Arnolds Keys looks at pros and cons of biodiversity net gain

Of course, 2024 will be a general election year, and one thing we can be certain of is that housing is likely to be a key political battleground. In Norfolk that is particularly apposite, because the nutrient neutrality issue has brought house building to a virtual standstill in much of the county – and BNG will almost certainly be part of the solution to that long-running problem.

Simon Evans, agricultural partner at Arnolds Keys - Irelands Agricultural (Image: Arnolds Keys)

But biodiversity issues run deeper than nutrient neutrality. From January 1, 2024, developers must ensure that their activity leaves the biodiversity of an area actually enhanced once they have completed their work. Achieving that will mean purchasing credits, which will be created by landowners, and especially farmers, developing biodiverse habitats on their land, often at the direct expense of food production.

To some, that will sound like easy money, accepting a 30-year covenant to be paid money for essentially not working the land (although they will have to create and maintain the habitat during that period). It is suggested that the payment for a high-paying habitat may be £120,000 per hectare, £1,600 per acre per annum for each year of the covenant.

At a time when the ‘Brexit replacement’ pot of money is about to expire, those payments may sound tempting. With the public finances already stretched, the temptation to replace uncertain public payments with guaranteed money coming from developers could be politically and economically compelling.

However, I would counsel some caution before locking up land in this way for three decades. These payments may sound generous today, but will it still seem so bountiful in 30 years’ time? Or will BNG covenants effectively reduce land values, as well as creating all sorts of succession and potential inheritance tax issues?

Remember also that political priorities can change, both in the short term and in the longer term.

When I first started in practice in the 1980s, agricultural policy was all about maximising production, with grants available for things like removing hedges and land drainage. Now we are receiving public money to put them back and maintain them.

If climate change and food security issues mean that food production, rather than environmental stewardship, becomes the imperative in decades to come, those who took the money to lock up their land for 30 years in biodiversity covenants may live to regret their decision. There is a place in the agricultural sector to accommodate the developers’ requirements, but consider carefully ‘what’ and ‘where’.

For more information, visit arnoldskeys.com