Evaluation of the Biodiversity Offsetting Pilot...

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Defra project code: WC 1051

Evaluation of the Biodiversity

Offsetting Pilot Programme

Final Report

Volume 1:

June 2014

Collingwood Environmental Planning Limited

in partnership with

The Institute for European Environmental Policy (IEEP)

Volume 1: Final Report June 2014

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Project title: WC1051: Evaluation of the Biodiversity Offsetting pilot

programme

Contracting

organisation:

Department for Environment, Food and Rural Affairs (Defra)

Lead contractor: Collingwood Environmental Planning Limited

Address: 1E The Chandlery, 50 Westminster Bridge Road,

London, SE1 7QY, UK

Contact: Dr William Sheate (Project Director)

Jonathan Baker (Project Manager)

Tel. +44 (0)20 7407 8700

Fax. +44 (0)20 7928 6950

Email: [email protected]

[email protected]

Website: www.cep.co.uk

Partner organisations: The Institute for European Environmental Policy (IEEP)

Address: IEEP Offices, Floor 3, 11 Belgrave Road, London

SW1V 1RB, UK

Contact: Dr Graham Tucker

Tel: +44 (0)20 7799 2244

Fax: +44 (0) 20 7799 2600

Email: [email protected]

Website: www.ieep.eu

Report details: Report title: Volume 1: Final Report

Date issued: June 2014

Purpose: To provide a synthesis of the information

collected across the two year evaluation of

the biodiversity offsetting pilot programme

Version no.: 2.4

Author(s): Baker, J., Sheate, W.R., Bennett, T., Payne, D.,

Tucker, G. White, O and Forrest, S.

Reviewed by: Eales, R. and Ten Brink, P.

Acknowledgements The Steering Group would like to thank the pilots for being so

generous with their time and insights. They would also like to

thank the Complementary Projects, the Natural England

advisers and to all of those who provided their time and

expertise to the evaluation, including the team at CEP.

The Project Steering Group greatly valued the efforts and expert

help of Ian Smith from Natural England in helping to guide this

project and for his dynamic assistance with the production of

this final report, on the brink of his retirement. He is most fondly

and respectfully remembered.

mailto:[email protected]


http://www.cep.co.uk/


http://www.ieep.eu/


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0. Executive Summary

0.1 Introduction

The evaluation project of the biodiversity offsetting pilot programme was a two year study

commissioned by Defra which began in July 2012, undertaken by Collingwood

Environmental Planning (CEP) in partnership with the Institute for European Environmental

Policy (IEEP). This is the Executive Summary of the Final Report of the evaluation.

The biodiversity offsetting pilot programme was established by Defra in April 2012, consisting

of six voluntary pilot areas that agreed to establish pilot groupings of Local Planning

Authorities (LPAs) and other interested stakeholder organisations to pilot the concept of

voluntary biodiversity offsetting in England. In so doing the pilot areas would also test the

biodiversity offsetting metric developed by Defra. The six pilots were:

Coventry, Solihull and Warwickshire (CSWAPO).

Devon (comprising three sub-pilots North, South and East Devon).

Doncaster.

Essex.

Greater Norwich.

Nottinghamshire.

Although six pilot areas are described, in practice there were eight as the Devon pilot

consisted of three sub-pilot areas. To distinguish between the three Devon sub-pilots, this

report refers to eight pilot areas.

The stated objectives of the evaluation were, to assess the extent to which the biodiversity

offsetting pilots:

A: Help to use resources more effectively to deliver greater benefits for biodiversity.

B: Streamline the process of agreeing compensation for biodiversity loss as required

by planning policy, in a cost effective way.

0.2 Key findings

The key findings emerging from the evaluation, grouped under the thematic headings used

across the evaluation are:

Governance

Every pilot was led by a pilot host who provided the majority of the leadership, momentum

and decision making for the biodiversity offsetting pilot areas. The pilot hosts also provided

ecological expertise; this was felt to be essential to implementing the biodiversity offsetting

approach.

Six of the eight pilots were supported by a group of stakeholders from different organisations,

mainly LPAs and Non-Governmental Organisations (NGOs). These pilot groups were reported

to work well and to provide a useful forum for the discussion of issues and the provision of

advice to the pilot hosts.

Within the pilot programme Natural England’s role was to provide technical advice and to

accredit offset providers and projects. The pilots welcomed the involvement of Natural

England, although they would have appreciated more proactive support particularly with

regard to promoting biodiversity offsetting within specific applications.

Process and management

Each pilot developed a biodiversity offsetting ‘strategy’ which varied in the level of detail

and length. Developing these documents provided a focus around which the biodiversity

offsetting metric (developed by Defra) could be tested and facilitated the discussion of


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biodiversity offsetting within the pilot groups. The strategies also resulted in principles and/or

specific areas where offset sites would be targeted.

Seven of the eight pilots used the metric in ‘live’ applications. Where the metric was used,

stakeholders felt that it was largely beneficial: providing a quantified, consistent, transparent

and relatively simple process that accounted for a wider range of biodiversity impacts than

current practice.

There were numerous examples across the pilots where the use of the metric was considered

to have led to improvements in the nature and extent of on-site mitigation and

compensation (above what was likely to have happened without the metric).

Despite broad support for the metric, some stakeholders had concerns. They noted that the

metric omitted certain ecological aspects (e.g. species, habitat function and connectivity),

it required additional processes and information requirements and, in the view of some, it

over-estimated the importance of lower value habitats and the impact of their loss.

Legal and development planning

All but one of the pilots felt that within a voluntary system existing national policy was not

sufficient to support biodiversity offsetting particularly for lower value habitats. The definition

of ‘significant harm’ as referred to in the National Planning Policy Framework (NPPF) was key

to this with CSWAPO using the metric to support their interpretation of significant. Through this

process, supported by good quality ecological data and substantial ecological expertise,

this pilot was able to use the metric on over 60 applications and secure offsite compensation

on six before the end of the pilot programme.

Partly in response to the perceived insufficiency of national policy, the pilots worked with

planning policy officers to include explicit reference to biodiversity offsetting as a mechanism

to achieve no-net-loss/net-gain in local planning policy. Because of the time taken to

prepare them, few plans with explicit reference to biodiversity offsetting were adopted

during the pilot programme.

Early engagement between applicants and planning authorities in the planning application

process was regarded by participants as key to ensuring that the metric was used and,

where appropriate biodiversity offsetting was considered as an option to compensate for

residual losses. However, in all but one of the pilot areas, a lack of resources hindered a

proactive approach to promoting the metric and biodiversity offsetting.

Consistent with current practice, section 106 legal agreements (s.106) were to be used to

require off-site compensation and long term management. Planning conditions were used

for on-site enhancements. During the pilot programme no s.106 agreements were formalised,

largely because of the time taken to determine applications, agree s.106s and commence

development. Although none were legally in place as many as 16 applications were

expected to result in s.106s including offsite compensation.

Costs

The time and costs to develop the biodiversity offsetting strategy varied depending on its

complexity. Very simple, informal strategies only required a few days of time to be prepared

whereas strategies that were complex or part of wider planning processes used significantly

more resources, up to £13,000.

Despite some inconsistency in the views of stakeholders, the general opinion was that

biodiversity offsetting and the use of the metric had the potential to lead to a marginal

reduction in time for planning decisions, but there was an initial learning period during which

it took more time.

Compared to current practice, in applications with residual biodiversity loss the use of the

metric and biodiversity offsetting increased the costs of compensation. Increases to cost

occurred because of the higher standards required by the metric compared to current

practice, in particular requiring management ‘in perpetuity’ and using risk multipliers


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In the pilot programme costs for offsets were subject to significant negotiation between

applicants and LPAs, with applicants refusing to meet full costs and not pursue biodiversity

offsetting (and therefore no-net-loss) in many instances.

The lack of costed management plans and the insufficiency of existing evidence on the

costs of habitat restoration and recreation meant developers and pilot hosts were not able

to accurately predict the costs of specific offsets. Searching for and preparing appropriate

offset sites entailed costs which developers were reticent to meet – these costs were sensitive

to the exchange rules (which determine which habitats can replace certain habitats) and

how far offset sites could be from the impact site. Offset providers were also reluctant to use

their time to prepare management plans without a commitment that the plan would be

funded.

Ecological implementation and monitoring

The pilots felt that biodiversity offsetting and the application of the metric more clearly

demonstrated and strengthened the application of the mitigation hierarchy in most

applications. However, evidence from two applications suggested that biodiversity offsetting

was presented as a ‘validated route’ for compensation and in doing so may have

undermined the mitigation hierarchy.

In the absence of guidance on the meaning of ‘in perpetuity’ for offset sites, pilots were

working with offset providers to prepare management plans of around 25-30 years. This was a

pragmatic response undertaken to incentivise developers and potential offset providers to

work with the pilots.

LPAs favoured offset sites which were close to the impact, ideally within the same local

authority, whilst being consistent with local ecological priorities. This preference is based on

LPAs wishing to retain the benefits of developer contributions within their own authorities.

The accreditation process for offset providers was considered to be straightforward by both

offset providers and Natural England, while the project viability assessment was seen as more

complicated, although in practice each was tested in only one case.

0.3 Conclusions

The pilots were atypical in that the LPAs volunteered to participate in the pilot programme;

they had access to ecological expertise and exhibited a high level of enthusiasm for

exploring biodiversity offsetting. This possible bias should be borne in mind when attempting

to extrapolate or scale up findings from the pilot programme to any form of national system.

The level of biodiversity offsetting activity within the pilots was lower than expected so some

aspects of biodiversity offsetting remain untested and considerable evidence gaps remain,

particularly for long term impacts. The use of the metric and the governance and strategy

arrangements were reasonably well tested. But there was a general lack of experience and

evidence related to offset delivery and management, although some evidence began to

emerge towards the end of the pilot programme.

