Frequently asked questions

Why implement a system of biodiversity accounting?

To better deliver sustainable development by compensating for the loss of wildlife (biodiversity) when development occurs. If sufficient on-site compensation cannot be provided at a development, then it may be secured in a different place. The purpose of an accounting system is to deliver (and clearly demonstrate) environmental gain, rather than just achieve no net loss – so that we get truly sustainable development.

What is Environment Bank?

Environment Bank is a broker of biodiversity compensation . This means we work between the organisations involved in compensation arrangements to ensure a smooth and fair process. We liaise with LPAs who are assessing planning applications where biodiversity is impacted, with developers to ensure their impacts are calculated correctly and with landowners who can provide the land needed for the appropriate compensation.

Why is a broker needed?

Global experience demonstrates the critical need for transparent brokering that avoids conflicts of interest. LPAs cannot be seen to calculate impacts at the same time as making planning decisions; conservation bodies cannot be seen to create credits at the same time as responding to planning consultations; landowners cannot set the conservation credits for their own land. At all stages an independent (and preferably accredited) broker is necessary. Environment Bank also manages a national registry [link] that allows easy searching and matching of compensation sites.

How is Environment Bank paid?

Environment Bank provides some services, such as impact calculations for developers, that are charged at consultancy rates. However, our brokerage role is paid for via a transaction fee applied to the final credit sale i.e. a slice of what the developer pays. We expect the cost to the developers (even after all administration costs are factored in) to be less than the cost to them of negotiating, finding and arranging compensation themselves (and if it isn’t, then the developer will think twice about doing it). Ultimately, developers will start to factor in the cost of credits (the environmental cost of their development) into their land purchase prices.

Who benefits from this system?

Hopefully everyone. Landowners benefit because it provides them with a financial return for creating and managing land for wildlife. Local Planning Authorities benefit because the accounting system is an efficient and transparent way to ensure there is biodiversity gain through development. Developers benefit because the standardised system allows for better project planning and allows cost-effective delivery of long-term environmental obligations in one transaction, removing long-term liability for managing conservation habitat – which isn’t their core business. And wildlife benefits from the large scale creation of new habitats.

How does it work?

To secure off-site compensation, a developer purchases ‘conservation credits’ that fund long-term habitat creation and restoration schemes. For example, some arable farmland might be converted into grassland, or a degraded wildlife site might be enhanced to better condition – these projects create credits that can be sold to developers.

Why is it needed now?

Most of the UK’s wildlife outside of specially protected areas is in decline across most of the country. This system is designed to reverse that decline. Also, the National Planning Policy Framework (NNPF) requires both Local Planning Authorities and developers to demonstrate ‘sustainable development’ and a system of biodiversity accounting is one way of doing this.

How does this compare with HLS, or other agri-environment schemes?

From our estimates, the true costs of creating and managing habitats in the long term might be two or three times what an agri-environment scheme might pay a landowner. This system therefore offers a more flexible, more realistic way to finance habitat creation and management. And this may be attractive to a farmer who has some land available that is less productive but has high wildlife potential.

How are conservation credits calculated?

Using a series of government ‘metrics’ that measure the biodiversity value of an area identified for development (including brownfield sites and arable land) we are able to quantify the ecological impact of a proposed development. This defines the impact in biodiversity units and therefore the required compensation needed to achieve ‘no net loss’ of biodiversity. The same metrics are used to calculate the credits available at potential compensation sites, so that the impact and receptor sites are measured in the same way. The calculations at the compensation site get complicated because multipliers are applied that account for the risk of delivering the proposed habitat, the time it takes for that habitat to mature, and the location in regards to whether the site sits within a local greening strategy, or alike. The metric also requires that a developer purchase credits of a particular ‘type’ (e.g. grassland credits) to achieve like-for-like compensation for the damage being done.

How much is a conservation credit worth?

