The market for 'biodiversity net gain' units has been thriving since the regulation came into force a year ago, according to the Environment Bank, though others have criticised the scheme for a lack of ambition.Exactly a year ago, the Department for Environment, Food & Rural Affairs introduced a mandatory minimum of 10% biodiversity net gain for developers, making sure habitats for wildlife "are left in a measurably better state than they were before the development".
Under the BNG scheme, ecologists measure the biodiversity value of existing land and advise on suitable habitat creation or enhancement for the land, so developers can create biodiversity on site, but if they cannot achieve all of their BNG on-site, they can deliver through a mixture of on-site and off-site, buying biodiversity units on the market.
In the first year of the scheme, the Environment Bank said it has provided BNG units to 100 customers, covering over 1,000 development sites, with partnerships including Barclays PLC, the station for Everton FC's new stadium, National Grid PLC (LSE:NG.) and Aldi.
Demand in the early weeks of 2025 has "considerably gained momentum", it said, with sales in January this year matching all sales from the second half of 2024 and live enquiries now stand to the value of £210 million.
Supply is meeting the increased level of demand, too, it added, coming from farmers and landowners who are looking for a new income stream, supporting business diversification.
The Wildlife Trusts also announced today that it expects to be one of the largest BNG providers, with five active sites now registered on the Biodiversity Gain Register, and more than 70 sites proposed with planning authorities.
The charity said it encourages developers “to go beyond the minimum 10% gain for wildlife and to deliver at least a 20% gain”, where possible.
Missed targets
Indeed, more can be done, other environmental groups said too.
Last week, research from Wildlife and Countryside Link said the 773 hectares of land secured for offsite habitat creation and enhancement under the BNG scheme had "dramatically missed" the government’s expectations, achieving just half the minimum amount of annual habitat creation expected.
The organisation and other green groups are calling for the BNG scheme to be strengthened and for the government's upcoming Planning and Infrastructure Bill.
Moreover, more than three-quarters of non-householder planning applications in the second half of the year claimed exemptions from the scheme as the developers argued they were not impacting a priority habitat, according to research from TerraQuest, whose software is behind the UK planning portal.
The number of exemptions applied for has outpaced actual units, with 1,891 more exemptions than units recorded between March and September of last year, the research found.
Demand from housebuilders, supply from farmers and landowners
Environment Bank's CEO, Catherine Spitzer, said the BNG market "is thriving and it is truly exciting to see a market that never before existed becoming established and delivering on its goals to restore and protect nature".
Most of the demand is coming from the UK’s housebuilders, with most of the biggest names having bought units.
"This shows that BNG provides the right balance – enabling the government’s ambition to build 1.5 million more homes while at the same time investing in and supporting nature," she said.
Spitzer noted that the UK is the first country in the world to legislate for nature restoration with large new developments using this method.
Holes in the scheme
The BNG scheme is full of potential, but is also "full of holes", said Richard Benwell, CEO of Wildlife and Countryside Link.
He said ambition was lacking as the scheme remains limited to "just about offsetting harm to habitats", with implementation and enforcement also lacking, with "huge numbers" of planning applications falling through the gaps and "no way to check" that many of the promised gains for nature ever happen.
"Nature recovery and development can go hand in hand, but only if rules to protect wildlife are effective," Benwell said.
The total asset value of ecosystem services in the UK was around £1.8 trillion in 2022, the Office for Statistics calculated last year, an increase of 11% since 2018.
But research by the Green Finance Institute last year showed that damage to the natural environment is slowing the UK economy and could put a larger dent in economic output than was seen during the 2008 financial crisis or pandemic lockdowns.
With wildlife and natural ecosystems such critical natural Infrastructure, he said it is "vital that the planning system plays its part by dedicating enough space for nature to thrive", by fixing the holes in BNG as a key starting point.
"This year’s planning reforms must ensure that at least 30% of England is protected for nature and that every new development is wilder by design."
Beccy Speight, chief executive of the Royal Society for the Protection of Birds (RSPB), said: “One year on, it’s clear this scheme is a huge missed opportunity that’s currently failing on all counts.
"There is widespread support for ensuring most new developments create or restore more habitat for nature than they destroy but for that to happen we need to give Local Authorities the right tools and resources to support nature recovery.
"We also need to set out where nature needs to be protected at scale through a national spatial plan, and build nature-friendly design into our new homes and communities. That way we can get the win-win intended for nature and for development."