Selling all the biodiversity net gain (BNG) units from one large conservation project in England could take up to a decade, if they trade at all, with the current system unable to drive large-scale landscape recovery on its own, a land manager has said.

The approximately 800-hectare Wendling Beck environment project in Norfolk is preparing to generate approximately 3,500 BNG off-site units to market to developers.

However, pre-demand for units has not taken off, with developers offsetting the bulk of their nature impacts within building sites, while there is an excessive supply of BNG units, said Glenn Anderson, project lead at Wendling Beck.

“It could take us 10 years to sell BNG, if we can even sell the number of units that we’re going to create. We’re not 100% sure there’ll be the capacity in the market to be honest [to buy all of them],” Anderson told Carbon Pulse.

“It’s a finite market. The way the policy works at the moment is not going to drive big-scale natural recovery, because there isn’t the demand for the units, and there’s unlikely to be the demand, particularly in Norfolk.”

Some landowners in other areas of the country may sell all of their units, but demand will remain below national supply until policy is tightened, he said.

Under legislation that came into force in February, developers must improve biodiversity by 10%. They must prioritise generating on-site units, before buying off-site ones if necessary, then purchase biodiversity credits as a last resort.

A WORLD-CLASS POLICY

Although the demand forecast is grim, Wendling Beck has seen small-scale enquiries from developers about buying packages of up to 10 units that should ramp up over time, Anderson said.

The Norfolk initiative would be happy if it sold just 100 of its 3,500 off-site BNG units a year.

The organisation’s units are not yet live as their launch has been delayed by the inability to create conservation covenants with developers, but they should emerge within weeks, he said.

In April, a law firm found just five local authorities in England out of more than 300 assessed were prepared to create these agreements.

Anderson stressed it is early days for the BNG market, which should not let the perfect be the enemy of the good.

“It’s only been enforced since February, and definitely needs a little bit of time for the market to develop, to understand what it’s delivering, and then you can evolve it.”

“BNG is still a world-class policy. It crystallises a market of taking private finance and putting it into nature restoration. The principle it sets is really important, and I don’t think we should lose sight of that.”

Wendling Beck is undertaking some demand modelling that should give a more detailed picture of the BNG market in his region by the end of the month. In 2022, the last model showed there would be demand for 3,500 units in the whole of Norfolk up to 2036.

PRICES

Many of Wendling Beck’s units will float for between £30,000 and £35,000, depending on the market at the time, though prices will rise to £150,000 for the most expensive options, Anderson said.

The potential income for some types of restoration, in areas such as parkland and rivers, are too low from BNG units to incentivise much intervention, he said.

London-based marketplace Gaia has listed over 25,000 off-site BNG units at an average price of almost £30,000 each. A “wave of demand” could happen when developers start to need to buy off-site units around August, a Gaia executive predicted last month.

Property company Savills said demand for BNG units via its platform was creeping up, with one unit selling recently for £32,500.

VOLUNTARY BIODIVERSITY CREDITS

Although small-scale landowners probably can rely on BNG for demand, larger ones with the most impact are unlikely to be able to depend on the government scheme alone to reform landscapes, Anderson said.

“We’re going for it, we’re happy with what we’re doing, and it’s our risk. But I certainly wouldn’t be advising everyone to just take all of their land production and put it into BNG.”

Wendling Beck is considering diversifying its income from ecosystems by generating nutrient and carbon credits, alongside voluntary biodiversity credits – distinct from those in the compliance BNG scheme.

“We need to look beyond BNG. It’s really important to be able to stack different ecosystem services to spread the risk a bit and look for alternative revenue streams.”

“I think there is real potential in the voluntary biodiversity credit market, through mechanisms like Taskforce on Nature-related Financial Disclosures we will see more demand for biodiversity credits over time, and that could potentially offset the lack of capacity through BNG.”

Wendling Beck has not yet selected a voluntary biodiversity credit standard to work with while it evaluates options, several of which have emerged in the last couple of years.

While onlookers have commended the ambition of the BNG legislation, it has faced numerous issues over the last year, including claims that it could incentivise building in nature recovery areas, pose serious risks to ecology, and has fundamental gaps in its market infrastructure.

By Thomas Cox – t.cox@carbon-pulse.com

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