The evaluation identified a number of barriers to voluntary biodiversity offsetting. These

included resource constraints, immaturity of the offset market and a lack of perceived

support in planning policy. Despite these barriers challenges experienced by the pilots were

being resolved and there was a sense of progress as the programme developed.

In general stakeholders considered the metric to be an effective, efficient and transparent

tool to quantify and communicate the impact of a development on habitats. Overall, the

use of the metric, informed by ecological expertise, tended to support the application of the

mitigation hierarchy, although there were some applications where biodiversity offsetting

was presented as a ‘validated route’ for compensation which may have undermined the

hierarchy. In most instances developers sought to challenge the need to meet the increased

biodiversity compensation requirements identified by the metric (due to the fact that

compared to current practice these costs were higher) unless required to do so by a robust


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interpretation of national planning policy or the inclusion of biodiversity offsetting, no-net-loss

or the use of the metric into local planning policy. The pilot hosts all stated (and this was

supported by the evidence collected through the evaluation) that the application of the

metric in particular highlighted the current and on-going failure of planning applications to

meet the objective of no-net-loss, or achieve net-gain of biodiversity.

It is apparent that the current system needs to be improved in some way if no-net-loss policy

is to be met.

Assessment against evaluation objectives

Evidence from the pilot programme suggests that whilst biodiversity offsetting has the

potential to deliver improvements in biodiversity outcomes it will require additional resources

and ecological expertise in local authorities to deliver it and in instances where residual

biodiversity loss is identified will increase costs overall for developers compared to current

practice. It is likely that it would, at best, deliver only marginal benefits in terms of streamlining

the planning process for agreeing compensation for biodiversity loss.

0.4 Suggested options for improvement

Discussions with the pilots and others who engaged with the pilot programme through

interviews and workshops identified the following suggested options to improve the process

and efficacy of biodiversity compensation:

1. The use of a Defra habitat metric could be made mandatory within planning

applications to support the implementation and monitoring of current biodiversity

policy.

2. Defra and Natural England could consider making improvements to the metric based

on the evidence from the pilot programme.

3. Defra and Natural England could produce updated technical guidance on

biodiversity offsetting including:

a. A minimum definition of ‘in perpetuity’.

b. An updated list of habitats that are defined as ‘irreplaceable’ (i.e. not subject

to biodiversity offsetting).

c. Improved guidance on the mitigation hierarchy and a definition of

compensation as a last resort.

d. Improved evidence and guidance on habitat restoration difficulty and time to

target condition including the identification of key determinants (such as type

of management / characteristics of the site) to achieving target condition.

4. LPAs could continue to develop local policy for no-net-loss and compensation for

residual loss, reflecting existing national planning policy.

5. If, in addition to the metric, a mandatory biodiversity offsetting system were to be

introduced, a transition period would be needed to allow the market for offsets and

delivery, accreditation and monitoring mechanisms to develop. In the view of the

authors this transition ought to be at least one year.

6. Natural England, Defra and NERC could review and prioritise emerging evidence

needs based on the experiences of the pilots.

7. A targeted evaluation of a number of the pilots’ projects that were close to

completion at the end of the pilot programme could be undertaken to maximise

learning from the pilots, particularly around offset delivery.

8. A scoping study could be undertaken on the feasibility of LPAs undertaking habitat

assessments within local planning policy, in particular within site allocation plans.


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Contents

0. Executive Summary ........................................................................ 3 0.1 Introduction ................................................................................................................................... 3 0.2 Key findings ................................................................................................................................... 3 0.3 Conclusions ................................................................................................................................... 5 0.4 Suggested options for improvement ....................................................................................... 6 List of figures ........................................................................................................................................ 9 List of tables ......................................................................................................................................... 9 Glossary .............................................................................................................................................. 10

1. Introduction ................................................................................... 11 1.1 Context and purpose of the Final Report ............................................................................. 11 1.2 Background and policy landscape ....................................................................................... 11 The pilots and the complementary projects .............................................................................. 13

2. Evaluation framework and research methods ........................... 15 2.1 Evaluation framework ............................................................................................................... 15 2.2 Research methods .................................................................................................................... 17 2.3 The counterfactual .................................................................................................................... 19 2.4 Supplementary research .......................................................................................................... 19 2.5 Summary of evidence gathered ............................................................................................ 20

3. Evaluation Findings ....................................................................... 22 3.1 Results of piloting biodiversity offsetting in each area ....................................................... 22 3.2 Evidence gathered against evidence needs ...................................................................... 23 3.3 Governance ............................................................................................................................... 23 3.4 Process and management ...................................................................................................... 26 3.5 Legal and development planning ......................................................................................... 36 3.6 Costs ............................................................................................................................................. 40 3.7 Ecological implementation and monitoring ........................................................................ 45

4. Analysis and Discussion ............................................................... 50 4.1 Analysis results ............................................................................................................................. 50 4.2 The consideration of biodiversity within a voluntary system.............................................. 50 4.3 Costs and efficiency of biodiversity offsetting ..................................................................... 54 4.4 National and local planning policy ....................................................................................... 55 4.5 Future biodiversity offsetting system ....................................................................................... 57 4.6 Barriers to voluntary biodiversity offsetting ............................................................................ 59

5. Conclusions ................................................................................... 63 5.1 Summary assessment against evaluation objectives ......................................................... 63 5.2 Assessment of the evaluation objectives .............................................................................. 63 5.3 Limitations to the conclusions .................................................................................................. 64 5.3 Suggested next steps ................................................................................................................ 64

6. References ..................................................................................... 66

7. Bibliography .................................................................................. 68

8. Appendices ................................................................................... 71 Appendix 1 – Complementary projects ...................................................................................... 71 Appendix 2 – Collated evaluation questions ............................................................................. 71 Appendix 3 – Summary of evidence ............................................................................................ 71 Appendix 4 – Review of pilot Local Planning Authority (LPA) development plans ............ 71 Appendix 5 – Offset costs ............................................................................................................... 71 Appendix 6 – Roles and responsibilities........................................................................................ 71


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List of figures

Figure 1: Evaluation Framework Overview .......................................................................................... 15

Figure 2: Biodiversity offsetting activities within the pilot programme ........................................... 22

Figure 3: Schematic representation of stakeholder perceptions on key aspects of voluntary

biodiversity as tested by the pilot programme .................................................................................. 50

Figure 4: Mitigation hierarchy in practice: fuzzy boundaries. Taken from Defra (2014a)........... 51

Figure 5: Emerging criteria used by the pilots for offset site selection ........................................... 56

Figure 6: Pre-requisites for a biodiversity offsetting system (from pilots’ experience) ................. 58

Figure 7: Mapping of barriers to voluntary biodiversity offsetting ................................................... 60

Figure 8: Identified cost elements and comparative scale ............................................................. 63

List of tables

Table 1: Host organisations of each pilot ............................................................................................ 13

Table 2: The Complementary Projects that provided information ................................................. 14

Table 3: Interview points and the number of interviewees in each stakeholder group ............ 21

Table 4: Pilot progress at the end of the pilot programme (dark bands indicate progress) ..... 23

Table 5: Dissonance in users’ expectations for improvements to the metric ............................... 35

Table 6: Emerging plans in the pilot areas with explicit reference to biodiversity offsetting (at

the time of writing) ................................................................................................................................... 38

Table 7: Self-reported costs related to developing the biodiversity offsetting strategies .......... 41

Table 8: Opportunities and threats presented by biodiversity offsetting to potential offset

providers..................................................................................................................................................... 48


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Glossary

Additionality A property of a biodiversity offset (or any action), where the conservation

outcomes it delivers are demonstrably new and additional and would

not have resulted without the offset (or the action).

Biodiversity unit The output from the metric which states the total impact (positive or

negative) of the development.

Blue line boundary A wider area around the red-line boundary which may be owned by

the applicant but is not included within the application.

Complementary projects Voluntary projects identified by Defra to provide additional learning.

Conditions As an alternative to outright refusal, the LPA may grant permission subject

to conditions, for example, restricting what the applicant can do on the

premises, or requiring the applicant to get specific approval for aspects

of the development, such as the materials to be used, before they can

proceed.

Conservation credit The amount of biodiveristy that needs to be delivered to compensate for

the residual loss of biodiversity units from a development.

Counterfactual The process currently followed for agreeing compensation for biodiversity

loss within planning applications, without the use of the metric or other

biodiversity offsetting mechanisms.

Developer contributions The general term for funding sectured via planning conditions / s,106.

Down-trading An exchange rule whereby the loss of habitats can not be offset by

habitats of lower-dinstinctiveness.

Exchange rules The priorities with which habitats can be offset against each other.

Related to down-trading.

Green infrastructure A network of natural spaces and other environmental features.

Habitat banking Combining funding from multiple developments into a single offset site.

Habitat condition The quality of the habitat. Within the pilot prpogramme this was based

primarily on Natural England’s “Higher Level Stewardship: Farm

Environment Plan (FEP) Manual”.

Habitat distinctiveness Reflects, amongst other factors, the rarity of the habitat concerned (at

local, regional, national and international scales) and the degree to

which it supports species rarely found in other habitats. Guidance was

provided alongside the pilot, setting out the distinctiveness rating for

different habitat types.

Mitigation hierarchy A policy for ensuring development activities do not have unnecessary

impacts on the environment, by requiring that impacts should be first

avoided, then reduced/mitigated and only as a last resort be

compensated for.

Offset site The location where the off-site compensaiton will be delivered.

Pilot groups The steering groups developed to support the pilot hosts.

Pilot hosts The individuals who submitted expressions of interest and led the pilot.

Red-line boundary The area that is subject to the application.

Section 106 (s.106) Section 106 of the Town and Country Planning Act 1990 (as amended) -

known as planning obligations, are agreements between developers

and local planning authorities that are negotiated as part of a condition

of planning consent.

