What UK Landowners and Developers Need to Know About Biodiversity Offsets

Biodiversity offset policies have become an increasingly popular strategy for mitigating the impact of development on natural ecosystems around the world. While it is always preferable to try and avoid and minimise damage to biodiversity, sometimes it’s simply unavoidable - and when that happens biodiversity offsets offer a mechanism for balancing the impact of development through ecological compensation (restoration, enhancement, or protection of ecosystems) in other locations. In this blog, we will explore what biodiversity offsetting is and how it may be implemented into Biodiversity Gain Plans to meet new UK national policy to preserve and protect biodiversity. 

Biodiversity Offsetting defined 

Biodiversity offsetting is part of the fundamental shift in the way we think about non-human nature, which emphasises the economic valuation of habitats, ecosystem services and natural capital. The concept of biodiversity offsetting is gaining momentum worldwide as a means of tackling biodiversity loss around the globe as it becomes an increasing environmental challenge. 

Biodiversity is a fundamental component of ecosystems that provides a range of invaluable services to society and underpins life as we know it. According to a UN report published in 2020, biodiversity losses are happening at an unprecedented rate, with around 1 million species (out of an estimated 8 million species in total) currently threatened with extinction (many within decades). This projection highlights the need for a range of policy interventions, including biodiversity offsetting and mitigation measures, to shift the trend.

As such, the United Kingdom is creating and implementing a system and standard for biodiversity offsetting to provide ecological compensation for biodiversity net losses incurred by development projects. Biodiversity offsetting is a last resort approach in a mitigation hierarchy for habitat and ecosystem conservation and protection. It is intended to be implemented only after all mitigation measures have been taken to avoid and minimise development impacts. 

In line with the Environment Act 2021, Biodiversity offsets are part of the policy plan and strategy to ensure that every development project not only prevents biodiversity losses but also produces a minimum biodiversity net gain of 10%. The policy is a measurable way to ensure that the net losses to nature caused by development are compensated for. It is meant to preserve and protect biodiversity so we may stop and reverse the environmental damage being done. 

The new policy will be introduced from November 2023. As it comes online, nearly all new development projects (both big and small, personal and professional) will be required to provide a Biodiversity Gain Plan (BGP) to local authorities before being granted development permissions. BGPs must prove that any new development will produce a 10% net gain in biodiversity that will be maintained over the next 30 years. Biodiversity offsets are a way of helping developers to meet the new required building permission standards when they are unable to provide the mandated net gain in biodiversity on site. 

Biodiversity conservation - measuring and implementing Biodiversity Offsets 

The implementation of biodiversity offsetting in the United Kingdom involves four main steps. 

• The first step is to identify the biodiversity value of the site to be developed, which involves assessing the quality and quantity of habitats that constitute the site. 
• The second step is to assess the impacts of the development on biodiversity and determine the residual losses that cannot be avoided or mitigated. 
• The third step is to design and implement a biodiversity offsetting project that delivers biodiversity gains that compensate for the residual losses (ideally these should be done on site, but offsite if not possible). 
• The fourth and final step is to monitor and report on the outcomes of the biodiversity offsetting project.

To achieve each of these steps, there are different methodologies and frameworks established to standardise the process. 

Habitat evaluation and measurable conservation outcomes

Habitat evaluations are used to determine the appropriate biodiversity offset requirements, such as the amount of land or types of habitat that need to be conserved or restored to compensate for the loss of biodiversity caused by the development. DEFRA, in collaboration with Natural England and UKHab, has established a standardised metric for habitat evaluation, Biodiversity Metric 4.0, which is used to assess and determine the number of Biodiversity Units (BUs) on a site and evaluate the impact of development on the site’s habitats. 

This metric is designed to ensure that the same set of rules are used to work out the impact of a development on biodiversity across England. It ensures that the impacts are accurately assessed, and the appropriate offset measures are taken to maintain and increase biodiversity levels.

Under the new law, projects must provide biodiversity gains that are additional, measurable, and verifiable, and they should ideally be located close to the development site to ensure that the biodiversity benefits are realised in the same area.

Mitigation Hierarchy

The mitigation hierarchy provides a structured approach to decision-making that helps to ensure that the impact of development on biodiversity is effectively managed and mitigated. Under the mitigation hierarchy, the first priority in protecting biodiversity is to avoid or minimise impacts on biodiversity, and offsetting should only be considered as a last resort. The five stages of the mitigation hierarchy are as follows:

Avoidance: The first stage involves avoiding impacts on biodiversity entirely by changing the location, scale or timing of the development project.