The price is set by the landowner and it will depend on the compensation site. The metric used to calculate the value of an site in credits does not affix a monetary value. This value is set by the individual landowner who considers all his management, and other costs, associated with creating or restoring the habitat proposed. Therefore, between different properties, landowners with the same credit ‘type’ may vary greatly in the price they are asking. With time, the market for different credit types, such as for rare habitat types, may push prices up if they are in demand.

How will a compensation site be chosen?

Depending on what kind of compensation a developer needs (habitat type and number of credits), Environment Bank will search for a site on their registry before actively searching for landowners, using partners and other contacts, such as land agents. A developer can then choose where to buy their credits from if Environment Bank finds multiple options. However, the final say is given by the LPA, who may want to see that the site is found within their administrative boundary.

Is there a minimum size of site?

No, although bigger habitat banks may be more cost effective, small sites will often be needed to meet small compensation requirements and could be great stepping stones, buffers, and corridors around and between existing habitat.

Are you looking for creation or restoration sites?

Both generate credits and are therefore equally eligible under this system. It is also likely that many sites will have a mosaic of both. Many sites in England are degraded and require funding to bring them up into better condition, while the creation of new sites that link, buffer and build on existing sites will also be ideal for creating larger networks of habitat across the countryside.

Can I register land if I’m already involved in other schemes?

Yes, if you can deliver a real improvement in biodiversity value on what is already happening on your property. For example, creating new habitat on arable land will score many credits, restoring existing habitat in poor or moderate condition to good condition will also score credits. But habitat in good condition where no further demonstrable improvements can be made will not score credits and therefore will not be suitable.

Can I use my own land to compensate for my impacts?

Yes. A developer can use their own land to provide compensation for their impacts, but we would still recommend using the expertise of Environment Bank as a broker. This is because we can take care of the complicated calculations to quantify the number of credits needed and provided by the development and receptor sites respectively. This should help reassure the Local Planning Authority that the compensation results in a ‘no net loss’ to biodiversity. If a receptor site has excess credits, Environment Bank can hold those credits for future transactions on the registry.

Why should I use a broker like Environment Bank if I source my own receptor site?

Environment Bank can offer a number of services which will help smooth the process even if you have sourced your own site or are using your own land. These include, holding any excess credits on the registry for future developments – we can work with the LPA to assure them that the credits are spent and tracked properly, monitor the site and report on progress and handle the financial transactions.

Which landowners can take part?

Everyone who owns land can register as a potential provider on the Environment Bank registry – including farmers, NGO’s land managers (with permission from the landowner), mining companies and LPAs.

What will motivate landowners/managers to get involved?

This system offers landowners a potential long-term income for managing part of their land for wildlife. The land can remain within their control and the cost of management is completely determined by them – the only input Environment Bank has is to ensure that the cost of management is sufficiently accounted for. Being involved does not create any extra obligations for public access nor, apart from the land management contract, does it affect the ownership rights in any way. There are no legal restrictions or designations associated with this system.

I have never managed my property for wildlife before - who will help me?

Once a landowner submits an EOI (Expression of Interest) form to Environment Bank, if the property is prioritised for a site assessment, an Advisor from Environment Bank will visit to provide more information and do a basic assessment to enable credit estimates and registration of the property. If there is then developer interest, it is at that time that the landowner will need to get a management plan (for 25+ years) prepared with costings. This should be done properly so it could be best to hire an ecologist, whose costs can be included in the credit price developed. The ecologist could also help you find contractors to do any of the labour you’d prefer not to do yourself, or are unable to do. We can also help you with this process. These costs can all be factored into your credit price.

What if I don't sell all the credits at my site?

If a receptor site is registered, with say, 20 conservation credits available, but a developer only needs to buy 5 credits, the landowner has a couple of options. Firstly, the landowner could begin managing the entire site in the hope that the remaining 15 credits will be sold to subsequent developers. This is an ideal option because a habitat bank is created under one legal agreement and credits are more easily sold off. However, this requires investment in the site by the landowner prior to the site being fully funded. So, while the conservation credit market develops in the UK, landowners may choose to instead begin managing just an area (within reason) that equates to 5 credits which could be, for example, 1 paddock of grassland or 1 pond. The remaining registered credits could then be sold to subsequent developers and the management at those sites would begin at the time of sale.

