Farming News - Change needed to make habitat banking work effectively, according to leading property consultancy

Change needed to make habitat banking work effectively, according to leading property consultancy

As the UK advances its Biodiversity Net Gain (BNG) policy, habitat banking is gaining traction as a potential solution to balance development with environmental restoration.

 

Tom Beeley, a natural capital expert at leading property consultancy Fisher German, says that while the concept of developers offsetting biodiversity loss by purchasing credits from landowners may seem straightforward, the reality on the ground is far more complex.

Both farmers and developers face significant challenges in making habitat banking work effectively, from long-term land commitments to regulatory hurdles and market uncertainty.

For farmers, habitat banking presents a new revenue stream at a time when traditional subsidies are being phased out. By converting parts of their land into biodiverse habitats, such as wildflower meadows, wetlands, or woodlands, they can sell biodiversity units to developers needing to meet BNG requirements.

However, the transition is not without hurdles. Habitat banks typically require a 30-year management agreement. For many farmers, this is a daunting commitment, especially when future land values or policy changes are uncertain.

Establishing a habitat bank involves significant upfront investment in ecological assessments, habitat creation, and legal agreements. However, returns may take years to materialize.

It can also mean a loss of productive land. Converting arable or pastureland into habitat means sacrificing potential food production, which can be a difficult trade-off, especially in a time of rising food insecurity.

There is also a level of regulatory complexity, and navigating Natural England’s system of measuring biodiversity, planning rules, and legal frameworks can be overwhelming without expert support.

On the other side, developers are under pressure to deliver housing and infrastructure while complying with BNG regulations. Habitat banks offer a way to meet these obligations off-site, but developers face their own set of challenges.

This includes a current shortage of accredited habitat banks, especially in high-demand areas, which drives up prices and creates uncertainty in project timelines. Developers also often struggle to find reliable information about available habitat banks, pricing, and credit quality, and local planning authorities vary in how they interpret and enforce BNG rules, leading to inconsistent requirements and delays in approvals.

So, what needs to change? It’s clear that to make habitat banking a viable tool for both farmers and developers, several improvements are needed.

Farmers need clear, accessible advice, funding for feasibility studies, and streamlined processes to enter the market. Incentives such as grants or tax relief could also encourage more landowners to establish habitat banks, increasing supply.

There needs to be market transparency. A national register of habitat banks and credit prices would help developers plan and budget more effectively. A national land use framework could help identify priority areas for habitat creation that align with development needs and ecological goals.

While habitat banking is a compelling concept for farmers in theory, in practice, the risks and regulatory complexity make it difficult to justify, unless you have the right land in the right location.

There’s real potential for habitat banking to align economic development with environmental restoration, but only if the system works for both those who build and those who steward the land.

With the right support, farmers can play a pivotal role in restoring nature, and developers can meet their obligations without compromising project viability. The challenge is to create a market that is fair, functional, and futureproof.