Sustainable urban

draingae systems (SUDS)

A natural approach to managing drainage in and around properties

and other developments. SUDS work by intercepting rainfall, slowing and

holding back the water that runs off from a site and allowing it to

percolate into the subsoil and groudwater.

Validation checklist Sets out the information requirements a planning application needs to

include when submitted.


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1. Introduction

1.1 Context and purpose of the Final Report

The evaluation of the biodiversity offsetting pilot programme was a two year study

commissioned by Defra and undertaken by Collingwood Environmental Planning (CEP) in

partnership with the Institute for European Environmental Policy (IEEP). This report describes

the research approach, the findings, conclusions and suggestions for next step. It addresses

the two evaluation objectives set by Defra and provides an assessment of the extent to

which biodiversity offsetting:

A. Helps to use resources more effectively to deliver greater benefits for biodiversity.

B. Streamlines the process of agreeing compensation for biodiversity loss as required by

planning policy, in a cost effective way.

This report is intended to be used by Defra to advise Ministers about the potential efficacy of

biodiversity offsetting in England. It is expected that other stakeholders such as Local

Planning Authorities, developers and Non-Governmental Organisations (NGOs) will also be

interested in the evaluation.

1.2 Background and policy landscape

Biodiversity offsetting seeks to achieve no-net-loss, or a net-gain, of biodiversity by

compensating for any residual adverse biodiversity impacts of development. It does this by

seeking to provide an equivalent level of, or additional, measurable biodiversity benefit

somewhere other than the development site (i.e. offsite). The need for quantification of

biodiversity impacts associated with development and the commitment to demonstrate no-

net-loss of biodiversity differentiates biodiversity offsetting from ‘traditional’ biodiversity

compensation.

There are a number of biodiversity offsetting schemes in place internationally and it is

established good practice to follow the ‘mitigation hierarchy’ (Box 1). This means that

biodiversity offsetting should be used only when the developer has looked firstly to avoid

damage to biodiversity and secondly made attempts to reduce, or mitigate any impacts. If

that is not possible, then off-site compensation may be undertaken. Within England, the

National Planning Policy Framework (NPPF) refers to the need to follow the mitigation

hierarchy in paragraphs 118 and 152. The mitigation hierarchy is also enshrined in EU and UK

law, through the requirement of the EU Environmental Impact Assessment (EIA) Directive

2011/92/EU1 and the UK EIA implementing regulations to avoid, reduce or remedy significant

adverse effects of a proposed project on the environment.

International experience (see for example Ecosystem Market Place, 2011 and European

Commission, 2014) suggest that provided biodiversity offsetting is carried out in accordance

with the mitigation hierarchy and other key principles, it can have potential benefits for both

1 Article 5 (3) (b)

Box 1: Mitigation Hierarchy

The hierarchy is defined in paragraph 118 of the NPPF. The mitigation hierarchy is a policy for ensuring

development activities do not have unnecessary impacts on the environment:

In the first instance harm should be avoided, for instance by locating development at a

different site.

Where this is not possible the impacts should be mitigated, for instance through the detailed

design of the development.

Lastly any residual impacts should be compensated for, for instance by restoring or recreating

habitat elsewhere.


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biodiversity and developers – although there are also recognised costs (see for example

POST, 2011).

Defra have been developing the evidence and policy base around biodiversity offsetting for

some time. A scoping study (Defra, 2009) explored the potential design and use of offsetting

in an English context. The results of that study flagged up numerous risks and opportunities

(Defra, 2011a) and led to Defra taking an incremental evidence-based approach, which has

developed over five years. Other research relating to biodiversity offsetting includes Phase 1

(Defra, 2012a), Phase 2 (Defra, 2011b) and Phase 3 (Defra, 2012b) of the Policy and

Biodiversity Offsets Research. These research projects explored the literature and real

planning cases to understand the application and impact of biodiversity planning policy,

and what the impact of the emerging Defra biodiversity offsetting metric would have been

to these cases.

The Making Space for Nature review led by Professor Sir John Lawton (Defra, 2011b)

emphasised the need to take a more landscape scale approach to biodiversity

conservation. Habitat restoration through biodiversity offsetting was suggested as one way

this could be delivered. The review also identified principles that should be followed in the

establishment of any offset scheme, and these were largely taken up by Defra in the

development of the pilots and subsequent policy. These principles (Defra, 2011c) are used as

part of the evaluation framework in this evaluation.

The Natural Environment White Paper (NEWP) published in June 2011 built on the Making

Space for Nature Review and signalled Defra’s commitment to testing the voluntary

approach to biodiversity offsetting with pilots. A voluntary approach is one where developers

could choose whether to use the biodiversity offsetting metric to assess their project’s

impacts and choose whether to use compensation for residual adverse biodiversity impacts

(Defra, 2013).

The pilots

The overall aim of the biodiversity offsetting pilots was “to develop a body of information and

evidence to inform a future decision about whether to use biodiversity offsetting across

England” (Defra, 2011d, p.2). The pilot programme and the work of the pilots, was primarily

exploratory.

Prior to initiation of the pilots and in consultation with stakeholders, Defra and Natural

England developed a metric and Technical Guidance to facilitate the quantification of

biodiversity impacts (Defra, 2013a). These materials were designed to provide guidance and

some structure for how the pilots should manage and deliver biodiversity offsetting within

their local context. More general guidance on the biodiversity offsetting process was also

produced for the key stakeholder groups in the pilots: Local Planning Authorities, developers

and offset providers2. Biodiversity offsetting, as set out in the guidance, was not intended to

weaken existing levels of legal protection e.g. for SSSIs, international designations, or high

value biodiversity such as ancient woodlands, which cannot be replaced or re-created.

In July 2011, Defra requested Expressions of Interest (EoI) from Local Planning Authorities

(LPAs) to join the pilot programme, without any grant aid. In September 2011, the pilots were

selected by Defra. The pilots were chosen to ensure geographical and ecological diversity

with a preference for areas with high predicted levels of development (to increase the

likelihood that offset projects would come forward).

The pilots began in April 2012 and finished at the end of March 2014. The evaluation covered

in this report was commissioned in June 2012 and completed in June 2014.

At the same time as undertaking the EoI for the pilots, Defra invited organisations to come

forward as ‘Complementary Projects’. These were to run alongside the pilot programme

exploring specific aspects of biodiversity offsetting to enhance the evidence base with

2 See https://www.gov.uk/biodiversity-offsetting for the full list of guidance and materials available to the pilots

https://www.gov.uk/biodiversity-offsetting


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specific case studies and examples that were not related to the pilots. The results of the

Complementary Projects, where they have been provided, are also considered within this

evaluation.

Natural England provided each of the pilots with up to 0.5 full time equivalents (FTE) of

adviser time. The advisers worked with the pilots to advise on the development of their

biodiversity offsetting strategy, the assessment of biodiversity impacts and use of the metric.

They also intended to accredit any offset providers that the pilots presented and to review

the capability and viability of any specific offset proposals. No funding was provided to the

pilots.

Prior to the pilots commencing work, the Localism Act (2012) came into force bringing

significant change to the planning system, notably the National Planning Policy Framework

(NPPF), which was published as the pilots were being set up in March 2012. These, and other,

changes were highly relevant to the work of the pilots who were tasked with developing their

pilots whilst managing substantial changes to the existing systems of planning policy and

guidance. The impacts of these changes are considered by this evaluation.

During the pilots, Defra consulted on biodiversity offsetting policy through a Green Paper and

accompanying Impact Assessment in September 2013 (Defra, 2013). The Green Paper set

out various options for biodiversity offsetting in England and sought views and evidence to

support future policy decisions. The emerging findings from this evaluation fed into the

consultation.

The pilots and the complementary projects

The six pilot areas selected by Defra and their host organisations are presented in Table 1.

Table 1: Host organisations of each pilot

Pilot name Lead organisation

Coventry, Solihull and Warwickshire

(CSWAPO) Warwickshire County Council

Devon

North Devon North Devon UNESCO Biosphere Reserve

East Devon East Devon District Council

South Devon Teignbridge District Council

Doncaster Doncaster Council

Essex Essex County Council & Environment Bank Ltd

Greater Norwich Norfolk County Council

Nottinghamshire Nottinghamshire County Council

Although six pilot areas are described, in practice there were eight as the Devon pilot

consisted of three sub-pilot areas which each developed their own Biodiversity Offsetting

Strategies and governance arrangements3. In order to be able to distinguish between the

three Devon sub-pilots, this report refers to eight pilot areas.

Introduction to the pilots

The pilots were managed and coordinated by the hosts who were based in the lead

organisation. The hosts were primarily responsible for: coordinating with other stakeholders

(often via a pilot or steering group), preparing the biodiversity offsetting strategies and

seeking opportunities to test biodiversity offsetting. At the start of the pilot programme seven

of the eight hosts were ecologists (the exception being East Devon’s original host); at the end

all eight were ecologists.

Technical guidance materials were developed by Defra and Natural England. Natural

3 It is understood that the three Devon sub-pilots were all intending to submit their own bids for pilot status. When they

became aware of the other Devon bids they chose to submit a joint bid which was accepted by Defra.


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England also provided advisers to support the pilots. The pilots were encouraged to develop

and implement approaches as they saw fit, within some agreed boundaries set by Defra.

The size of the pilot areas varied with four of the pilots operating at the county level. The

Doncaster pilot was alone in being at the metropolitan scale.

Coordination of five of the pilots was based on existing groups of organisations. In these

cases the processes and responsibilities of the biodiversity offsetting pilots had been

integrated into the work of the existing group or through a sub-set of that group.

Pilot groups were set up in each pilot to provide support and coordination with key

stakeholders. These groups varied in size from two to twenty two organisations. All pilots

involved a wide group of organisations. The exception was Doncaster where the

involvement of non-LPA stakeholders was not considered appropriate by the host.

