Biodiversity net gain: unpacking definitions

What is Biodiversity net gain (BNG)?

BNG is an initiative to boost the biodiversity of new development sites in England by 10% from its previous baseline prior to the development, which will come into effect from January 2024. It will be mandatory for all developers to implement land into BNG under Schedule 7A of the Town and Country Planning Act 1990, through habitat creation or enhancement, whether on-site or off-site. This is where farmers and landowners come in, with this mandatory need to improve biodiversity, developers may approach farmers to use their land as an off-site solution. This is in the form of ‘units’ that can be sold to developers as BNG credits, which can provide additional income on farm.

These units come with some caveats that we will explain throughout this article, including specific actions that need to be undertaken to gain credits in an off-site agreement. These credits can be sold by landowners in a lump sum, staggered, or results based payment. There are statutory credit prices available here but these are not guideline prices for off-site units, so prices could vary.

How can BNG and other environmental payments combine?

Additionality

For offsetting credits, additionality should be proved, where the change in biodiversity would not have happened without the funding from credits. In this case, the gains made in improving biodiversity either on or off-site for developers would not have occurred without the investment (purchase of credits). There should be additional, measurable, benefits to the biodiversity creation and enhancement that would not have taken place without the investment into credits. Having proved this additionality, farmers and landowners will be paid per credit per hectare of land that is under BNG. However, this land comes under some rules concerning stacking and bundling, and the multiple use of one piece of land.

Stacking

Stacking in BNG allows for additional schemes to be ‘stacked’ on top of another on the same parcel of land. This could include BNG and another ‘ecosystem service’ such as carbon credits, or nutrient neutrality, providing different environmental outcomes have been met and clearly defined. These are from multiple buyers with multiple contracts on the same parcel of land, for example this could include being paid for BNG units by a developer and carbon credits by a corporation with a net zero strategy on separate contracts, delivering different outcomes. Farmers cannot be paid for the same public good twice, this is called double counting.

Bundling

Bundling in the context of BNG allows multiple ecosystem services to be ‘bundled’ together by one buyer with one contract, compared to stacking with multiples on the same parcel of land. Like stacking, this could involve BNG, and other ecosystem services purchased by one buyer with a corporate net zero strategy for example.

Main considerations

One thing to consider is the length of the contracts entered under BNG. These contracts will have the habitat secured for at least 30 years through planning or conservation agreements. This is important to note if you are a tenant farmer, and you should have a look at the length of contract you are under. For more information on tenant farmer’s rights and considerations in natural capital markets, see here.

Another thing is the different timescales for BNG and carbon credits. As mentioned above, BNG credits may take longer to come into fruition than other schemes, it is worth exploring the detail of BNG, carbon and other schemes to know the options available. This could leave a funding gap in the time between the sale of carbon credits and sale of BNG credits.

Finally, think about the cost of taking land out of production and maintenance of BNG, to complete BNG for 30+ years. Is the value provided by BNG credits enough to compensate for a loss of productive land, and is there another plot that is more suitable?