Minimise: The second stage involves minimising the impact on biodiversity by using best practice techniques such as designing the project in a way that minimises harm to biodiversity.

Restore: The third stage involves restoring habitats that have been damaged or degraded as a result of the development project. Restoration can include measures such as replanting, reseeding, or removing invasive species.

Offset: The fourth stage involves compensating for any residual harm to biodiversity that cannot be avoided, minimised, or restored. This may involve the creation or enhancement of habitats, such as the restoration of degraded wetlands.

Contribute: The final stage involves contributing to wider conservation efforts, such as funding conservation research or supporting protected area management. 

Biodiversity Units

A Biodiversity Unit (BU) is a standardised measure used to quantify and calculate the biodiversity value of a particular habitat or ecosystem. Biodiversity Units (BUs) are calculated based on the distinctiveness and condition of a particular habitat, as well as its size and strategic significance. The calculation involves assessing the habitat value, ecosystem services and species richness, abundance, and diversity of the site. 

Ecological net gains and net losses are quantified using numerical scores, which serve as the basis for creating and exchanging BUs. They are used to calculate the weighted ecological losses and gains associated with a development proposal because different habitats, ecosystems and species hold the different values for biodiversity benefits.

Biodiversity Units are calculated using the UK government’s biodiversity metric framework. The aim is to provide a way to compare the biodiversity value of different habitats and ecosystems on a standardised scale, so that the effectiveness of offsetting measures can be measured and compared. 

The use of BUs is an important tool for ensuring that biodiversity offsetting results in a net gain of biodiversity, and that the offsetting measures are standardised, fair and viable.

Additionality in biodiversity offsets

Additionality is a key concept of biodiversity offsetting. It involves compensating for the negative impacts of development on biodiversity by creating or restoring habitats elsewhere. Essentially, additionality means that the offsetting measures put in place should go beyond what would have occurred anyway in the absence of the development. In line with new regulations set in place in the Environment Act 2021, the offsetting should result in a minimum 10% net gain for biodiversity. This is important because if the offsetting measures are not additional, then the development will still have a net negative impact on biodiversity, even if some habitats are restored elsewhere. 

Biodiversity offsets for a site must be compliant with and calculated using the biodiversity metric. Some examples of what these calculations might look like in practical terms include:

1. A developer who plans to build a residential complex could commit to creating woodland, creating a nature or wildlife reserve by creating the appropriate habitat space, or funding the restoration of degraded land to offset biodiversity net loss. 
2. A farmer who wants to clear a patch of land for crops could commit to planting additional native plants around the perimeter of their property, which would provide new habitat for local wildlife and help to maintain biodiversity in the surrounding area.
3. A business owner who wants to build a new office building could commit to creating a green roof on the building, which would provide new habitat for birds and insects and help to mitigate the effects of urbanisation on local biodiversity.
4. An individual who wants to install a new pool in their backyard could commit to planting additional trees and shrubs in their yard, which would provide new habitat for birds and insects and help to maintain local biodiversity.

These small-scale examples demonstrate how individuals and businesses can contribute to biodiversity offsetting efforts and help to promote conservation on a local level. In each case, the Biodiversity Metric 4.0 should be used to work out how many BUs are created with each intervention, and to reach compliance the net change in BUs must be at least 10%. And, in all of these cases, the principle of additionality is achieved by taking actions that create a net gain in biodiversity that would not have occurred otherwise.

Equivalence in biodiversity offsets

Also known as the ‘like for like’ principle, this refers to the requirement that a biodiversity offset project should compensate for ideally the same sort of biodiversity or at least the same value of biodiversity that is being lost due to the development project. For example, if a development project results in the destruction of a certain habitat, such as a wetland or forest, the offset project should provide a habitat replacement in another location with the equivalent habitat value. Biodiversity Metric 4.0 outlines a set of “trading rules” whereby certain habitats can be offset by certain others. It’s important to note that if you fail to accurately comply with the established trading rules, your offsets will not be counted in respect to your statutory duty.

The biodiversity offset project should provide an equivalent value to the net loss of biodiversity incurred from the development project plus the required 10% minimum net gain. This ensures that the offsetting approach is transparent and effective in achieving its goals of maintaining or enhancing biodiversity.

