They function as repositories of ecological value, enabling the preservation and enhancement of biodiversity in a landscape. The primary purpose of habitat banks in Biodiversity Net Gain (BNG) is to offset the adverse impacts of development projects requiring planning consent on natural habitats.
An area designated for development, such as infrastructure or residential construction, may destroy or alter existing habitats and ecosystems. After following the mitigation hierarchy, developers can acquire off-site BNG Units from habitat banks to mitigate these impacts, meet their regulatory obligations, and ensure a 30-year delivery of biodiversity net gain.
Habitat banks achieve their purpose by establishing the number of BNG "Units" planned for creation, enhancement and retention works delivered on their land and secured over 30 years. When a development project impacts a natural habitat, it incurs losses, which can be measured by Defra’s statutory metric and provided for by purchasing BNG Units from a habitat bank. These units represent the ecological value of the created, enhanced or retained habitat within the bank, provided that there is measurable additionality. In this way, habitat banks provide a mechanism for developers to meet their regulatory obligations to compensate for habitat loss.
The environmental benefits of habitat banks are multifaceted. They play a crucial role in biodiversity conservation by safeguarding the habitats of various plant and animal species. By preserving diverse ecosystems, habitat banks can help maintain healthy wildlife populations and contribute to the overall resilience of natural environments.
Moreover, habitat banks contribute to ecosystem restoration by actively rehabilitating degraded or damaged habitats. This restoration work can involve wetland restoration and the reintroduction of native plant species, thereby enhancing the ecological functionality of the landscape.
Habitat banks serve as a mechanism to offset habitat loss and maintain the overall ecological balance despite development activities. By creating and conserving habitats in strategic locations, habitat banks help counteract the negative effects of habitat fragmentation and loss, thereby contributing to ecosystems' overall health and connectivity.
Habitat banks must be substantial to fulfil their conservation and restoration objectives effectively. While the minimum size can vary depending on various ecological factors and specific project requirements, a generally accepted minimum size for a habitat bank is around 10 hectares. However, larger habitat banks are often more ecologically effective, as they can support a wider array of species and provide more robust ecological functions.
Read more about the benefits of habitat banks in our article: What is Biodiversity Offsetting?
Who benefits from Habitat Banks?
Landowners
Partnering with a habitat bank provider to offer Biodiversity Net Gain Units to the market provides landowners with financial incentives for biodiversity conservation, aids in regulatory compliance by transferring biodiversity units to developers, allows landowners to leave a lasting positive impact on the environment, grants access to professional expertise in biodiversity conservation, and provides market access for additional revenue streams.
Depending on the model offered by the habitat banking partner, landowners could generate significant income while minimising their exposure to regulatory liability and the physical aspects of creation enhancement and maintenance.
Developers
Developers benefit significantly from utilising off-site BNG Units from a habitat bank as it allows them to efficiently meet regulatory requirements for biodiversity conservation while avoiding complexities in BNG delivery, maintenance and regulations. By incorporating off-site BNG Units, developers can streamline project planning and implementation, reduce land use conflicts, and access cost-effective solutions, ultimately ensuring sustainable development and environmental stewardship.
LPAs
Local planning authorities (LPAs) benefit significantly from working with established habitat banks. Collaboration with national habitat bank providers ensures the seamless integration of BNG planning processes, enabling LPAs to effectively address off-site BNG concerns with expert advice and delivery mechanisms. Additionally, LPAs benefit from the robust operational and governance system within established habitat banks, enhancing their confidence in approving off-site BNG Unit provisions within the Biodiversity Gain Plan. Moreover, habitat banks established under an s106 agreement with the LPA provide reassurance regarding the monitoring and management mechanisms ahead of time.
How to Establish a Habitat Bank in Five Steps
There are various forms, methods, and approaches to habitat banking from a landowner's and operational point of view. Some aspects of off-site BNG Unit provision have been intentionally left flexible, such as the point at which registration of your habitat bank can take place. Some habitat banks forward create their habitat enhancements, which means that registration is likely necessary before selling or allocating BNG Units to a development.
Other approaches mean that BNG Units are created at the point of sale or after they have been sold, meaning that a site will need to be registered at the same time as specific BNG Units are also allocated on the register to development, with enhancement works to be completed within an agreed time frame, this is also reflected within the Statutory Biodiversity Metric.
Below is a simple example of one of the options for setting up a habitat bank:
Baseline Survey & Options:
Engage a competent ecologist to conduct a baseline habitat survey, assessing the existing conditions and viable options for creating, enhancing, and retaining biodiversity. Measure these options using the Statutory Biodiversity Metric.
HMMP & Legally Securing the Habitat Bank:
Secure the habitat bank through a s106 agreement with the Local Planning Authority (LPA) or a conservation covenant with a registered responsible body. Agree on the Habitat Management and Monitoring Plan (HMMP) with the LPA or responsible body, incorporating ecological advice and data from the baseline survey, options, and metric information.
Agreeing Sale:
Negotiate the sale of BNG units with developers, ensuring that the specific BNG units align with metric trading rules. The cost of BNG units sold should cover all creation, enhancement, monitoring, and maintenance costs for 30 years.
Registering the Land & Recording an Allocation:
Apply to register the habitat bank land and allocate the provision of BNG Units to the developer. Natural England will assess the application and allocation to ensure compliance. Once approved, the LPA will allow the developer to commence development as they have met their pre-commencement conditions for BNG.
Ongoing Management, Monitoring and Reporting:
Manage and report on the habitats required for at least 30 years, following the HMMP and legal agreement (s106/conservation covenant). Report on the progress of the habitat bank at agreed intervals to the local planning authority or responsible body.
Requirements for Habitat Banks
Below is a brief list of initial considerations that Landowners should think about when considering habitat banking on their own:
Ability to finance the creation, ecological and legal documentation, and surveys required for habitat banking.
Willingness to accept responsibility for the full 30-year creation, management, maintenance, and liability for the habitat bank.
Demonstrated financial management capabilities to ensure provision for the 30-year activities.
Capacity to keep abreast of regulatory and governance standards required to deliver off-site BNG.
Business planning and strategy are needed to ensure that the project is viable in terms of location and demand and is over the 30-year required period.
Ability to market, engage and promote the BNG Units generated to developers, ensuring successful negotiation of sales terms and subsequent registration, etc.
The ability to provide the developers with the necessary support during the planning process to successfully meet their off-site BNG requirements from your site.
Assessment of the ecological value of the land, including its current biodiversity status and restoration potential.
Identification of unproductive land areas suitable for habitat creation and enhancement.
Access to the site and its compatibility with habitat restoration efforts.
Alignment with the local nature recovery scheme and its contribution to local biodiversity goals.
Adequate land size, typically a minimum of 10 hectares, to support meaningful biodiversity enhancement efforts.
Avoidance of Sites of Special Scientific Interest (SSSI) or irreplaceable habitat to minimise environmental impact.
Understanding your site's environmental context is crucial. For example, if your site is a brownfield site, while this does not preclude you from establishing a habitat bank for BNG, it will require a considered and practical approach. In some cases, brownfield sites can potentially impact areas previously damaging the environment due to industrial or commercial activities.
Landowners can make informed decisions by considering these requirements and effectively contribute to Biodiversity Net Gain through habitat banking.
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