How long will I need to maintain the site for? What does in-perpetuity mean?

Ideally, compensation sites should be managed for at least as long as the life of the development, which could be in-perpetuity (in legal terms, 99 years). However, we are asking for landowners to come forward if they are interested in managing a site for a shorter period (25+ years) as such projects can still offer the environmental gains sought and are being accepted by Local Authorities. To prevent landowners, or subsequent landowners destroying or developing a site that has been created for compensation, a longer-term management plan is preferred because, unlike in other countries such as the US and Australia, covenants that protect the land in-perpetuity are not yet available. Therefore, a condition is placed on the title of the land that requires future owners to continue with the management plan and protect the site. This does not mean the funding is spread over this entire period – the first few years may require higher, capital funding payments, with decades of relatively minimal maintenance payments thereafter, depending on the management plan.

What about brownfield sites and arable land?

Although the government wants to see development of brown field sites (abandoned or underused industrial sites), as a priority over green field sites, brownfield sites can be rich biodiversity hotspots, particularly for invertebrates. Although usually ignored, or not properly compensated for, brownfield now has a value in the government metric and therefore can be compensated for. Similarly, arable land can be important for wildlife, and the cumulative effect of removing farmland for development can have (and is having) huge impacts to biodiversity across the country – but it has a value in the government metric and therefore developers will be asked to purchase credits to compensate for loss of arable land.

What about indirect impacts?

Some developments have an impact on neighbouring areas that are important for wildlife, such as SSSIs. The metric does not take these indirect impacts into account, but a possible method to calculate a ‘proportional’ compensation requirement has been (and will continue to be) tested by Environment Bank, where applicable.

My local council will expect all compensation sites to be within its own administrative area. Why should compensation needed for development within our area be directed at sites beyond our boundary?

The aim is to deliver environmental gain via compensation within the same administrative area that the development is in and if a suitable receptor site is found within that administrative area then this is not a problem. However, landscape scale sites are usually going to be the best way of achieving ecologically meaningful results and these may be beyond the immediate administrative boundary. There are significant potential benefits if neighbouring councils work together so that pooled contributions can be utilised to create large-scale projects.

Why will developers get involved if it's voluntary?

Because they will be able to more easily demonstrate that they have fulfilled their environmental obligations in a clear and transparent way. Negotiations to secure appropriate compensation, including purchasing land, can be costly and time-consuming, while this system of biodiversity accounting, using Environment Bank as broker, is quicker and easier, with all environmental obligations fulfilled in one payment.

Will it affect house prices or developer's profits?

No. The aim is to target the increase in land value created by the granting of planning permission. The cost is therefore borne by the enhanced land value. It may, however, impact upon those development sites which are the subject of a minimum land value ‘option’ or other arrangements. Some form of transitional mechanism will therefore need to be put into place which allows such sites to come through the process and for a ‘start date’ to be applied to all future development sites.

Would such a system enable developers to avoid providing for public open space, green corridors, (amenity space), playing fields or landscaping within their development proposals?

No. The conventional requirement to provide such features in accordance with development plan requirements would remain. This system is designed to more clearly compensate for the residual losses to biodiversity.

How will a market for conservation credits be created?

Setting up conservation credits is critical in delivering truly sustainable development in the UK’s wider countryside. International experience also suggests two very important and positive side-benefits. Credits provide an ideal mechanism for Corporate Responsibility (CR) investment. National corporations can buy credits and thereby invest in national habitat restoration schemes. Consequently, conservation credits assume a real value, which makes them tradeable commodities. In the US, ‘green investment markets’ are springing up that allow credits to be bought and sold on trading platforms just like commercial stocks and shares – as with any private companies these therefore allow capital investment into habitat creation schemes.

What are the benefits of biodiversity accounting to Local Planning Authorities?

