How offsetting can support the restoration of biodiversity in the UK
David Hill CBE, chairman of the Environment Bank looks at how biodiversity has entered into the mainstream of legislation and how restoration can ramp up in the UK and globally.
How will we avert the existential threat posed by biodiversity loss? Until very recently, biodiversity conservation was firmly the domain of the environmental NGOs, globally. But a range of initiatives, notably ‘The Economics of Ecosystems and Biodiversity’ study, the Dasgupta Review, the 25-year Environment Plan and the Environment Act 2021, together with substantial ground-breaking work by the World Economic Forum, has catapulted the environment and biodiversity into mainstream policy making. I’ve said on many occasions that only by making nature economically visible will we stand a chance of restoring global biodiversity.
We have an opportunity to do that based on the fact that 55% of global GDP relies on what nature provides. We can no longer treat the environment and the biodiversity it supports (or doesn’t!) as a charity case. Private investment into private landholding will be the way to deliver nature recovery at scale. At Environment Bank we have worked out one route to secure that private investment.
Enactment of the Environment Bill included making biodiversity net gain (BNG) mandatory, under which practically all development (in England at this point in time) is required to deliver a minimum 10% uplift in biodiversity as a result of the development project – a milestone in biodiversity restoration and nature recovery. Through the demands of investment fund managers, the Taskforce for Nature-related Financial Disclosure, and other initiatives, it is pretty certain that all corporate entities will need to measure, disclose, reduce and offset (the residual) impacts on natural capital in the same way as now applies legally to development. This will need to include the agricultural sector which has had the biggest impact on nature compared to any other land use.
So, Environment Bank has created a new product called BNG credits that channels funding from development compliance under mandatory BNG, into land management interventions at scale. It relies on the transparency of the ‘biodiversity gain plan’, submitted by the developer in support of a planning application. Within the plan, the developer has to identify and secure the method of delivering BNG. Some will be placed on site but realistically this impacts on the net-developable area and, as with offsite solutions, all on-site provision will need to be registered (either locally or nationally) and, most importantly, funded for 30 years. The costs and risks of this long-term commitment will undoubtedly lead to developers looking to off-site much of the BNG provision – where it provides a better deal for biodiversity in creating larger, more contiguous areas where wildlife can flourish.
To support this demand, Environment Bank is working with landowners and farmers in selecting and securing 30 years of habitat creation and management in large habitat banks ranging from c.10ha – 100ha, at least one in each local planning authority (LPA) area. We guarantee all the development (creation) costs and underwrite the management of the site for 30 years, providing the landowner with a significant income stream. In exchange, we own the BNG credits (and other asset classes we will develop in parallel) that are raised on the land as a result of creation, enhancement and management. Transitioning degraded arable farmland into, for example, a woodland scrub-species rich grassland mosaic, yields the most BNG credits per hectare, as validated by the Defra 3.0 metric. But our credits are generated for the creation of a range of habitats – woodlands, wood meadows, rewilded sites, wetlands and species-rich grasslands.
We are therefore creating a pipeline of BNG credits that we are selling to developers so that they have a secure route to BNG delivery that is accepted by the LPA and that underpins planning permission. Our contractual terms enable the developer to discharge their BNG duties with the LPA, enabling them to proceed with their development unencumbered. They remove costs, risks and liabilities of long-term management themselves and large areas of wildlife habitat are created with a guaranteed future.
As we scale the model for the corporate sector, I am really excited by the prospect of once again being able to see abundant and prospering wildlife in England. I would therefore encourage Scotland, Wales and Northern Ireland to get on board with the initiative and introduce the same approach in the devolved countries. Time is running out.
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