The UK Environment Act: A new era for Biodiversity Net Gain?

  • Opinion

    09 July 2024

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An increased focus on sustainability and environment enhancement when planning infrastructure projects is an idea gaining traction overseas. With reform of New Zealand’s resource management and environmental landscape one of the Government’s priorities [1], New Zealand could look to overseas legislation when considering whether and how to introduce nature-positive infrastructure (NPI) requirements in our law and policy. In our previous article in this series, we highlighted the United Kingdom’s Environment Act 2021 (the Environment Act) as an example of legislation that is setting the precedent globally in this area. We now turn to consider that Act and its potential application in New Zealand in more depth.

Overview of Act

The Environment Act came into force in November 2021. Historically, the UK’s environmental standards and principles were derived from the European Union and international law. Post-Brexit, the UK had the opportunity to create new environmental laws which reflected its own goals. The Environment Act is comprehensive, including sections on waste and resource efficiency, air quality, water, and nature and biodiversity. It includes five Environmental Principles which must be considered during policy-making [2]:  

  • integration: the overarching fundament that environmental protection should be integrated into the making of policies;
  • prevention: that policies should aim to prevent environmental harm and damage;
  • rectification at source – policy makers should aim to develop solutions that are cost effective, efficient, and equitable in the long-term;
  • polluter pays: where possible, the costs of pollution should be borne by those causing it, rather than the person who suffers the effects of the resulting environmental damage or the wider community; and
  • precautionary: policymakers need to make a reasonable assessment using the best available scientific evidence of the risk.
Biodiversity Net Gain

The Act is designed to help achieve the UK’s biodiversity goals and targets [3]. It requires new developments to demonstrate a Biodiversity Net Gain (“BNG”) of at least 10%, to be maintained over at least 30 years. BNG has been defined as:

“an approach to development, and/or land management, that aims to leave the natural environment in a measurably better state than it was beforehand [4]."

Although prior to the Act, other UK legislation and policy [5] conveyed a duty on local authorities to conserve and enhance biodiversity when considering planning applications, the Act aims to substantially strengthen that protection by effectively conferring a biodiversity requirement on developers. The BNG requirement came into effect in February 2024 for most town and country planning developments [6] and in 2025 will apply for nationally significant infrastructure projects [7].

How do we measure BNG?

During the planning stage of the development, ecological appraisals will be used to calculate a pre-development and projected post-development biodiversity value to measure the BNG. This will use Natural England’s Metric [8] that scores habitats according to their importance for plants and wildlife. An ecologist will measure the biodiversity value of the existing habitat using the four key factors of the Metric: habitat size, its functionality, whether it is an area of particular ecological importance and whether it is a priority area for habitat creation/enhancement. Developers must submit a Biodiversity Gain Plan to the planning authority using a template published by the Department for Environment and Rural Affairs (Defra), which will set out how they will deliver the net gain. The ecological gains or losses will be represented as a metric unit.

How do developers demonstrate net gain?

There are three ways a developer can achieve BNG [9]:

1. Create biodiversity on-site through enhancement of existing habitats on site through plant selection and minimising disturbance, building green roofs, landscaping, or green infrastructure.

2. If they cannot achieve all their BNG targets on-site, they can deliver through a mixture of on-site and off-site. They can do this by either making off-site gains on their own land outside of the development site or by buying off-site biodiversity units on the market. This will result in a supply of biodiversity units from landowners (private organisations, farmers, local authorities, and NGOs) who have created or enhanced habitats on their land to sell to developers who require them. Biodiversity offsetting should only occur when the project cannot first avoid or mitigate the resultant biodiversity loss.

3. If a developer cannot achieve on-site or off-site BNG, the last resort is to buy statutory biodiversity credits from the government. The guidance released indicates that this revenue will be re-invested in habitat creation nationally.

Landowners and farmers will be encouraged to register land suitable for habitat enhancement or creation on a national register of BNG sites. The price of biodiversity credits will be set higher than prices for equivalent biodiversity gain on the private market to encourage its development, with Defra reviewing credit prices every six months [10].

Enforcement

Both developers and landowners must enter into any BNG arrangement for a minimum period of 30 years, and this must be secured via a planning obligation or conservation covenant. If BNG requirements are not met, the landowner may be in breach of planning conditions, planning obligations or legal agreement. This could lead to local planning authorities taking enforcement action against the landowner. 

At a broader scale, the Act has also established a new independent watchdog, the Office for Environmental Protection (OEP), replacing the EU Commission’s role in compliance management and holding the Government and other public bodies to account. The OEP has powers to advise the ministers and government departments. It has a duty to report annually on the government’s progress to conserve and enhance biodiversity and whether it is meeting related targets, to which the government has a duty of response [11].

