Farmers and landowners across East Anglia have been urged to make the most of revenue opportunities from the rapidly expanding biodiversity market.
New biodiversity net gain (BNG) rules were introduced last year which mean developers are now required to replace habitats lost during building projects – plus a net gain of at least 10 per cent.
That can be done either by ringfencing wildlife areas on site, or by paying other landowners to create equivalent off-site BNG units for them nearby.
The latest report from Savills – Biodiversity: risk, reward, resilience – explores the opportunities that the evolving market presents to farmers and land managers as a potential alternative income source, particularly at a time when farm profits are under pressure.
Joshua Spink, associate director in the rural estate management team for Savills in Norfolk and Suffolk (pictured), said: “The BNG market is expected to expand significantly over the next decade as more developers seek ways to meet their legal obligations under new planning and environment policies.
“As demand grows there are opportunities for farmers and land managers to create new revenue streams by providing habitat creation or enhancement services – an area that we are already exploring with several clients.
“When BNG came into effect Defra predicted biodiversity units would achieve values ranging from £9,000 to £15,000 per unit – but some are well in excess of this figure, varying largely depending on the habitat type, its rarity and the extent of BNG it can offer.
“Units related to watercourses, for example, are achieving the highest prices nationally, at £140,000 per unit, while hedges and neutral grassland-based habitats are closer to £20,000.
“There is some regional variation in terms of the regulatory requirements of local planning authorities and in the price of BNG units, but with traditional income sources for farming businesses diminishing it’s a good time for farmers and land managers to review current land use activities and consider whether there is scope for allocating areas for the creation of biodiversity units.”
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 month.
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.
Katie Stein, associate director in the Savills rural research team, said: “By using current evidence to inform future projections, the opportunities are set to increase; in 2024 a record low number of [planning] permissions were granted for new homes in England, with just over 30,000 projects approved.
“Our predictions suggest that of the amount of land estimated to be developed for housing in England each year, 20 per cent will be required for BNG. In 2021, this was forecast as 1,300 hectares of off-site land. With current house building targets at 130,000 per year it follows that the amount of off-site land required for BNG units will need to increase significantly.”
Visit https://www.savills.co.uk/research_articles/229130/377718-0
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