Biodiversity Net Gain (BNG) legislation aspires to harmonise real estate development with nature recovery. Yet, within this framework lies a paradox – development often impacts nature forever, whereas Biodiversity Net Gain only compensates for these permanent impacts with temporary mitigation and compensation.
The BNG principles require mitigation and compensation to be secured for at least 30 years, but this has become a target rather than a minimum. This policy decision by Defra bodies is founded on a financial model in the Government’s Green Book, where a pound in the future is worth less than a pound today. These diminishing values, over time, tail off after approximately 30 years, at which point the reduction in value is de minimise.
The quantification of nature is immensely complex, and the progression to mandatory BNG is a huge step in the right direction. However, the 30-year policy is driving business models and behaviour that may also hinder long-term nature recovery. Landowners putting their land into offsetting consider these diversification opportunities as temporary, in the same way that government grants are considered for environmental stewardship. It has also opened the door to business models where specialist offset providers lease land and return it to the farmer on expiration of the obligation. Many landowners considering this leasing model or self-driven diversification, intend the land to be returned to productive agricultural land, or at least under current legislation, they would be at liberty to do so unless future new legislation suggests otherwise.
Many councils are looking at plan-level viability to justify going above the 10% net gain, but few are putting the 30 years under the microscope. This is understandable because the longer nature is required, the more exposure and risk there is to cost fluctuations and the greater the barrier to landowners wanting to diversify their portfolios, resulting in more expensive biodiversity units.
For developers, why should they care about this temporal element of offsite BNG? Well, many small and some medium-sized development companies won’t care because public legacy is unlikely to be at the forefront of their minds – most are more acutely focused on the immediate bottom line. Larger-sized development companies frequently have a much longer-term view, considering reputational risks and the genuine benefits to local communities by placemaking. Fast forward 30 years, not only has a development site permanently destroyed the habitat it was built on, but the habitats created to compensate are no longer protected. Our landscape is still at risk of becoming further depleted of nature than today.
At Wild Capital, we care about legacy and the permanence of our offsets on land we own, not because we are required to but because we can. We think it is the right decision to see long-term nature recovery prioritised.
Importance of Long-Term Nature Recovery
The UK is one of the most nature-depleted countries in the world, so we cannot afford to implement short-term regeneration measures. Permanent mitigation/compensation can have a profoundly meaningful and long-term impact on nature, which provides offsets commensurate to the impact and paves the way to true long-term nature recovery.
Conclusion
Biodiversity Net Gain legislation signifies a significant stride towards sustainable development. However, the requirement for developers to manage and monitor BNG habitats for 30 years, in contrast to development’s permanent impact, presents a challenge.
Developers who care about long-term reputation and permanent place shaping should ask offset providers both about their competence and ability to deliver, and also if they are committing the land for nature, forever.