Introduction to the Complementary Projects

Table 2 presents a summary of the Complementary Projects and their focus. Summaries of

the findings of the Complementary Projects, where they have been provided, are referred to

at relevant points in this report (and Appendix 1).

Table 2: The Complementary Projects that provided information4

Complementary Project Focus

Atkins Retrospective study that tested the metric on a real case to identify

any challenges and potential biodiversity benefits

Parsons Brinckerhoff5 /

Thames Link Partnership

Retrospective study considered the developers perspective and what

lessons could be learned from their experience

Doncaster Metropolitan

Borough Council and the

Yorkshire Wildlife Trust

Retrospective application of the metric to historical cases with the

intention of identifying differences in outcomes and implementation

challenges

The Somerset Biodiversity

Partnership

Based on extensive spatial biodiversity data and recent biodiversity

compensation experience this project looked at integrating species

into the metric and its application early in the planning process

4 Four other Complementary Projects volunteered but for various reasons they did not progress and/or provide Defra

with any information.

5 The project was originally established by Balfour Beatty but completed by Parsons Brinckerhoff (a Balfour Beatty

company)


15

2. Evaluation framework and research methods

It was recognised that only a relatively small number of biodiversity offsetting projects might

be delivered and that quantitative indicators would not be appropriate due to the small

sample size and the non-random design of the pilot selection. A qualitative approach was

therefore adopted which used three primary research methods: literature review; document

analysis; and semi-structured interviews and follow on discussions.

2.1 Evaluation framework

An Evaluation Framework was developed in consultation with the Project Steering Group, the

pilots and a small number of other stakeholders. The evaluation framework formed the

methodological basis for the work undertaken over the two years of the project.

Figure 1: Evaluation Framework Overview


16

The evaluation framework, presented in Figure 1, consists of the following elements:

Evaluation objectives were set by Defra.

Evaluation criteria (Box 2) were derived from Defra’s principles for biodiversity

offsetting (Defra, 2011c). They provided a greater level of detail against which the

findings could be assessed.

Evaluation questions were devised for use in the semi structured interviews. The

questions included some specific questions provided by Defra and others developed

by the evaluation team as the pilot programme developed. Appendix 2 includes the

full list of questions asked across the evaluation. The questions and responses were

arranged under themes to give a logical reporting structure.

Evaluation themes structured the information collection, analysis and reporting. Every

question asked across the evaluation was ‘tagged’ with a theme (see Appendix 2).

This created a direct link from the questions back to the evaluation objectives. When

results were analysed the responses relevant to individual questions were filtered by

theme and then reviewed. This allowed for effective and efficient cross-pilot thematic

analysis. The themes were:

o Governance – Including the nature and structure of relationships between

Local Planning Authorities and Natural England; and interactions with other

stakeholders.

o Process and Management – Including strategic elements and relationships

with other initiatives; the process of using the biodiversity offsetting metric, and

the transparency of the process.

o Legal and Development Planning – Including the role of national and local

planning policy and regulation, any project specific legal agreements and

planning mechanisms or conditions. The offset providers’ use of brokers and

any pooling of funds and resources were also considered.

o Costs – Including time inputs and other expenditure by local authorities,

developers, and other stakeholders. This included a comparison with

traditional compensation arrangements and identified any efficiencies of the

process.

o Ecological implementation and monitoring – Including outcomes from the

metric in practice; the nature and size of habitats lost or restored; ecological

outcomes; the process for accreditation, and the role of Natural England.

Three stages to the pilots were identified. This staged approach allowed for flexibility

in information collection. For example, not all pilots reached Stage 3 and so the focus

of the evaluation for those pilots switched to exploring the reasons for that. The stages

were:

o Stage 1: Setting up of the pilot – this included the time from the LPAs’ decision

to submit an Expression of Interest to there being an agreed and established

pilot group.

o Stage 2: The development of the pilot offsetting strategy – this included all non-

development-specific discussions around biodiversity offsetting and the

development of a final biodiversity offsetting strategy in any form.

o Stage 3: Individual development projects and associated offsets – including

the accreditation of offset providers, the process by which projects were

identified and developed, and the use of the metric within specific cases.


17

Box 2: Evaluation Criteria

1. Biodiversity offsetting should ensure no change to existing levels of protection for biodiversity.

2. Biodiversity offsetting should deliver real benefits for biodiversity through:

a. Seeking to improve the effectiveness of managing compensation for biodiversity loss.

b. Expanding and restoring habitats, not merely protecting the extent and condition of what

is already there.

c. Contributing to enhancing England’s ecological network by creating more, bigger, better

and joined areas for biodiversity (as discussed in Making Space for Nature).

d. Providing additionality; not being used to deliver something that would have happened

anyway.

e. Creating habitat which lasts in perpetuity (with a clear and agreed understanding of what

is meant by perpetuity).

f. Being at the bottom of the mitigation hierarchy, and requiring avoidance and mitigation of

impacts to take place first.

3. Biodiversity offsetting should be managed as much as possible at the local level and:

a. Within national priorities for managing England’s biodiversity and ecosystem services.

b. Within a standard framework, providing a level of consistency for all involved.

c. Through partnerships at a level that makes sense spatially, such as county level, catchment

or natural area.

d. With the right level of national support and guidance to build capacity where it is needed.

e. Involving local communities.

4. Biodiversity offsetting should be as simple and straightforward as possible, for developers, local

authorities and others.

5. Biodiversity offsetting should be transparent, giving clarity on how the offset calculations are

derived and allowing people to see how offset resources are being used.

6. Biodiversity offsetting should be good value for money.

2.2 Research methods

Three primary research methods were used to collect information:

Literature review

The literature review had two objectives, firstly to provide information to support the analysis

of evaluation findings and secondly to refine the evaluation questions. A literature review of

research exploring biodiversity offsetting and biodiversity compensation was undertaken at

an early stage of the project and updated as new research became available. A reference

list (literature cited in this report) is available at the end of this report as is a bibliography

which includes all other literature that was reviewed.

Document analysis

A review of relevant documentation was undertaken depending on what stage the pilot

had reached. For example within Stage 3 this might include planning documents (such as

planning applications and related information), accreditation documentation and metric

calculations. Within Stage 2, relevant documents included the biodiversity offsetting strategy

and related documents in draft and final forms. Other materials such as Steering Group

minutes were reviewed where they were available. The final biodiversity offsetting strategies

were subject to an assessment against the evaluation criteria and the results are presented in

the pilot reports (Volume 2: The Pilot Reports) and integrated into Section 3. Natural England

also provided monthly progress reviews of the pilots which were used to monitor progress and

track emerging issues to pick up during interviews.

Semi-structured interviews

The evaluation team carried out semi-structured interviews with the relevant stakeholders at


18

defined stages during the pilot6. These interviews were face to face (15) or via telephone

(83), as convenient for the interviewees. Where possible face to face interviews were

preferred for the final / reflective interviews as face to face allows for more exploratory

interviews. Questions were elaborated from the initial list of evaluation questions provided by

Defra, grouped by evaluation theme and focused on ‘inputs’, ‘processes’ and ‘outputs’

consistent with the logic model set out in Government guidance on evaluation (HM Treasury,

2011). The results of the interviews were recorded in a proforma for subsequent collation and

analysis (Appendix 2 includes the full list of questions asked).

Semi-structured interviews were considered appropriate as the pilots and individual pilot

stakeholders had a great diversity of experience and expertise and it was therefore

necessary to retain some flexibility during the interviews. Furthermore, as the pilot programme

developed and a relatively small number of projects emerged it was apparent that an

exploratory approach, one which allowed for discussion about how and why the pilots were

progressing, would be required.

Where possible, interviews were undertaken with a number of individuals and different

stakeholder groups to obtain a range of opinions and insights. Table 3: Interview points

and the number of interviewees in each stakeholder group

summarises the stakeholders interviewed across the project. There were also numerous

update discussions between the pilots and the evaluation team across the pilot to track the

pilots’ progress.

Interviews were also undertaken with officers from LPAs who had the opportunity to join the

pilot programme but, for various reasons, chose not to.

Workshops

In addition to the three primary research methods, two workshops were held with the pilots,

Natural England advisers and Defra staff: the first in November 2012 to discuss the draft

evaluation framework; and the second near the end of the evaluation project in May 2014

to discuss the emerging findings.

Quality assurance

Throughout the information collection progress reports were produced which presented the

emerging findings of Stage 1 and Stage 2. An Interim Report covering Stages 1 and 2 was

produced in June 2013 for review by the Project Steering Group.

After the completion of information collection, all of the proforma and results of the

document analysis and literature review were collated and analysed in respect of the

evaluation questions and themes. The results were shared with the pilots and the Steering

Group in a final workshop in early May 2014, which provided an opportunity to test the

emerging findings of the evaluation with representatives from the pilots. This Final Report,

having been subject to multiple quality assurance reviews including external peer review,

presents the results of the evaluation and reflects the findings from the final project workshop

with the pilots, Natural England and Defra.

Research limitations

Limitations of the research relate to the design of the pilot programme, the nature of the

pilots and the evaluation’s research approach.

The biodiversity offsetting pilots were a voluntary initiative; there is therefore a high risk of

selection bias (at the programme and project level) because the pilots volunteered to

participate in trialling offsetting. Furthermore, more interviews were undertaken with those

pilots that progressed further, meaning there is a potential bias in the results towards those

6 Table 3: Interview points and the number of interviewees in each stakeholder group

describes these stages.


19

pilots.

The pilots are different to other planning authorities in a number of respects. For example

each of the pilots was led by an LPA ecologist. Research indicates that nationally only

around a third of LPAs have ecologists (Policy Exchange, 2012). Other noted differences

include an enthusiasm for testing biodiversity offsetting, a willingness to innovate and

relatively high predicted levels of development.

