an early stage (and indeed, the costs associated with providing BNG compensation could feed into negotiations with the relevant LPA regarding other s106 contributions). It is possible to mix on-site and off-site BNG provision. Land nearby the application site will being afforded more value than land further way. All off-site gains must be delivered within England.
Developers should be aware that the Government’s statutory biodiversity credits will only be available as a last resort and will be deliberately set at a high price to try and kickstart (and not undermine) the BNG market. Biodiversity credits will therefore not be an easy ‘go-to’ option to meet BNG requirements – although, in some cases, they may be the only option whilst the BNG market becomes established.
The BNG requirement will be framed as a pre-commencement condition, meaning that the biodiversity gain condition must be discharged before development can begin. To discharge the condition, the planning authority must approve the development’s Biodiversity Gain Plan. Biodiversity Gain Plans will therefore increasingly become a common submission document in support of a planning application (with the planning application or at the condition stage).
How is BNG measured?
BNG is measured using the Biodiversity Metric developed by Natural England (Natural England has just released Version 3.1 of the Metric).
This standard industry metric is used to measure, and give a score to, the existing baseline condition of a site i.e. the ‘pre-development value’. The metric is then used to predict the future biodiversity value, including any contributions provided by creating or enhancing habitats offsite i.e. the ‘post development value’.
The ‘pre-development value’ is calculated using three site-specific factors:
1. a ‘distinctiveness’ score which gives a score to the type of habitat e.g. modified grassland has a “Low” distinctiveness score, lowland meadows are “Very High”;
2. a ‘condition’ score – a score based on the biodiversity value of the habitat relative to others of the same type; and
3. a strategic significance – a score based on whether the location of the development and/or off-site work or the habitats present/created have been identified as significant for nature.
The site area is multiplied by these factors to give a ‘biodiversity unit score’.
The above calculation is repeated for the ‘post-intervention’ scenario, with three further factors discounted:
1. difficulty of creating or restoring/enhancing a habitat;
2. a temporal risk i.e. how long the habitat takes to establish and reach a target condition; and
3. a spatial risk – the closer the enhanced habitat to the site, the better the score.
The ‘post-development score’ needs to be at least 110% the number of pre-development units in order to meet the mandatory BNG requirement.
A key rule for using the metric is that habitats cannot be ‘traded down’. The loss of habitats needs to be compensated for on a ‘like for like’ or ‘like for better’ basis.
Site Area x (distinctiveness x condition x strategic location) = Pre-development score
Site Area x (distinctiveness x condition x strategic location)
discount – (difficulty of creation / time until target conditions / distance from site)
= Post-development score
Post-development score – pre-development score = Biodiversity Net Gain
From a developer’s perspective, it is important to have a clear understanding of a site’s baseline position at an early stage – ideally at the site acquisition stage. This will enable the developer to know the level of post-intervention biodiversity compensation required and to then either design this into proposals or to start looking at off-site options. It will also form the basis of any Biodiversity Gain Plan.
Whilst the Biodiversity Metric 3.0 is designed to quantify BNG, there remains an element of professional judgement, particularly if a site does not fit neatly into the metric. Early input into a development from an experienced ecologist can therefore pay dividends in the longer term.
Developers should also be aware that the biodiversity metric scoring system provides an incentive for the advanced creation of habitats or ‘habitat banking’ – again, another reason that it may be beneficial to consider BNG sooner rather than later in the development process. There may also be opportunities for developers to sell on or ‘bank’ any biodiversity units should a development create a surplus.
BNG will no doubt continue to evolve until it comes into force in November 2023. In the meantime, we trust this is useful in giving you a flavour of BNG and the potential implications for developers. Should you have any specific questions, please feel free to get in touch with one of the Firstplan team.