The UK’s flagship nature market, soon to be mandatory for developers in England, has major gaps in onsite governance with enforcement nearly impossible for a large proportion of the biodiversity units to be generated, a new academic study suggests.

Researchers from the University of Kent and the University of Oxford have raised critical governance concerns, argung that 27% of onsite units are at risk of leading to no tangible increase in biodiversity, in a study published Monday.

“This is really important in the big picture of the UK’s nature markets framework”, Sophus zu Ermgassen, an ecological economist at the University of Oxford and one of the study’s authors, told Carbon Pulse.

“Any demand that gets diverted to the onsite, is demand we are stripping from the nature market because the offsite offsets underpin the demand for units … [while] the onsite biodiversity units underpin the governance of the whole mechanism.”

Biodiversity net gain grafts biodiversity into England’s planning and development system, whereby land developers need to achieve a 10% net increase in biodiversity for their site, which can be achieved by following the mitigation hierarchy.

BNG prioritises onsite improvements in habitat condition, but it is this onsite condition that presents a major governance challenge to the whole mechanism.

The study’s authors state their findings are conservative, not just because they only account for the changes in habitat conditions not being achieved, but also because developers may not even deliver the type of habitat proposed, and there is limited infrastructure in place to conduct the necessary checks.

CONDITION

Habitat condition is central to biodiversity net gain. It is one of the main inputs into the UK Department for Environment, Food and Rural Affairs (Defra)’s biodiversity metric, which calculates the biodiversity units assigned to a project site.

Units can be generated onsite through improvements, purchased from other land managers offsite, or as statutory credits from the government as a last resort.

The government expects 50% of all BNG units to be delivered onsite, but this is at odds with the academics’ findings.

In the six early adopter councils included in the study, more than 90% of the units were delivered onsite. These councils have already adopted BNG into their planning processes.

“We found that larger developments tend to plan to achieve biodiversity onsite and smaller developments are more likely to purchase offsite,” said Emily Rampling, the lead author of the study.

Within a project, onsite habitat moving from poor to good would be in a high-risk category for local authorities, due to the lack of monitoring capacity, oversight, and legal recourse within local authorities, according to the authors.

The study raises key resource capacity concerns in local authorities, with up to 60% having no in-house ecological expertise and so would find regular monitoring difficult.

While there is a clear ongoing resource need for the local authorities tasked with reporting on biodiversity outcomes, onsite habitat improvements were always going to be tricky within a system that aims to achieve often competing objectives, the authors told Carbon Pulse.

POLICY

Onsite habitats are challenging to manage and improve beyond the base level of “poor” condition. Their potential improvement is also often at risk due to a specific context, compared to offsite biodiversity improvements.

“The quality of onsite habitat in these large urban developments is going to be exposed to a lot of urban impacts such as people and animals,” Emily Rampling, the lead author from the University of Kent, told Carbon Pulse.

“There is a challenge to balance wanting an aesthetic look or wanting a wild look. People are more open to natural spaces, but if it is outside their apartment, they want it to look nicer.”

A Defra impact assessment from 2019 highlights that the policy objectives of biodiversity net gain are to increase biodiversity, streamline planning and development, and have a clear benefit to people and communities.

The UK government also has a housebuilding target of 300,000 new homes for England per year by the mid-2020s.

Zu Ermgassen told Carbon Pulse that these policy objectives can often conflict with each other. For example, what is good for nature access may not be good for biodiversity, and may not help streamline the planning process.

Due to these challenges to the mechanism, the authors propose that one solution could be to divert high-risk onsite biodiversity units to the offset market.

Offsite biodiversity units have additional technical architecture within them, including a centrally managed, publicly accessible, spatially explicit national register, controlled by Natural England. Onsite units are not required to register.

However, its progress and development are somewhat clouded.

The digital register’s blog has not been updated since July last year, despite being set up to inform market participants.

“Until some of the offsite register data goes live, we have zero insights into what is happening in the majority of the country.”

While the competing objectives fall on the developer to mitigate, it is the responsibility of the local authority to ensure they do, creating another major governance challenge.

RESOURCE AND RECOURSE

Not only the lack of infrastructure regarding data management and monitoring, but also the limited options for local councils to enforce developers’ failure to deliver, are set to cause issues.

The threshold for councils to take legal action against developers is extremely high, the authors said.

They contend that the expected future failure of some projects to deliver habitat improvements after 10 years is also unlikely to hit the required mark for legal action, and enforcement is essentially voluntary, with little incentives for monitoring and follow-up checks.

“If these are some of the highest capacity [local authorities] and we still identify obvious signals of governance gaps, such as really high error rates, it indicates that even the best local authorities are under-resourced, under capacity, and don’t have the time to do these kinds of basic compliance,” said zu Ermgassen.

“That is a signal we need to clean up the governance and that we need more investment at the local authority level.”

A 2022 survey released by the Association of Local Government Ecologists reported that more than 60% of respondents required one full-time staff member or more to meet the capacity required.

In July, Defra announced £9 mln in funding to help local planning authorities recruit relevant ecological expertise, split between more than 200 local authorities where biodiversity net gain is relevant.

There is currently no standardised approach for local authorities to monitor onsite biodiversity units and no national compliance teams exist to support their efforts, the authors pointed out.

Standardising governance requirements across the mechanism could go some way to filling the governance gap in the scheme, the academics said.

Alternatively, high-risk onsite units could be redirected to the offsite biodiversity offsetting market. These units could be directed through planning authorities towards their local nature recovery networks, which enhance them as they would contribute to wider habitat connectivity.

However, the authors note there may be land availability challenges in finding suitable sites where habitats could be created or enhanced, leading to competing demands.

BNG was set to become mandatory in November, but in late September a leak to the BBC forced the government to release an updated timeline, with a three-month delay. The substance of the policy remains unchanged, and regulations are still expected to be announced in November, for implementation in Jan. 2024.

Without addressing or standardising the governance gaps already existing within biodiversity net gain, the mechanism runs the risk of repeating many of the mistakes made by other offsetting mechanisms, the authors conclude.

“These environmental markets have the potential to be a real force for good and they are falling at these basic hurdles.”

By Tom Woolnough – tom@carbon-pulse.com

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