The pilot programme was intended to be voluntary, meaning that applicants did not have to

use biodiversity offsetting unless they wished to do so. As a result, it is possible that the

projects that used biodiversity offsetting were in some way atypical and that atypical

projects were therefore evaluated. The exception was the CSWAPO pilot where a much

broader range of projects was evaluated.

This report recognises and discusses potential selection bias and the implications of it within

specific sections where it is considered to have affected the results.

Other limitations include the length of the pilot programme, which at two years meant it

would not be possible to evaluate or monitor long term biodiversity outcomes and impacts.

The time scale also presented challenges in that many planning applications can extend

beyond this time scale. Major planning reforms as a result of the Localism Act 2012 were also

being implemented, some of which had the potential to change existing compensation

practices. This made comparisons between existing compensation and biodiversity offsetting

less straightforward.

The length of the pilot programme also reduced the potential for a market for offsets to

emerge and for developers to account for the costs of biodiversity compensation within their

business planning and in particular when acquiring land. It is therefore possible that the costs

and challenges identified in this report are only relevant to the early stages of a biodiversity

offsetting system.

The primary data gathering technique used was semi-structured interviews. Although this was

the most appropriate technique considering the progress of the pilots there are potential

biases emerging from talking to a relatively small number of stakeholders who were aware of

and worked with other pilot stakeholders. The risk of this bias is reduced somewhat by the

range of stakeholders interviewed, the range of opinions expressed and the triangulation of

other evidence sources such as planning documentation and the literature.

It should be noted that all the case studies presented in this report are confidential and that

some relevant information has been removed for reasons of commercial sensitivity.

Where possible these limitations are identified and discussed within the results and analysis.

2.3 The counterfactual

Supplementary guidance to the Magenta Book (HM Treasury, 2012) indicates the

importance of defining the counterfactual; in this case, what would have occurred within

the participating LPAs in the absence of the biodiversity offsetting pilot programme. The

counterfactual was therefore defined as:

The process currently followed for agreeing compensation for biodiversity loss within

planning applications, without the use of the metric or other biodiversity offsetting

mechanisms.

Throughout the report this is referred to as ‘current practice’.

2.4 Supplementary research

Defra commissioned the evaluation team to undertake two related but distinct pieces of

additional research, intended to support the evaluation. These were standalone research

projects published separately by Defra. This report draws on the findings of these studies in

the analysis and conclusions, in particular with regard to the counterfactual. The projects are


20

summarised in Box 3.

Box 3: Summaries of supplementary research projects

Indicative Costs of Current Compensation Arrangements for Biodiversity Loss: Illustrative Case Studies

This research provided evidence regarding the costs of compensation for non-protected biodiversity

within the English planning system (Defra, 2014a). The results formed a baseline of existing (non-

biodiversity offsetting compensation) practice and provided evidence on:

1. The existing costs of compensation for residual biodiversity loss.

2. The existing costs of compensation for residual biodiversity loss, including delays caused by

negotiations/surveys, and issues around any land undeveloped because of on-site

compensation.

3. The relative frequency or occurrence for these costs.

A review of recent biodiversity offsetting practice in Germany

The research (Defra, 2014b) was led by CEP’s evaluation partners IEEP and examined biodiversity

offsetting experiences in Germany where biodiversity offsetting has been a legal requirement since the

1960s. The study sought to review current practice and to describe the long-established German off-site

compensation system and typical costs.

2.5 Summary of evidence gathered

In total 98 interviews were undertaken during the two years of the evaluation. A further 31

update discussions were held during the pilot programme, initiated by the evaluation team

to follow the progress of the pilots and specific applications.

Table 3: Interview points and the number of interviewees in each stakeholder group

summarises the interview points in the evaluation and the number of interviewees across the

pilots and their stakeholder group.

Not every pilot progressed to every interview point, so for example, not all pilots developed

formal biodiversity offsetting projects or accredited offsetting providers. CSWAPO progressed

furthest and this is reflected in the larger number of interviews undertaken for that pilot.

Where pilots did not progress to certain points the focus of the reflective interviews was on

the reasons for this. Appendix 2 supports the summary presented here and includes a full list

of all the questions asked at the interview points and a description of how interviewees were

identified.


21

Table 3: Interview points and the number of interviewees in each stakeholder group


22

3. Evaluation Findings

This section includes the findings structured by the evaluation themes. This structure ensures

that the reporting relates the evidence to the evaluation criteria and objectives, and the

specific questions explored with the pilots (Appendix 2).

3.1 Results of piloting biodiversity offsetting in each area

The pilot hosts wished to join the pilot programme for several reasons: the most significant of

these was to see if there were better ways of undertaking mitigation and compensation for

biodiversity loss. Other incentives to join included a wish to secure no-net-loss; a keenness to

be innovative and the possibility of securing new and additional funding sources for

biodiversity.

In practice, most of these aspirations were unmet. Pilots found that the pilot period of two

years was insufficient to integrate and to test biodiversity offsetting within a planning system

where project planning can take years. Within all of the pilots, significant periods of time

were used getting planners, developers and consultants to understand and engage in the

process. This was exacerbated due to the pilots’ time and resource constraints and the

relative downturn in economic development during the pilot programme; hence the first

year of the pilot saw very few possible projects coming forward. The second half of the pilot

saw more development proposals with the potential for testing biodiversity offsetting,

although few of these proceeded to formal offsets. Partly this was because developers were

able to withdraw in many instances, and partly because the projects had not gained

planning permission by the end of the pilot programme.

Since the initiation of the pilot programme in 2012, all of the pilots: formed pilot groups;

developed some form of biodiversity offsetting ‘strategy’; sought to incentivise biodiversity

offsetting generally and within specific developments; and raised capacity across LPAs and

other groups such as ecological consultants. Figure 2 shows the activities involved in piloting

biodiversity offsetting.

Figure 2: Biodiversity offsetting activities within the pilot programme

A key issue emerging from the evaluation is that while few actual ‘offset’ projects were

agreed or delivered (i.e. offsite habitat creation on land owned by a third party and funded

by developer contributions), the metric was widely used to implement the mitigation

hierarchy, quantify losses and propose mitigation and on-site compensation, as well as to

calculate financial contributions for off-site compensation.

All but one of the pilots (Greater Norwich) used the metric on live planning applications, but

only two (Essex and CSWAPO) progressed to a complete biodiversity offsetting project i.e.

where an offset site has been identified and is expected to be implemented (Table 4). The

reasons for variation in progress are discussed under each of the evaluation themes.

Volume1: Final Report June 2014

23

At the end of the programme all of the pilots planned to continue to promote and pursue

opportunities for biodiversity offsetting, including use of the metric. The momentum of the

pilots increased across the two years and it is likely that more opportunities and projects have

emerged since the cessation of information collection for the evaluation.

Table 4: Pilot progress at the end of the pilot programme (dark bands indicate progress)

Pilots Pilot group

set up

Final

biodiversity

offsetting

strategy

Metric used

within a

planning

application

Accredited

offset

provider

Offset site

agreed

CSWAPO 63 *

East Devon 2

South Devon 4

North Devon 4

Doncaster 5 1

Essex 11 * ^

Greater Norwich

Nottinghamshire 6

Notes: The numbers indicate the number of planning applications relevant to specific stages

during the pilot programme.

*CSWAPO and Essex had agreement in principle for management plans for offset sites but

these were not formalised before the end of the pilot programme.

^ Essex had a ‘test-offset’ where a historical s.106 was used to test the processes for agreeing

a long term offset.

3.2 Evidence gathered against evidence needs

Due to the progress of the pilots previously described there remain some aspects of

biodiversity offsetting that were not-tested, or only tested to a small extent, by the pilots.

Appendix 3 presents a summary of this analysis.

Generally the pilot programme and the evaluation collected a substantial amount of

evidence about setting up the pilot groups, developing biodiversity offsetting strategies and

the use of the metric to understand biodiversity impacts. Evidence gaps remain on the

actual delivery of offsets and the related costs.

3.3 Governance

Box 4: Summary of Governance findings

Overall, the governance arrangements, where pilot hosts were supported by a steering or working

group, were reported to work well.

Four of the six pilots were supported by a pilot group of stakeholders from different organisations,

mainly LPAs and NGOs.

The pilot groups proved a useful forum for the discussion of issues and the provision of advice to the

pilot hosts.

The pilot hosts provided the majority of the leadership, momentum and decision making for the

pilots.

The need for ecological expertise as provided by the pilot hosts and LPA ecologists was felt to be

essential to implement the biodiversity offsetting approach.

Natural England’s role was to provide technical advice on strategies and the metric and undertake

accreditation of offset providers and projects. The pilots welcomed the involvement of Natural

England, although they would have appreciated more proactive support particularly with regard

to promoting biodiversity offsetting within specific applications.


24

This section focuses on governance, especially the nature and structure of partnerships and

relationships within the pilots, including those between Local Authorities and Natural England

and other stakeholders.

Nature and structure of partnerships

Overall, pilot hosts reported a range of functioning governance systems. There was limited

testing of governance in relation to delivery of actual offset projects.

Six of the eight pilot areas were supported by a pilot group (which acted like a project

steering group) of partner organisations including LPA, NGOs, potential offset providers and

Defra Arms-Length Bodies (ALB). The Nottinghamshire pilot chose not to form a pilot group.

Instead they maintained contact with the partner councils participating in the pilot; in

hindsight they felt that a pilot group might have helped to maintain the profile of the pilot.

Doncaster worked with other stakeholders on specific issues as they arose, but had no

regular pilot group.

Membership of pilot groups was generally stable over the two year period of the pilot and

one pilot reported that additional organisations joined the pilot group. One pilot host

reported that there was a spirit of joint venture and other pilots reported a good degree of

exchange and sharing of good practice within these groups.