Concerns

Although the BNG regulations, which are embedded in the Environment Act, have only recently commenced, there are a range of concerns about their practicality, including:

  • Development of the biodiversity unit market, including:
    • maintenance of the BNG site register;
    • availability of units to buy – dependent on landowners being willing to enter the market;
    • the process for registering land and who can do so; and
    • the process for removing land from the register and whether there are any fees payable.
  • Development of the statutory biodiversity credits system, including:
    • how the distribution of credit funds for habitat creation will work in practice;
    • how frequently and easily developers will be able to buy credits rather than secure a BNG; and
    • whether a national percentage is appropriate to be applied across all locations and sites [12].
  • The ability of local authorities and developers to implement the scheme, including:
    • how BNG delivery will be monitored and how stringent enforcement will be; 
    • how to mitigate the costs of maintenance and implementation of the net gain criteria; and
    • whether sufficient ecological expertise is available to create and assess BNG plans. Government funding has already been committed to help local authorities with creating ‘green’ jobs [13].
  • The expected impact of the scheme: There are numerous exemptions and the regulations do not apply where a site has an existing biodiversity value of zero (e.g. potentially much brownfield development).
  • The interdependence between the OEP and the government [14]: A lack of clarity exists over how the OEP is funded, how members are appointed and its enforcement powers over the Government.
Application to New Zealand

The UK’s Environment Act is unique as it imposes requirements on developers prior to development (at the planning consent stage). Whether New Zealand could implement a similar law or amend current planning laws is a matter for Parliament and no doubt after intense scrutiny of how the Environment Act works in practice long term. 

Based on experience with the UK legislation and the operation of biodiversity offset markets in Australia (State and Federal) suggest some practical challenges that will need to be overcome. These concerns could equally arise in New Zealand if similar legislation or directives were implemented.

In Australia, there are well developed State [15] and Federal [16] offset markets that are used to offset the loss of native vegetation. However, these schemes have attracted criticism as to whether they go far enough to prevent the loss of biodiversity [17]. While there is a requirement to monitor offset sites, few resources are allocated to auditing and enforcement. Very large projects or projects located in sensitive areas (i.e., alpine) often encounter problems with there not being enough credits of a particular type on the market, resulting in very lengthy negotiations with regulators and/or the project needing to make substantial changes.

As discussed in our previous article, there is significant reform of the Resource Management Act 1991 underway. New Zealand can look to overseas for a model framework implementing environmental net gain into development projects. In our next article, we will discuss how parties can incorporate such directives into their contracts.

Footnotes

[1] First RMA amendment Bill introduced to Parliament 23 May 2024 Hon Chris Bishop; Speech to the New Zealand Planning Institute 22 March 2024 Hon Chris Bishop Beehive; Government unveils its plan for RMA reform 25 March 2024 MinterEllisonRuddWatts.
[2] Section 17(5) Environment Act.
[3] Environmental Targets (Biodiversity) (England) Regulations 2023. See also the HM Government Environmental Improvement Plan 2023 First revision of the 25 Year Environment Plan. 
[4] Planning Advisory Service “Biodiversity Net Gain FAQs – Frequently Asked Questions” (16 October 2023) Local Government Association PAS
[5]  The Natural Environment and Rural Communities Act 2006, Section 40. The National Planning Policy Framework, Section 15
[6] Exemptions and small sites not included (small sites are residential sites of less than 9 dwellings on a site of less than one hectare or where number of dwellings unknown on a site of less than 0.5 hectares, and non-residential spaces where floor space is less than 1,000 sqm, a site area of less than 0.5 hectares. BNG for small sites is due to come into effect on 2 April 2024. See Biodiversity Net Gains – What are the exemptions? (22 January 2024) Land Use Policy Team.
[7] Burges Salmon “What to expect from environmental law in 2023” (02 February 2023) Burges Salmon
[8] Biodiversity Metric 4.0, published in March 2023.
[9] Department for Environment, Food & Rural Affairs Understanding biodiversity net gain 21 February 2024.
[10] DEFRA “Statutory biodiversity credit prices” (11 August 2023) Gov UK
[11] Office for Environmental Protection Statement in relation to the revised biodiversity duty December 2023.
[12] Local Government Association “Get in on the Act: The Environment Act 2021” (10 May 2022)
[13] Climate Action UK Government announces ‘world-first’ scheme to deliver nature boost for housing developments 13 February 2024.
[14] Friends of the Earth “5 things you need to know about the new Environment Act” (19 November 2021) 
[15] For example, the Native Vegetation Offset Register which applies to South Australia
[16] For example, the environmental offsets policy under the Environment Protection and Biodiversity Conservation Act 1999.
[17] Department of Climate Change, Energy, the Environment and Water - Professor Graeme Samuel AC’s independent review of the EPPBC Act, October 2020.