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Defra BNG consultation: Putting policy into practice

Published on March 29, 2022

An introduction to BNG

Biodiversity is an issue that has risen up the development policy agenda in recent years. In 2018, the UK government first consulted on making biodiversity net gain (BNG) mandatory for new development through the planning system and included provisions for mandatory BNG in the 2021 Environment Act. In January, the Department for Environment, Food & Rural Affairs (Defra) began its current consultation on BNG, considering how to effectively implement this new policy, which will require most substantive developments and nationally significant infrastructure projects in England to deliver at least a 10% biodiversity net gain on the pre-development biodiversity value.

The BNG policy aims to create positive outcomes for nature through a clear process for developers to follow. However, the scale of potential new obligations is significant and needs to be fully understood to keep the development sector moving. On 17 March, RSK hosted a virtual event bringing together policy, legal, investor, industry and practitioner perspectives to explore what the consultation means and what challenges and opportunities are anticipated in implementing the new BNG policy across the development industry.

Our key takeaways from the event are set out below.

What issues do the key sectors think need further clarity within the BNG proposals?

During the event discussions, there was broad approval for the proposed new policy objectives. Many of our sector participants thought that the policy could effectively improve biodiversity outcomes with the twin benefit of improving communities’ access to nature. It was generally agreed that the new policy would result in increased investment in biodiversity and improved development outcomes and that biodiversity enhancements could even increase sales values for some developments.

However, there were some concerns about how the policy would work in practice and some common themes emerged across the key sectors represented: energy, water, transport infrastructure, residential development and commercial development. These issues are summarised below:

Pressures on land availability may impact on the quality of BNG proposals, as it isn’t always possible to deliver the necessary biodiversity improvements on-site. Questions were asked about whether corporate/estate/national off-site approaches might be more suitable than site-specific proposals to deliver BNG across wider development portfolios.

The proposed use of biodiversity credits was a concern to some practitioners who had previous experience of no credits being available within their locality, which can impact on project feasibility and viability. Developers questioned whether it would be possible to sell excess credits to other neighbouring developers or combine credits together to strategically create BNG.

It was noted that land values can affect the viability of providing credits and that this is likely to cause on-site delivery issues, particularly in South-East England. There was some uncertainty about ‘habitat banking’ and how prices may fluctuate in the future within an unregulated but competitive private market.

Key takeaway: It will be important to understand through the new proposals how much land will be available for off-site BNG requirements and how this market will be regulated.

There was much agreement about opportunities for projects to achieve ‘stacking of multiple benefits’, such as carbon sequestration and flood prevention, along with BNG and this was seen as an opportunity to maximise benefits from a site to make it more viable for a development to proceed. Dr Julia Baker, Biodiversity Technical Specialist at Balfour Beatty, commented, “There are multiple benefits of nature-based solutions – and so loads of opportunities to join up BNG with carbon credits and debts. But effective enforcement and regulation is essential.”

Key takeaway: Developers or landowners shouldn’t be penalised for getting payments for additional benefits if land can deliver multiple ecosystem services that not only deliver BNG but also other sustainability gains.

Many also noted the challenges around the proposed 30-year timescales and the monitoring, maintenance and ongoing funding implications of this. Landowners would be concerned about covenants on land and at present, a lot of management companies don’t have the specialist expertise to ensure habitats are managed in the correct way over longer timeframes.

Key takeaway: Clear mechanisms need to be provided as part of the proposed framework, particularly given the proposals to secure habitats legally through the proposed biodiversity plans.

Challenges were also raised to the proposed biodiversity metric, as in some cases, habitats that would be most appropriate and fitting for the existing landscape do not score highly enough to achieve BNG. For example, habitats such as mixed woodland and wild flower meadows always score highly under the metric, whereas more difficult-to-create habitats, such as heathland or calcareous grassland, score more poorly, even though in ecological terms they were the ‘right’ habitat for that location. It was noted that despite these proposals, questions around protection of habitats and species diversity remain and that it should be recognised that artificially created habitats may not be as valuable as natural ones.

Key takeaway: The correct biodiversity measures should be selected for each location and flexibility will be needed to ensure BNG is appropriate to each setting.

The success of the policy will rely on the ability of the ecology industry to respond. Ecological consultants will need to be able to support the industry and local planning authorities (LPA) to achieve BNG requirements and to monitor projects over the long term. Many LPAs do not have ecologists in-house, so accreditation of practitioners will be key to maintaining the integrity of outcomes. As explained by Jon Davies, Director of RSK Biocensus and RSK Wilding, “The regulation and funding needs to be sorted. The BNG process needs to be trusted, well designed, fair and transparent. And there will need to be money from the government to help LPAs regulate.”

Key takeaway: Clarity in the legislation is required to understand how this process will be fair and transparent. Addressing challenges such as resourcing and accreditation will be critical to ensure the process delivers the biodiversity improvements it is designed to bring.

There were also some sector-specific concerns. It was noted that farmers remain sceptical of how BNG will interplay with longer-term funding mechanisms. Many companies in the water sector that work within a regulated environment already have internal requirements to achieve 10% BNG and have successfully incorporated the practice into their businesses and land management plans. The water industry, among others, regularly uses permitted development rights, and this new requirement may slow down timescales.

Key takeaway: Further consideration is needed of how BNG will interface with permitted development rights and existing funding frameworks.

So what happens next?

Our discussions demonstrated that there are several concerns relating to how the off-site provisions for biodiversity credits will function and how the market will be regulated. It will also be key to understand how BNG will interface with other planning requirements, permitted development rights and existing funding frameworks. Defra will need to provide further clarity on these matters through BNG guidance before the new provisions come into play. As articulated by Richard Broadbent, Director at Freeths LLP, “More detail is needed and sooner rather than later, particularly around stacking [of different natural capital benefits] and how that will work in practice.”

Defra’s BNG consultation is open until 5 April, and we encourage you to submit your response here. Industry feedback is vital if we are to achieve a smooth and successful implementation of BNG policy.

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