With Biodiversity Net Gain (BNG) recently coming into law, it’s important that developers and associated parties get to grips with some of the technical elements of the legislation to successfully work through planning. In this article, Ian Hambleton, Director of Biodiversity Units UK, a company that assists property developers and their consultants in sourcing BNG Units dives into more detail on two of the elements of BNG – the DEFRA Metric and the Spatial Risk Multiplier – a key principle of BNG. Successful applications will need to understand and utilise these tools to deliver a compliant planning application.
The new law makes 10% BNG mandatory in England for all new developments after this date (with some smaller developments excluded until April). To put this into perspective, the average number of planning applications submitted in England was 395,600 in the year ending March 2023.
BNG requires developers to ensure that new projects result in a quantifiable increase in biodiversity compared to the pre-development state. This entails not only conserving existing habitats but actively creating new ones, such as green spaces, wetlands or wildlife corridors. By prioritising the enhancement of natural environments, BNG should foster resilient ecosystems capable of supporting a wide array of plant and animal species.
In many ways, Biodiversity Net Gain is an innovative, calculated instrument that puts a value on our country’s biodiversity and natural habitats. Some will argue that BNG adds an unnecessary barrier and cost to development in England, but in my estimation, it provides a robust framework for balancing development and nature recovery.
As part of the new law, the Mandatory DEFRA Metric is used to calculate Biodiversity Net Gain (BNG) Units in England. You can find detailed information about this metric and its usage on the official DEFRA (Department for Environment, Food and Rural Affairs) website or by consulting with relevant authorities for the most up-to-date guidance.
Where a development cannot achieve BNG either wholly or partly on-site, then the developer can achieve the unit shortfall by securing a bespoke site for net gain or from appropriate sites on the local net gain habitat market from other landowners.
In simple terms, developers have three choices for their Biodiversity Net Gain:
Option one is to provide ‘BNG onsite’. This is the preferred route, but in many cases almost impossible and commercially unviable. We are starting to see schemes from developers and ecologists who are attempting to deliver improved biodiversity on site but this tends to be only a portion of the overall requirement.
Option two is via an ‘Offsite BNG Provider’ like us, Environment Bank or Biofarm. This is often more viable and less expensive than the third and final choice for developers
Option three is ‘Credits of Last Resort’. These credits are delivered by Natural England, and as the name suggests, these are the least preferred option in the legislation and tend to be very expensive.
Depending on the option a developer chooses, they will then need to work with their ecologist and solution provider to fill in their mandatory DEFRA Metric. This metric can be best described as a fairly complicated Excel spreadsheet with inbuilt rules and macros that spit out requirements for BNG. When correctly completed, it demonstrates via a selection of rule-driven tabs and columns, that the project is compliant and achieves 10% BNG.
For developers, it’s important that the parties you engage with understand and are confident using this tool. Both your ecologist and your unit provider will need to complete sections of the Metric and understand the spatial risk multiplier. This process requires significant knowledge of biodiversity habitats, the rules of BNG, and the specific parcels of land being provided as part of your solution. You can find support by working with experts in this space. Companies like ours can help with this process and have the necessary expertise and knowledge to guide you through the process.
Within the DEFRA metric, the Spatial Risk Multiplier is a rule-based system that penalises the unit provider based on the distance that the unit is delivered from your proposed development. On the developer side of the fence, arguably this isn’t their concern. They need to purchase a certain number of BNG units. However, for the offsite provider, the situation is more complex.
They may need to provide 1x, 1.5x or 2x the units to compensate. Depending on whether they are located in the developments LPA (Local Planning Authority) / NCA (National Character Area) they could just provide one unit. If they are in the adjoining LPA / NCA it’s 1.5x or if they are located outside this area as many as two units for each one needed by the developer. In doing this, the Risk Multiplier is incentivising local nature recovery and if that isn’t possible, it encourages delivering significantly more biodiversity the further away from the development site.
You might wonder why this is even a thing, and surely BNG units can be sourced locally. However, we expect that for some time, units may be unavailable to many local authorities. The demand will significantly outstrip supply and in some LPA’s such as London or densely built-up areas, there may never be enough BNG.
In many ways, the DEFRA Metric and Spatial Risk Multiplier delivers a well-thought-out instrument as part of the legislation. It factors in a preference to deliver biodiversity locally to planning developments, which is likely favourable to residents and planning authorities. However, it’s not commercially naive enough to believe that BNG can be delivered anywhere in England. Over time, it’s also likely to ensure that Offsite BNG providers will favour locations closer to significant development regions, putting a premium on these units. The Spatial Risk Multiplier incentivises nature closer to development, but it also provides practical solutions if this isn’t possible.
From what we’ve seen in the early stage of the market we expect the rollout of BNG to be slightly bumpy. Whilst we are extremely optimistic about the role of Biodiversity Net Gain both for nature and the reputation benefits within the property industry, it is important to recognise that, like any new market there will be challenges in implementing this new legislation and scaling up its delivery.
As an example, we are already witnessing a significant shortage of approved Section 106 agreements in England. These agreements serve as the necessary paperwork until conservation covenants are fully implemented. Although there are reportedly a large number of BNG unit providers, very few of them have been granted their Section 106 agreements.
Of course, as more units come on stream and are available this volatility in pricing should settle down and become a much more standard part of development. But during this early phase developers and their associated parties should try to get to grips with some of the technical aspects of the law, or work with companies who are keenly abreast of the legislation and can offer commercial advice on how to navigate through the process.