Stacking the odds in nature's favour: how ecosystem services can contribute to nature recovery
This blog is a collaborative contribution written by Nicola Cotton and Adam Richards. Both are members of the planning-specific Environmental Law Group at Womble Bond Dickinson (UK).
As planning lawyers, we are particularly interested in planning-related law and the policy and regulatory context that surrounds it. With the UN convention on Biological Diversity (COP 15) in December 2022 just behind us and looking ahead to biodiversity-specific elements of the Environment Act 2021 coming into force in 2023, our thoughts are turned towards new possibilities for biodiversity net gain (BNG).
COP 15 concluded with an historic agreement to preserve and protect nature: the Kunming-Montreal Global Biodiversity Framework. This worldwide framework represents an important step towards halting biodiversity loss and safeguarding our planet. The framework, which is similar in ambition to the 2015 Paris Agreement, includes wide-ranging steps to tackle the causes of biodiversity loss – notably climate change and pollution – across the globe. It is intended to work in synergy with the Paris Agreement and other multilateral agreements such as those on forests, oceans and desertification.
The Kunming-Montreal Framework also builds upon the UN Strategic Plan for Biodiversity 2011-2020 and sets the ambitious goal of transforming society's relationship with biodiversity so that, by 2050, a shared vision of living in harmony with nature can be fulfilled. The draft framework emphasises that collective responsibility and transparency will be key to implementing global change. No single country can achieve this on its own.
In terms of contributions that can be made by individual nations, and by the UK in particular, this blog highlights a key theme from the 2022 UKELA (UK Environmental Law Association) conference: how best to bring about an urgently-needed shift from nature conservation to nature recovery, from trying to protect a dwindling resource to achieving BNG.
If the UK is going to save its severely depleted natural environment, it seems government-led initiatives are just not enough. To address this shortfall, the UKELA conference considered how the private sector can make nature more 'visible' in financial terms in order to create incentives to prioritise it. The idea is not new – worldwide trading in carbon credits emerged from the Kyoto Protocol back in 1997 – but in the face of accelerating climate change, the application of a similar principle to a wider range of 'ecosystem services' has acquired a greater sense of urgency. Simply put, the question is: how can BNG potential be maximised to stack the odds in nature's favour?
As it turns out, there are ways of doing this quite literally. In BNG terms, the concept of 'stacking' has emerged whereby landowners can derive multiple income streams from the same piece of land. Think of a club sandwich with a choice of different fillings each of which can be bought separately. By analogy, individual stacking payments can be made in respect of different ecosystem services relating to biodiversity, carbon capture or nutrient neutrality, for example.
Currently, the National Planning Policy Framework and supporting practice guidance provide that the planning system in England should achieve net gains wherever possible. There is, however, no fully-in- force legislation or national policy that mandates BNG to counteract the impact of development. Whilst the BNG provisions of the Environment Act 2021 will not become a legal requirement in the UK until November 2023, a raft of secondary BNG-related legislation is expected, including a proposal to bring forward a specific requirement for net gain in the marine environment.
One important aspect of the BNG debate that has come to the fore is that different ecosystem services are not only complementary, but also often inextricably linked. In club sandwich terms, the cheese, tomato and pickle taste better in combination than they do in isolation. While it may be possible to buy and sell single units of BNG credit using a stacking principle with individual layers, it may lead to better environmental outcomes if those units are traded as a 'bundle' instead – a burrito rather than a sandwich, perhaps?
Whichever principle is applied – stacking or bundling – the question of how to calculate BNG value arises. Whether you are a landowner wanting to derive financial benefit from your land, a developer seeking to obtain BNG credits to meet the proposed minimum 10% net gain requirement, or an ecologist concerned about timescales and the need to secure BNG 'additionality' (BNG value over and above a no-impact or no-offset scenario), the system of accounting on all sides is not straightforward. To assist with this, a detailed 'Biodiversity Metric' has been developed by Natural England in collaboration with DEFRA and others. The latest version, Biodiversity Metric 3.1 (April 2022), will form the basis of the statutory metric that will underpin mandatory BNG under the Environment Act 2021.
The Biodiversity Metric is not intended to be a standalone tool, however; rather it forms part of a multi-stage BNG process. Once a development site has been selected and a design produced in accordance with the mitigation hierarchy (avoid, mitigate, compensate), the unit value of the site before and after development will be calculated. A Biodiversity Gain Plan will follow, setting out how BNG will be achieved, including habitat management plans and other elements not covered by the Metric. If BNG cannot be delivered on site, off-site options will need to be secured by way of legal agreements. Off-site BNG must then be formally added to a proposed Biodiversity Gain Site Register before a net gain agreement is drawn up detailing how the site will be managed and maintained long-term in order to deliver the required net gain outcome.
Unlike the club sandwich, BNG provision will probably need to be maintained for at least 30 years (subject to review and further secondary legislation), with a proposed 125-year minimum duration for nutrient neutrality presenting an even longer term prospect. With regard to additionality, DEFRA's 'Green Finance Strategy' has made it clear that habitat enhancements will only be counted if they genuinely add BNG value and are not already being counted as part of another BNG credit unit. The Green Finance Strategy will need to consider too what happens during and after the 30-year window. Once a BNG credit has been sold for a given parcel of land, what can be done to enhance its value during those 30 years, as opposed to simply waiting until they have elapsed and then selling it again? If wealthy developers can afford to offset BNG by paying for credits, will they in turn be discouraged from creating gains on their own sites?
It is clear there is a great deal of green accounting still to be worked out. When it is – and indeed while it is – we look forward to playing our part in securing lasting BNG for the schemes we work on and hope, in anticipation, to have left you with some interesting food for thought.
Author: Nicola Cotton
Nicola is an Associate Solicitor in the Womble Bond Dickinson (WBD) Planning and Infrastructure team. She regularly advises on environmental assessments for large infrastructure projects.
Author: Adam Richards
Adam joined the WBD team in 2022 having trained and qualified with the firm. During his training, Adam has gained a breadth of commercial experience having completed a secondment with a global retailer.