Permanence in biodiversity offsets 

As a requirement in all Biodiversity Net Gain plans, permanence maintains that the biodiversity offset project's benefits should be sustained over a long-term period, 30+ years minimum, ensuring that biodiversity losses from the development are compensated for permanently. 

To create and secure these opportunities, the UK government has introduced conservation covenants as a new legal instrument that can be used to ensure the protection and management of important ecological features and habitats. In the context of biodiversity net gain, conservation covenants can be used as a mechanism to ensure that uplifts in biodiversity net gain are protected for 30 years or more, as required by the Environment Act 2021. By establishing a conservation covenant, landowners and local authorities can agree to permanently protect a site or area of land that has been identified as having significant ecological value, and to manage it in a way that supports the local ecosystem. This helps to ensure that the gains made are permanent, and that future generations will benefit from a more diverse and resilient natural environment. 

Tools and resources for Biodiversity Offsetting

Biodiversity offsetting is a complex conservation strategy that requires careful planning and implementation to ensure its effectiveness in delivering a net gain in biodiversity. To ensure this goal, a range of guidelines and standards have been developed to provide a framework for understanding and implementing biodiversity net gain and biodiversity offsetting. Local Planning Authorities are tasked with making sure that developers correctly comply with these rules.

These three resources are the essential requirements for the valuation, implementation and monitoring of Biodiversity Net Gain mandates. They provide a comprehensive approach to biodiversity offsetting, helping to ensure that the net gain in biodiversity is delivered and that natural habitats and species are conserved. 

Biodiversity Metric 4.0

Biodiversity Metric 4.0 is a tool developed by the UK government (with DEFRA and Natural England) to assess the biodiversity impact of development projects. It is used to calculate the biodiversity value and BUs of a site before and after the development takes place, in order to determine the net gain or loss in biodiversity resulting from the development. Its use will be mandated in UK law. 

The metric is based on a set of ecological characteristics that are important for biodiversity, such as habitat quality, connectivity, and the presence of protected or priority species. These characteristics are used to assign a score to the site, which reflects its biodiversity value.

Under the metric, developers are required to calculate the biodiversity value of a site before and after the development takes place. If the development results in a net loss in biodiversity, the developer must provide compensation in the form of biodiversity offsetting.

Biodiversity Metric 4.0 is designed to provide a standardised approach to assessing the biodiversity impact of development projects, and to ensure that the impact is fully accounted for and compensated for, as required by the Environment Act 2021.

Small Site Metric (smaller developments)

The Small Site Metric is a simplified version of the Biodiversity Metric 4.0. It’s designed to assess the biodiversity impact of smaller development projects (for residential developments with fewer than 10 residential units on a site area less than 1 hectare) or developments on smaller sites (where the site area is less than 0.5 hectares). 

Designed to be accessible and user-friendly, it uses a simplified set of biodiversity indicators to assess the ecological value of the site, making biodiversity offsetting more accessible to small-scale developers and encouraging the consideration of biodiversity in smaller development projects.

UK Habitation Definitions

Biodiversity Metric 4.0 uses a standardised list of habitats, many of which are derived from the new UKHab list of habitats. Other lists of habitats are also used - with the complete list being available in UKHab’s metric excel sheet. Being familiar with, and having a good understanding of the different types of habitat is very important as this underpins the entire metric system. 

BS8683

BS8683 is a British Standard that provides guidance on the use of biodiversity metrics to measure the impact of development projects on biodiversity. The standard outlines a framework for the calculation of biodiversity metrics and provides guidance on how to use them to assess the impact of development projects on biodiversity. It recommends the use of a set of standardised metrics, including habitat area, habitat connectivity, and habitat quality, to assess the impact of development projects. The standard should be used by developers, planners, and other stakeholders to ensure that the biodiversity impact of development projects is assessed consistently and accurately.

Joe’s Blooms simplified solution

Interpreting and complying with all the details of the UK’s new environment regulations can be a daunting and expensive task. To ease the journey, Joe's Blooms has created a self-service digital platform that simplifies the process, providing a fully compliant end-to-end solution for creating accurate and viable Biodiversity Net Gain Plans. 

We understand that many small site developers may lack the specialist resources and expertise to implement Biodiversity Net Gain requirements. Our tools help to democratise the new environmental requirements, simplify the complexities of compliance, and help educate on the evolving biodiversity laws.

Our platform allows developers to collate all necessary information, input it into a biodiversity metric tool, and generate a Biodiversity Gain Plan that meets all statutory requirements for Biodiversity Net Gain planning approval. 

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