High biodiversity credit price sets the scene for a planning revolution

At the end of July, government announced the price list for statutory biodiversity credits and they are pretty eyewatering – but what lies behind this and what are the implications?

From November this year – the precise date is still to be announced – or spring next year for smaller projects, it will become compulsory for all but the smallest planning applications to promise to provide at least 10% biodiversity net gain (BNG).

Angus Walker is planning infrastructure partner at law firm BDB Pitmans

This means that whatever habitat is lost due to the development must be more than offset by an improvement elsewhere guaranteed for at least 30 years. This is calculated by reference to a “biodiversity metric” produced by Natural England, that scores habitats according to their distinctiveness and condition, giving a score in “biodiversity units”. For example, if a site to be developed is valued at four units, then land somewhere else must be improved to the value of at least 4.4 units.

The idea is that improvements should preferably be found onsite or at least adjacent to the site in question, but if that is not possible at all or to the full extent required, the next option is to look for land provided by other landowners and brokers that will be published on a national register and pay them to improve it and maintain the required habitat. This is known as “biodiversity gain land” and the government hopes that a market will be created for buying and selling such land – indeed brokers are already springing up and enhancing land in advance. The advance development meets the legislation as long as the enhancement happened after 30 January 2020.

The final backstop option, if onsite and offsite land cannot be found to the required specification, is to buy statutory "biodiversity credits" from the government. It is the price of these that has just been announced.

They have been made deliberately expensive so as not to interfere with the market in biodiversity units and they range from £84,000 to a huge £1.3M for a single unit, depending on its habitat rarity. Although a developer will simply pay money and not know what is going on behind the scenes, the government has said it will use the income to buy offset land and also pay for the implementation of the regime, so that is another opportunity for landowners and brokers.

The government is calling biodiversity credits “statutory credits” to try and reduce confusion with “biodiversity units”, which is what the metric score is in. As an example of the cost of biodiversity credits, one acre of land, classified by an ecologist as being vacant or derelict land in moderate condition habitat-wise, would require a payment of just under £150,000 for sufficient credits to meet the biodiversity net gain requirement. Biodiversity credits are certainly deliberately expensive.

Since the biodiversity gain register is only expected to be opened shortly before BNG becomes a statutory requirement, it may be that, to start with, land on the register will also be very expensive and prices will approach the credit value. Over time this should settle down as more land becomes available and competition sets in, although I was disappointed to hear that the government do not want the biodiversity gain register to become the marketplace for buying and selling BNG land, when it is the obvious candidate – it may become so anyway, by default.

The publication of the high credit price should finally concentrate the minds of developers as to the significance of this revolution in planning that is less than four months away. Unless onsite land can be found that is suitable for habitat improvement, a hefty additional cost will have to be met that may affect a development going ahead at all.

  • Angus Walker is planning infrastructure partner at law firm BDB Pitmans

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