The pilot groups were used to discuss and explore emerging issues; they were reported to be

useful and to work well. However, some discussions proved challenging, particularly where

individual members had different views on specific planning applications, modifications to

the metric or conceptual aspects of biodiversity offsetting. The host organisations of two pilot

groups had hoped that the pilot group would identify and discuss potential offset projects

that could be taken forward; however in both cases there appeared to be reluctance on

the part of the pilot group to discuss what were considered to be speculative projects with

no guarantee of funding or delivery.

Most of the pilot groups had relatively simple arrangements. There were exceptions, for

example CSWAPO had a three-tier governance structure with the CSWAPO group of

planning officers providing high level review, with responsibility for developing biodiversity

offsetting (and the Green Infrastructure strategy) delegated to a sub-group. There was also a

separate group of ecological experts who met to discuss specific questions relevant to the

metric. This arrangement worked well with the pilot host coordinating dialogue between tiers

as required. The South Devon pilot also chose to create a smaller working group to deal with

the emerging complexities of their strategy.

Roles and responsibilities

Six of the individual pilot hosts remained in post from the start to the end of the pilot

programme. In one case the lead pilot host’s role changed, with the effect that there was

less time available to promote biodiversity offsetting widely. This was felt to have impacted

on delivery. There were changes in pilot host staff in two pilots (East Devon and Doncaster). In

East Devon this slowed progress until a member of staff was appointed with a time allocation

to take the pilot forward.

Five Natural England staff acted as advisers throughout the pilot programme, with one being

adviser to two pilots. The advisers to the remaining two pilots changed during the course of

the programme; pilot hosts reported that advisers were therefore less familiar with the pilots.

In the early stages of the pilot programme the only new roles that were created to manage

the pilots were the two Environment Bank Ltd (EBL) members of staff. These roles were

employed full time within two of the pilots and funded independently. These posts, although

funded externally, became integrated into the functions of the pilots and their respective

LPAs.

Within other pilots biodiversity offsetting was integrated into the hosts’ day to day roles.


25

Role of pilot hosts

All but one of the individuals hosting the pilots were from an ecological background, with the

exception being a landscape architect in the East Devon sub-pilot (who was replaced by an

ecologist in the second year as a result of the former changing jobs). The pilot hosts served a

number of functions including raising awareness and building capacity on biodiversity

offsetting and its implementation within the pilot group and pilot area, and providing

momentum to the pilot. They also dealt with the development of the key materials such as

the strategies and the metric and managed potential offset cases.

Support provided by the Natural England Advisers

Pilot hosts found that Natural England provided a positive input when they engaged with the

pilot. Examples of this input included attending pilot group meetings; commenting on

strategy documents; providing clarification on Defra’s guidance and position; accessing

internal Natural England advice: sharing knowledge from other pilots; and mentoring to

facilitate development of the pilot.

None of the pilots or Natural England advisers felt that the allocated 2.5 days per week of

Natural England support was fully utilised. This was partly because the number of biodiversity

offsetting projects was lower than anticipated and partly due to limited Natural England

adviser capacity being reduced by other priorities. For one pilot, the value of Natural

England’s support was reduced by having four different advisers over time. For another pilot

joint working with the adviser was made difficult because the adviser was not local.

Role of Natural England

Despite the generally positive relationship between advisers and hosts there was a difference

in expectation about the intended role of the Natural England advisers. In practice Natural

England’s role in supporting the pilots was deliberately restricted by Defra to a few specific

tasks, so as not to distort the outcomes from the pilots. These tasks were to provide technical

advice on strategies and the metric and to accredit offset providers and projects. Although

these limited roles were made clear to the pilots, the pilots hoped Natural England would be

able to provide more proactive support.

Natural England advisers were comfortable commenting on whether the metric had been

populated accurately, but were not in a position to state whether management costs were

acceptable or to sign-off other project specific details. Advisers considered this position to be

appropriate for a voluntary pilot, but it was acknowledged that it frustrated the pilots.

Aside from the role of the advisers the pilots had hoped that Natural England would promote

the use of biodiversity offsetting within consultation responses to specific applications.

Although Natural England did amend the wording of standard consultation responses to

raise awareness of the existence of the pilots, the pilots felt that this was insufficient to

incentivise developers to engage with the pilot.

Most of the pilots were frustrated by this reactive approach and Natural England’s policy of

focusing only on high risk cases (those potentially affecting statutorily protected sites), when

biodiversity offsetting was designed to deal with lower levels of biodiversity loss. Some pilot

hosts and Natural England advisers felt that a (part time) role should have been created to

provide dedicated support to the pilots e.g. to deal with planning applications potentially

appropriate for biodiversity offsetting. Such a role could have bridged the gap by enabling

Natural England to respond to applications in relation to non-statutorily protected sites and

at the same time encourage uptake of the offsetting approach.

Natural England did provide some oversight and advice in relation to their wider statutory

responsibilities, for example:

A case arose in Essex where an application impacted on a Local Wildlife Site that was

of potential SSSI quality. Natural England reviewed the site and found that it was not

of SSSI quality and advised applying the metric to determine residual impacts.


26

A further case in Devon related to a section 41 (s.41) listed Habitat of Principal

Importance7. Before populating the metric, Natural England wanted the LPA to

consider the significance of losing the s.41 habitat and whether or not this was

acceptable to them under their duty to conserve biodiversity. Natural England

wanted the LPA to make this decision, since if it was considered acceptable to the

LPA then Natural England would have recommended like-for-like replacement of the

habitat.

In addition to the supporting materials produced prior to the pilot programme, Natural

England provided facilitated learning exchange via Huddle8. Beyond the first few months of

the pilot programme the Pilots made limited use of Huddle.

Relationship with Defra

Defra stood back from the pilots and did not provide targeted support or assistance beyond

two initial webinar events. The intention was to allow a range of approaches to be applied

and tested by the pilots. Some of the pilot hosts felt that Defra’s detachment was because

they were not supportive of the work of the pilots; this affected morale. Technical advice

(largely relating to the metric) was provided by Defra or Natural England depending on the

nature of the request and in response to technical issues raised by pilots. Providing

comprehensive advice was not always possible, particularly if the issue related to something

the pilots were set up to explore.

3.4 Process and management

This section focuses on the process and management of the pilots including the

development of the biodiversity offsetting strategies, relationships with other initiatives, the

extent to which habitat banking was used, the process of using the biodiversity offsetting

metric and the transparency of that process.

7 Section 41 of the Natural Environment and Rural Communities (NERC) Act 2006 - Habitats and Species of Principal

Importance in England

8 Huddle is an online virtual learning environment for storing and managing documents and facilitating online

interaction among its members, and a Huddle site was set up by Natural England for the use of the offsetting pilots.

Box 5: Summary of process and management findings

A biodiversity offsetting strategy/document was developed in each of the pilots. These documents

provided a useful forum for the discussion of issues and the provision of advice to the pilot hosts. The

strategies resulted in principles and/or specific areas where offset sites would be targeted.

Contact with other natural environment initiatives (Local Nature Partnerships (LNP), Nature

Improvement Areas (NIAs)) occurred in all instances where initiatives overlapped. The impact of

these relationships was limited to high level support and the sharing of priorities for habitat

restoration and re-creation.

Seven of the eight pilots used the metric in ‘live’ planning applications. Where the metric was used,

most stakeholders felt it to have been largely beneficial: providing a quantified, consistent,

transparent and relatively simple process that accounted for a wider range of biodiversity impacts

than current practice.

Across the pilots, there were numerous examples where stakeholders felt that the use of the metric

had led to improvements in the nature and extent of on-site mitigation and compensation (above

what was likely to have happened within current practice).

Despite broad support for the metric, some stakeholders had concerns. They noted that the metric

omitted certain ecological aspects (e.g. species, habitat function and connectivity), it required

additional processes and information requirements and, in their view, over-estimated biodiversity

loss.

LPAs favoured offset sites that were are as local as possible to the impact, ideally within the same

local authority, whilst being consistent with local ecological priorities.


27

The biodiversity offsetting strategies

All of the pilots were asked to “agree and publish a strategy for using [biodiversity] offsetting

in their pilot area with their partners. This should set out the types of habitats the local

authorities would like to see created through offsetting, and target areas for offset projects

(e.g. linking together valuable wildlife sites, buffering watercourses etc.)”9.

All of the pilots developed some form of biodiversity offsetting strategy. These documents

tended to be concise and functional as the pilots felt that this was proportionate to the

voluntary nature of the pilot programme. Details and links to the strategies are given in the

Pilot Reports (Volume 2).

The strategies had the following common aspects:

Description of what biodiversity offsetting is and how it works.

Principles for how biodiversity offsetting would be integrated within spatial planning

and development control within the LPA.

Spatial prioritisation of preferred areas for offset sites by setting either principles

and/or the identification of sites.

The strategies differed in the amount of detail that was provided. For instance, Greater

Norwich set simple principles for spatial prioritisation, whereas Doncaster’s and North Devon’s

strategies provided more structured, hierarchical spatial priorities. Uniquely, CSWAPO’s

strategy was intended to be integrated within planning policy, whereas the others were

more guidance orientated. South Devon’s strategy gave a high degree of detail about the

biodiversity offsetting process and uniquely included species considerations. The other

strategies included a summary of what biodiversity offsetting is and referred to the Defra

materials to provide the majority of the procedural detail.

Variation in the nature of the strategies was expected and encouraged by Defra who

deliberately allowed flexibility around their style and content.

An unexpected finding was the amount of time it took some of the pilots to finalise their

documents. Four of the pilots published their strategies in the summer of 2012 but the three

Devon pilots did not have final versions until late 2013 / early 2014. The reasons given for this

were:

The need to familiarise pilot groups with biodiversity offsetting.

