Risks to the long-term effectiveness of new biodiversity net gain scheme

There are risks to the long-term effectiveness of a new policy, launched by the government in February, to make sure developers in England protect or improve biodiversity on land they are developing, according to a new National Audit Office (NAO) report.

Statutory biodiversity net gain (BNG) was legislated for as part of Defra’s 2021 Environment Act. The new rules require development to have a measurably positive improvement (‘net gain’) on biodiversity.  Developers must improve the habitats they harm by a net 10%, ideally on-site. Off-site gains can be created by the developer elsewhere or purchased through a new private market for biodiversity units.

The government provided either £26,807 or £43,4674 to each local authority to help them prepare in each of the two years proceeding launch. Local authorities had discretion to spend the money: for instance, on recruiting and training new ecologists, procuring new software, and processing legal work.

Natural England and Defra lack relevant information they need to effectively evaluate the regime and determine whether it’s a success. They currently do not have a comprehensive source of information of habitat enhancement taking place on site. Defra is exploring what information might be available from local authority reporting against the statutory biodiversity duty which will only be available at five-yearly intervals.

Defra is relying on a private sector market for biodiversity units emerging but does not know how rapidly it can scale up or satisfy demand. Where private markets fail to provide enough off-site credits, Defra will step in as a provider of last resort, with the money raised ring-fenced for government mandated improvements to UK biodiversity. Defra does not have a legally compliant mechanism to spend income from statutory credit sales to enhance biodiversity.

Overall, the government expects BNG to provide a small contribution to separate, national biodiversity targets. Defra’s 2019 impact assessment suggested that BNG, as designed, could be expected to deliver genuine net gain, or at least no net loss.

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