Biodiversity net gain

Biodiversity net gain (BNG) is the biggest driver towards biodiversity enhancement and nature recovery in England. It is the first compliance biodiversity market in the world and showcases how recovery can be championed.

First introduced by the Environment Act 2021, it ensures any new development leaves the natural environment in a measurably better state than it was before. Mandatory in England since February 2024, developers must prove that they will deliver a minimum 10% uplift in biodiversity value prior to commencing with development. The legislation covers all development that falls under the Town and Country Planning Act, this includes housing, commercial and agricultural developments.

2024 saw a record-low number of permissions granted for new homes in England, with just over 30,000 projects approved. Savills predicts that of the amount of land estimated to be developed for housing in England each year, 20% will be required for BNG. In 2021, this was forecast as 1,300ha of off-site land. Targets for house building have increased considerably since then, and supply on the BNG site register is increasing daily.

Measuring BNG

Prior to the requirement of BNG, the ecological impact of a development was assessed in the planning process, but this was not easily quantifiable. In England, the main method for measuring BNG is the Statutory Biodiversity Metric. Developed by Natural England and Defra, the evidence-based metric quantifies biodiversity value through standardised “biodiversity units” based on habitat characteristics.

How it works

• Biodiversity is assessed through area habitat units, hedgerow units and watercourse units.
• Factors like habitat size, condition, strategic significance and type are considered.
• Risk multipliers (such as difficulty to create habitat) and trading rules are embedded within the metric.

How it helps

• Developers: A site is broken down into parcels to show gains and losses for each habitat parcel.
• Landowners: Can see the current biodiversity value of their land, how many off-site units could be produced through additional habitat creation, and the potential for sale of units.
• Local planning authorities: Can evidence the statutory biodiversity metric has been used by the developer to meet the BNG requirements.

The BSI Principles Standard for nature markets report was launched in March and is under consultation until July. The standards will have an impact on any party trading ecosystem services, such as biodiversity units or carbon credits in the future. Using funding from Defra, the BSI is currently developing detailed standards for biodiversity and carbon. Tasked with growing confidence in nature markets, to support greater private investment and funding for nature-based solutions, the standards will set high-integrity requirements for UK nature markets and players. This will align with the Science Based Targets initiative (SBTi), which is a global initiative that helps companies and financial institutions set science-based emissions reduction targets.

Scotland

Scotland’s biodiversity market is at a critical inflexion point. The Scottish Biodiversity Strategy has set a target that, by 2045, Scotland will have restored and regenerated biodiversity across its land, freshwater and seas. NatureScot is currently developing two biodiversity metrics:

1. Ecosystem Restoration Code: a new high-integrity market mechanism to attract responsible private investment into nature restoration and biodiversity projects. This commitment is being delivered in 2025 via a Scottish Government-NatureScot partnership project.
2. Statutory metric: driven by the National Planning Framework 4 (NPF4), which requires all major development to include significant biodiversity enhancement. This is under development and broadly based on the English Defra metric but reflecting Scotland’s policy-led approach (in contrast to England’s legislative approach) and aligning with Scotland’s unique landscapes and land tenure models.

Wales

The Welsh biodiversity market is led by the National Planning Policy on Biodiversity. This requires developers to demonstrate a net benefit for biodiversity and detail how they have implemented a ‘stepwise approach, which encourages harm to biodiversity to be designed out at every stage of development. This is done in a qualitative way and puts more emphasis on the delivery of green infrastructure and habitat creation/retention on-site.

The latest revisions to Planning Policy Wales (PPW) signal planning authorities to identify opportunities for collaboration on biodiversity enhancement to be funded through development.

Case Study: CREATING NEW VALUE IN THE HIGHLANDS

An estate in Inverness-shire has taken its first steps into natural capital by agreeing a plan to enrich biodiversity. By establishing a biodiversity baselining strategy, the estate has created a programme to make the land ecologically richer and add value to the woodland and peatland carbon credits.

The proposed programme delivers biodiversity gain across the whole estate by providing crucial wildlife corridors and a mosaic of habitats from the lowlands to the hills, which is essential for species diversity. Within 20 years, the estate hopes its own investment into the land will mean it is abundant in wildlife with healthy soils and increased pollinators, which will improve farming profitability, sustainability, and provide a rich diversity of species to protect its ecosystems.

The cost of biodiversity net gain

Since the introduction of BNG in England, it has become clear that navigating the process to deliver biodiversity uplift can be complex. The BNG process requires interdisciplinary collaboration and input from specialist planners and ecological consultants, who will deliver the best outcomes for both the development and the management of the land delivering the BNG.

Regional variations have developed both in respect of the regulatory requirements of local planning authorities (LPAs) and in the price of BNG units. At the onset of the scheme, Defra predicted biodiversity units would be valued between £9,000 and £15,000 per unit. Current comparables are well in excess of these figures, and although prices have recently stabilised, they remain high due to risk and a lack of clear data on pricing in the sector.

The price of a BNG unit varies largely depending on the habitat type, its rarity and the extent of biodiversity gain it can offer (Figure 1). Prices are based on the cost of creating, maintaining and monitoring the habitat.

Data collected by Biodiversity Units UK shows units related to watercourses are achieving the highest prices nationally, at £140,000 per unit, while hedges and neutral grassland-based habitats are closer to £20,000.

Regional variation in pricing is also significant, as developers prioritise the proximity of units to their development. Hotspots for supply are forming, particularly for high-distinctiveness habitats like Mixed Deciduous Woodland and Floodplain Wetland Mosaic (Figure 2).

If a developer is unable to use either on-site or off-site units to deliver their BNG requirement, they can buy statutory credits from the government. These have a mark-up to prevent statutory credit prices undercutting the off-site market, with a starting price of £42,000 per unit. However, developers must buy two units for every one they need, making it a purposefully costly option to incentivise local delivery.

Since the implementation of the BNG regulations, an estimated 7,500 planning applications with a requirement for BNG have been made, and around 2,000 new applications are being made every month⁵. This demand is expected to continue to rise, further driving market activity.

BNG units must be legally secured either through a Section 106 agreement or a Conservation Covenant, with the market showing a preference for the latter as they streamline the process and increase certainty for buyers.

⁵Biodiversity Units UK

SAVILLS INSIGHT

The future of the BNG market

"We predict the off-site market for BNG will continue to grow and that nationally the supply of BNG units will meet, if not exceed, demand. At present, less than 2.5% of sites on the biodiversity gain site register are allocated to an actual development project, showing there is still an oversupply of units in the market, although the lack of demand may be due to delays in the planning system."

Julia Pound, Savills Head of Natural Capital Brokerage

The Savills Environmental Exchange provides a brokerage platform for BNG units. It’s a map-based mechanism to connect parties who are either seeking or providing BNG. The map below shows the spread of BNG sites across England and Wales that Savills is currently engaged with. This is a form of habitat banking, where strategically located habitats and BNG units are created before any nature loss is caused by development, providing off-the-shelf BNG units to developers at low risk.

BNG gold standards

The Wildlife Trusts have a strategy to deliver a ‘BNG gold standard’, striving to deliver at least 20% BNG locally, rather than the statutory 10%. A number of local authorities are also targeting a 20% net gain, with most located in the south of England and in London. LPAs seeking higher BNG targets must demonstrate the local need for such gains and assess the impact it will have on the viability of delivering their Local Plan objectives.

_{Read the articles within Spotlight: Biodiversity below.}