Environmental markets: more detail on Defra's plans

11 February 2011

Bio-diversity offsetting looks like it could be arriving in the UK, following the trend in many countries to use 'environmental markets' to protect natural habitats. In 2008 in the US, conservation credits from developers raised over $3bn for wetland conservation. 

The Department of Environment, Food and Rural Affairs has now closed its consultation on the proposals, but they are expected to form a key part of its Natural Environment white paper, due in spring. 

The policy could result in developers, housebuilders clients paying a tariff based on whether the wildlife being lost to the bulldozer is considered to have Very High, High, Medium or Low distinctiveness. 

Defra has assigned values of bespoke, 24, 16 and 8 to these four categories. As the tariffs are applied per hectare of land, a developer building on 7 ha of land rated to have Low distinctiveness  would be required to pay 56 for units. 

However, the financial value attached to one unit, which would be related to the cost of restoring and creating habitats in line with the UK's Biodiversity Action Plan, rather than the “value” of what had been lost, has yet to be calculated.

If implemented, the policy is likely to lead to the creation of a market for biodiversity offsets, with landowners or developers setting aside land for this purpose, and intermediary companies facilitating deals. 

One organisation entering the market is the Environment Bank, which has already launched a pilot scheme, working with seven local authorities, Defra, Natural England and various wildlife bodies. 

The Thames Headwaters Conservation Credits project covers an area over 1000 square miles, across Gloucestershire, Wiltshire and Oxfordshire, with money raised from developers used to reconnect fragmented habitats. 

Janet Kidner, head of sustainability at Lend Lease says that the offsetting proposal could provide developers with more flexibility. But she added: “It would need to be tightly regulated and monitored to avoid the sort of scams associated with the early days of carbon offsetting.” 

According its the website, Defra sees Section 106 agreements as the main tool to enforce the system, although it could also come under the Community Infrastructure Levy. 

The wesbite also suggests that the system would work best if neighbouring authorities work together to devise a strategy linked to local wildlife priorities, perhaps involving local biodiversity action groups and even Local Enterprise Partnerships. 

The website also contains the following outline of how the scheme would work:  

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