Limits to the capacity and resources of the pilot hosts impeding their ability to

prioritise the strategy as hoped.

The detailed discussions around what a strategy should include.

Specific technical discussions around how to deal with certain aspects of


CSWAPO integrated the strategy into the sub-regional green infrastructure (GI) strategy (it is

Annex A of the strategy) and this meant the biodiversity offsetting strategy had to develop at

the pace set by the much broader and more formal process for developing, consulting and

approving the GI strategy as a supplementary planning document (SPD). A draft of the

CSWAPO strategy was consulted on in April 2013, but the final version had not been released

by the end of the pilot programme because the pilot was awaiting a decision on national

biodiversity offsetting policy.

9 The Information Notes for Local Authorities produced by Defra provides a summary of what is expected from the

offsetting strategies (Page 5, para 19-20)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69529/pb13744-bio-local-

authority-info-note.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69529/pb13744-bio-local-authority-info-note.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69529/pb13744-bio-local-authority-info-note.pdf


28

There was no single determinant for the amount of time it took the pilots to develop their

strategies, but the learning point from the pilots was: the simpler the strategy, the quicker the

process.

Definition of perpetuity

A number of the strategies made reference to creating or restoring habitat “that lasts in

perpetuity” as set out in the Defra Principles (2011c). The exact definition given to the term

‘perpetuity’ varied between the strategies. Most pilot hosts said that agreeing a definition of

perpetuity within the pilot groups took a significant amount of time and discussion. This was in

part because the pilot programme was limited to two years and the long term policy

framework for biodiversity was considered unclear. Offset providers and developer

representatives noted the impact of uncertainty especially the cost implications of defining

‘perpetuity’ to mean open-ended management.

The definitions of perpetuity included within the pilots’ strategies were:

CSWAPO defined it as 30 years.

South Devon referred to a requirement for a “nominal” 100 year management

plan.

Nottinghamshire described any offset as lasting “at least the life time of the

development to which it relates”.

North Devon referred to perpetuity generally, but does not seek to define it.

Essex, Doncaster and Greater Norwich did not make explicit reference to

perpetuity, but linked to documents that do (such as the Business and Biodiversity

Offsetting Programme (BBOP) and the Defra Technical Guidance).

There appeared to be a growing willingness within some, but not all, of the pilots to set

shorter time scales for management plans, for example Essex and Greater Norwich interviews

referred to 25 years. Planning documentation within CSWAPO and Essex indicated that 30

and 25 year management plans were being developed. This was largely a response to

concerns from developers about the cost of very long term management and push back

from potential offset providers who, according to most of the pilot hosts, were reticent to

enter into open ended or very long term management agreements (e.g. 50 years).

One option that was discussed in CSWAPO was whether for certain features it might be

appropriate to have an even shorter timescale for offsets, say 15 years. It was accepted that

there was insufficient evidence upon which this might be based but that, with appropriate

multipliers, these offsets could be used to reflect the dynamic nature of some semi-natural

habitats at a landscape scale. This was not explored within the pilot programme.

Principles for offset sites

All of the pilots’ strategies called for habitats to be expanded and restored and referred

explicitly to Making Space for Nature. Other landscape scale conservation activities were

referred to including NIAs, Living Landscapes, Futurescapes and ThinkBig10.

The strategies set local priorities for offsets sites within the context of national priorities. This

was largely achieved by joining up national and local ecological priorities by using existing

ecological evidence such as Biodiversity Action Plans (BAP), Living Landscapes, Nature

Improvement Areas (NIA), Biodiversity Opportunity Areas, Special Areas of Conservation and

National Parks. All of the pilots had some form of existing evidence base which they used to

determine the principles and priorities of their biodiversity offsetting strategies.

10 Living Landscapes is the Wildlife Trust’s landscape scale initiative, Futurescapes is the RSPB’s and ThinkBig is Natural

England’s.


29

One common principle that emerged as the pilots developed was a preference for offset

sites to be located as close as possible to the impact. A number of pilots indicated a desire

for offset sites to be in the same LPA as the impact. Within the strategies this was expressed as

a preference (see Essex and Doncaster for example). It was also incentivised by the use of

multipliers within the metric – i.e. more biodiversity units were required if the offset site was not

situated in the strategic areas identified by the pilots. Pilot hosts noted that this proximity

preference was very strong and it was felt that elected members were very unlikely to

support biodiversity offsetting if it resulted in the loss of biodiversity (and potential income

from developments) from their LPA. The importance of this issue was supported from

discussions with two non-pilot LPAs (Rushcliffe and Southend) who said that they did not join

the pilot programme because of this concern.

Relationship with other initiatives

Local Nature Partnerships (LNPs) and NIAs were initiated around the same time as the pilot

programme. Relationships formed as and where the LNPs,11 NIAs12 and pilots matured and

overlapped. LNPs and NIAs are partnership based initiatives and the pilot hosts and members

of pilot groups often have positions within the LNPs and NIAs.

The relationship with LNPs was generally about providing high level support. This was

achieved by cross-referencing (for example including biodiversity offsetting within LNP

manifestos), having common ecological priorities and using common structures, such as pilot

groups and websites. The pilot hosts noted that the impact of these interactions was limited

and less than they had expected. The pilots had hoped that working with the LNPs would

lead to the identification of specific projects and offset sites that could be delivered through

the pilot. The reasons for this not happening were consistent with the general barriers

explored in Section 4.

There was limited direct engagement between Local Enterprise Partnerships (LEPs) and the

pilots. Where this occurred the LNPs were a conduit for any discussions but these interactions

were again limited in number and impact.

Some of the pilots (North Devon, Doncaster, Essex and South Devon) used the NIA

boundaries and priorities within their strategies to target any emerging offset sites. This tended

to be the limit of any interactions between the pilots and NIAs. The exception was Essex

where their NIA (Greater Thames Marshes NIA) provided joint funding for the Essex pilot’s

‘test-offset’ (more information is provided in Volume 2: The Pilot Reports).

The interviews with the pilots reported that, in general, the lower than expected level of

projects emerging from the pilots limited the scope for joint working with LEPs, NIAs and LNPs.

Habitat banking

There were no instances of ‘habitat banking’ in the pilots. Doncaster considered pooling two

s.106 contributions, but this did not involve preparation of a site prior to determining planning

applications i.e. creating a habitat bank, and was not advanced by the end of the pilot

programme.

Most of the potential offset delivery projects that were identified in the pilots involved the

Environment Bank Ltd (EBL) via the Essex and CSWAPO pilots. In these instances EBL provided

a brokering role, linking up development payments with potential offset receptors. This was

done on a 1-to-1 basis. The only difference between this and a conventional approach to

compensation was securing a management plan for long term management based on a

measurable impact (informed by the metric).

Some of the potential barriers to habitat banking were reported to be:

11 All bar Essex have an LNP.

12 Coventry, Warwickshire and Solihull, North Devon, Doncaster and Essex have NIAs. Coventry, Warwickshire and

Solihull, is one of the locally determined NIAs.


30

The limit to the number of s.106s (six) that could be linked to a specific site.

The lack of certainty about the timing and exact contribution provided by any

specific application.

Developers wishing to be able to identify their contribution to a specific site –

‘compensation kudos’ (see the Thames Link Programme Complementary Project).

Within a habitat bank, providers would need to provide management plans that

were very flexible and largely blind, in that they would not know what size or nature

of impact they would need to provide for. One response to this was the production

of compartmentalised management plans where a general management plan for

an area could be adapted to make it consistent with the compensation

requirements for a specific development(s), whilst remaining consistent with a

larger scale ecological need.

The lack of demand for biodiversity offsetting provided limited opportunities to

explore habitat banking.

One of the main outcomes of the pilot programme in Greater Norwich was the creation of a

‘Connecting Nature Fund’. This arose from the pilot group’s desire for creating offset projects

that were strategic in size and location. The fund pools money from various sources, including

s.106 agreements, and targets it towards the identified ecological priorities.

From interviews with potential offset providers, there was a feeling that habitat banking may

be required as single offsets were unlikely to provide enough money to justify the transaction

costs. Providers and a pilot host reported that for a private land owner, providing an offset

which brought in less than £5,000 per annum (a total of £150,000 over 30 years without

adjusting for inflation) would not be worthwhile. Available evidence suggests average

compensation from an individual development is likely to be less, for example CSWAPO data

suggest an average agreed compensation figure of around £51,000 total (n=6) and the

average cost of off-site compensation in the cases explored in the supplementary research

was £95,438 (n=8).13

The metric

Defra developed a metric that could be used to quantify the impact of a development in

terms of ‘biodiversity units’. This was a key part of the pilot programme as quantifying the

impact of a development, and calculating any residual impact that might need to be

compensated for, is fundamental to biodiversity offsetting.

All of the pilots, with the exception of Greater Norwich who did not apply the metric to any

applications, used locally adapted versions of the metric within live planning applications.

The metric was used within the pilots as a biodiversity impact assessment tool to quantify the

total impact of a development whilst accounting for any on-site mitigation and

compensation.

Variations of the Defra metric were developed by some of the pilots, for example:

Complexity and automation – at the time of publication, the most recent version of

CSWAPO’s Excel spreadsheet metric (version 17) was highly automated and

supported by a detailed user guide; they also developed their own hedgerow

metric (see Volume 2: The Pilot Reports). In contrast, North Devon’s was closely tied

to the original Defra version.

13 This is based on an average of compensation cost data only (Appendix B of Defra (2014a)). Cost data which

included mitigation or landscaping costs were not included in this calculation


31

Distinctiveness – pilots adjusted some habitat distinctiveness values so that locally

scarce habitats considered more distinctive in their area were given a higher value

than in the Defra metric. CSWAPO increased the distinctiveness scale from a three

point to a five point scale to allow greater nuance.