First, it enables LPAs to demonstrate to the local community that land lost for necessary development will be compensated for in strategic, quantified credit sales from landscape-scale habitat bank sites. This simplifies the processing of planning applications in terms of protracted negotiations and uncertainties, particularly in relation to major projects. And the management of credit sales and delivery can be effectively and independently monitored (by Environment Bank) – reducing LPA staff time and resources needed to monitor and manage delivery.

How will the planning system incorporate a system of biodiversity accounting?

Under the National Planning Policy Framework (NPPF), developers and planning authorities are asked to demonstrate sustainable development – this system allows a standardised, clear way to do this. Planning policy generally prefers ‘conditions’ to ‘obligations’, and it is possible to deliver compensation via conservation credit sales through conditions. However, there are also ways to do so via S106 obligations. Environment Bank has drawn up template planning conditions and S106 wording for planners to use.

Once the process is underway how will the public know where these sites are and be able to access them?

We expect many sites will be made available to the public, though this will depend on their ecological sensitivity and the management arrangements entered into with landowners. If suitable, and in agreement with the landowner, the sites may host nature conservation interpretation facilities, visitor facilities, cycleways or footpaths.

How will the community know what has been done with the money raised through compensation arrangements and how effectively it has been spent?

Compensation sites will be the subject of legally binding agreements which will include a plan-based implementation strategy that will run for 25+ years. Sites will be monitored and the information will be fed into the relevant Council’s Annual Monitoring Report (ARM). Also, LPAs who would like to retain a compliance role as to the delivery of a site can be signatory to the Environment Bank legal agreements.

What about ecosystem services?

The conservation credit system currently largely applies to biodiversity – which is relatively well understood by planners and conservationists. The Natural Environment White Paper calls for a wider context for conservation – one that understands the social and economic value of a healthy natural environment to the nation. A wide range of ecosystem services are delivered by our environment – everything from clean air and water and good food, through flood defence, carbon sequestration and climate mitigation, to spiritual and physical well-being. All of these ecosystem services should be valued and protected and a similar mechanism to conservation credits, such as ecocredits could provide for this in the future.

Is there any hard and fast legislative basis for this system and what is it e.g. clauses or sections?

Although White Papers are not acts of Parliament – they are a reflection of Government policy and intent – the Natural Environment White Paper of 2011 is more substantive than most. It sets out three themes – natural environment, green economy, and reconnecting people with nature. Under the natural environment theme there are 4 policy announcements – NIAs (with an extra £12m to deliver), Local Nature Partnerships (with an extra £1m to deliver), NPPF (now in place) and offsetting (with six national pilots, completed in April 2014). The system (as ‘offsetting’) is described specifically in the White Paper and there is also supplementary guidance from Defra on the metric and delivery of compensation sites (offsets).

Are there any examples of how this has worked in practice, if not in the UK, then elsewhere?

The BushBroker program in Australia facilitates the location of land allocated to offset areas of newly cleared vegetation in the state of Victoria. This operates through the trade of Native Vegetation Credits (a gain in quantity and/or quality of native vegetation that is subject to a secure and ongoing agreement). At the end of 2014, almost 400 credit ‘trades’ have taken place via BushBroker. Landowners involved have gained trust in the system and have begun to purchase more land with the sole purpose of protecting and restoring it for offset credit sales. As more banked land has become available, securing offsets has become faster, and developers have also gained confidence in the system. For more information see the BushBroker website.

Isn't biodiversity offsetting just a 'licence to trash' special sites?

No. Biodiversity offsetting must rigorously follow the current mitigation hierarchy, and doesn’t in any case apply to protected species (e.g. great crested newts) or highly protected species (such as Natura 2000 sites).

Where can the system be used?

Any Local Planning Authority and developer in any part of the country can choose to use this system of biodiversity accounting and this is already happening. Environment Bank is a national organisation working throughout the UK on a number of projects and would be delighted to discuss biodiversity accounting and compensation with any Local Planning Authority that would like to find out more.

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