Principles – South Devon sought to include some species considerations within the

metric so that habitats for greater horse shoe bat and cirl buntings were enhanced.

Other variations included different approaches to dealing with gardens (whether or

not they count as habitats), linear habitats and down-trading.

Process for using the metric

Participants in the pilots agreed that ideally the use of the metric should be introduced with

applicants as early as possible in the planning process - preferably at the pre-application

stage. The benefits for biodiversity and developers from doing this are demonstrated in the

Somerset Complementary Project, although extensive spatial biodiversity data are required

to enable such early use of the metric. Early engagement would facilitate the metric being

considered during any initial ecological surveys so that the results of the metric could be

incorporated into site layout and design, including on site habitat creation and

management.

When the metric was used differed depending on the systems that the pilots developed. The

system used in CSWAPO meant that potentially relevant applications were identified by the

LPA ecologists within the weekly lists provided by the planning officers. Initially LPA ecologists

populated the metric for these applications, but over time the applicant’s ecological

consultants were obliged to provide this, with the LPA ecologists reviewing the information.

In other pilot areas, the metric was applied on applications that were identified by the

planning officers of lower tier LPAs often via pre-application (example Doncaster cited a

figure of approximately 30% of applications being subject to pre-application discussions). The

officers would then consult with the pilot hosts via existing consultation processes and if

appropriate the metric would be applied e.g. in Doncaster, Nottinghamshire and East

Devon.

Ecological consultants also reported that for developments requiring Environmental Impact

Assessment (EIA), use of the metric was suggested in the scoping opinions provided by some

of the LPAs. In the other pilots, the metric was only used (by either ecological consultants or

LPA ecologists) on sites that were prioritised by the pilot hosts. These tended to be higher

impact applications. The Pilot Reports (Volume 2) include more detail on the pilots’ processes

for using the metric.

Box 6: Summary of the metric

The metric is a set of calculations based on three key features of the habitat to be lost:

A. Area of habitat (hectares).

B. Condition of the habitat (scores 1, 2, or 3).

C. Distinctiveness of the habitat (scores 1, 2, or 3).

Based on this information the total biodiversity units that are to be lost by the development can be

calculated (A x B x C= total biodiversity units). The total impact will take account of any on-site

mitigation and compensation.

Offset providers use the same system to calculate the number of biodiversity units they can provide,

taking into account three additional factors:

Risk associated with habitat restoration or recreation (scores 1, 2, or 3).

Time it will take to recreate or restore the habitats (look-up table for weighting factor).

Location of the offset (scores 1, 2, or 3).

A fuller description of the metric is available in the Green Paper (Defra, 2013b)


32

Proactive versus reactive use of the metric

All of the pilots and many of the LPA ecologists recognised that ideally there should be a

proactive approach to identifying and assessing relevant planning applications at pre-

application or submission stage. In all but CSWAPO, resources (staff and time) were

insufficient for this to happen. Instead they were reliant on others, generally officers in lower

tier authorities to identify and refer applications in which the use of the metric and

consideration of biodiversity offsetting might be appropriate. This process was consistent with

normal consultation, but it was essentially a reactive, pragmatic, and risk based approach

where only higher impact applications were considered. The pilot hosts and some LPA

ecologists had concerns that this approach meant that not all of the applications that were

resulting in net-loss were using the metric.

Through the use of these existing processes, the application of the metric, and approach to

biodiversity offsetting, was brought into the ‘day job’ of staff in most pilots.

Agreement and negotiation

Having applied the metric and understood the impact of the development, it was necessary

to identify and agree any on-site or off-site measures. Where the metric had been used there

was still a degree of negotiation: with the following questions needing to be discussed and

resolved:

Is there any residual biodiversity loss?

Is any residual biodiversity loss ‘significant’?

How can the loss be compensated?

What are the costs of any compensation?

What worked well?

Across all stakeholder groups there was a high level of support for the principle of using the

metric as a tool for quantifying biodiversity impacts. Most felt that it was a relatively simple,

easy to use tool that supported a greater understanding of the likely impact of a

development whilst also incentivising on-site mitigation and compensation. Specific benefits

included:

Visualising and quantifying biodiversity impact – The greatest benefit of using the

metric, reported across all of the stakeholder groups, was that it allowed the

impact of a development to be quantified. LPA ecologists, planning officers, NGOs

and consultant ecologists reported that visualising the impact increased the

likelihood of it being considered and addressed. The Doncaster, Thames Link

Programme and Atkins Complementary Projects also identified this benefit.

Increasing the transparency of mitigation and compensation – Across the

stakeholder groups metric users considered that the metric makes the discussion

and agreement of biodiversity impacts and related mitigation and compensation

more transparent as it set out explicitly what was being lost and what was being

replaced.

Providing a consistent but flexible framework – All metric users felt that the use of

the metric brought a greater degree of consistency to the consideration of

biodiversity impacts and possible mitigation / compensation. Metric users noted

that current practice for determining biodiversity impacts was ad-hoc, inconsistent

and reliant on the enthusiasm and expertise of the individuals involved. Pilots

reported that there was still scope for the use of expert knowledge and this meant,


33

within the framework set by the metric that local contexts and priorities could be

accounted for.

The metric as an on-site mitigation tool – There were multiple examples of

applications where the metric had resulted in positive changes to the nature and

extent of on-site mitigation and compensation14. The metric quantified residual loss

accounting for on-site measures. On-site measures were considered to be generally

cheaper and simpler than off-site compensation so reducing the on-site impact

was an effective way to reduce the costs of compensation of any residual impact.

There were examples where applicants had changed the design of the scheme,

i.e. physical changes to the development, to avoid impacts on higher value

biodiversity features, but these were few in number and most changes resulting

from the use of the metric were to the nature and extent of on-site mitigation and

compensation.

Raising the profile of ‘low-value habitats’ – Most of the pilots, LPA ecologists, NGOs

and consultant ecologists felt that the metric was very effective in accounting for

the loss of low-value habitats – such as ruderal, semi-improved grassland and scrub.

It was reported that these, non-designated habitats, were often targeted for

development as they are rarely accounted for within planning policy. The metric

identifies these habitats as having some value which increased the likelihood of

them being considered within the application.

Training – There was a consensus that where pilots provided training or capacity

building it was very valuable for metric users. Interviews undertaken with metric

users after this training indicated they became more confident with the metric and

were able to provide the necessary information in a more efficient way.

What worked less well?

Some aspects of the mechanics and implementation of the metric were reported to have

worked less well. These included:

The learning curve – All of the metric users reported that it took time to understand

the mechanics and specifics of the metric, including the application of the

condition assessment methodology.

The metric as an additional process – All of the pilots recognised that elements of

the process of using the metric involved additional work – such as the pilots

developing and managing the metric and undertaking capacity building.

Ecological consultants also noted that the metric required habitat condition

information to be collected. This is not currently collected as a matter of course.

Additional costs – Although the metric was used in a number of applications which

would result in residual biodiversity loss, only a fraction of these resulted in any

funded off-site compensation. Developers were generally open to using the metric

on a voluntary basis but across the pilots were very reticent to provide additional

funding unless required to do so; as in the CSWAPO pilot.

Metric outputs – Although the quantification of biodiversity impact was broadly

viewed as positive, it was noted by non-ecological metric users that ‘biodiversity

14 For example case studies CSWAPO1, 5 and 7, Devon1 and 2 and Notts1.


34

units’ was not a very intuitive output and that having populated the metric it was, in

some instances, hard to understand what action was required. Part of this related

to there being no information provided about likely costs or specific actions

needed; i.e. if the metric said that x biodiversity units needed to be compensated

for it was not clear how much this might cost or what habitats were required. This

frustrated metric users but it was a communication issue rather than a failing of the

metric, as compensation costs and exchange rules were informed by the metric

but agreed separately via negotiation.

Ecological omissions – A number of aspects of ecological systems or ecological

values were considered to be either missing or not addressed sufficiently by the

metric or related Defra guidance on biodiversity offsetting:

Connectivity / fragmentation – There was no consensus from metric users

whether the omission of these aspects of ecological systems should be

addressed via policy and ecological advice or whether it should be included

within the metric calculations.

Species and features – Around a quarter of metric users noted the absence of

species considerations and felt this should be addressed. The reason for this is

that, as noted by the Somerset Complementary Project, low value habitats can

be of high value for some species (e.g. some birds and bats) some of which

may not be covered by protected species requirements.

Accounting for mosaics – Mosaic habitats, (habitats with a range of vegetation

community types) could be accounted for if the area of the component

habitats was determined. The low resolution of most surveys meant that this was

not easily done. Metric users tended to identify a dominant habitat type and

classified the mosaic as that – this led to some disagreements between

ecological consultants and LPA ecologists.

Loss of function – Three of the pilots and LPA ecologists felt that the metric did

not account for the possible loss of ecological function resulting from the

development. For example, within a residential development hedgerows or

grassland might remain on-site but could lose their value for nesting birds due to

cat predation. The metric was not able to account for this.

Over-accounting – A few ecological consultants, one of the pilot hosts and the

developer representatives felt that in some instances the metric over-estimated the

importance of low-value habitats – in particular land used for arable cropping.

Lacks of subtlety – The numerical values and weightings of some components of

the metric were considered to be too crude in some instances. CSWAPO

developed a 1 – 5, rather than 1 – 3, scale for distinctiveness. Ecological consultants

and pilots reported that the spatial multipliers for offset sites (currently 1, 2 and 3)

were too strong, although it was conceded that these strong multipliers did

incentivise the use of strategic areas for offsets as identified in the pilot strategies.

Lack of guidance – Across the stakeholder groups, there was a view that insufficient

information or guidance was provided on condition assessment and restoration /

re-creation. Condition assessment is a core part of the metric and guidance on the

field assessment of condition was provided to the pilots in the form of the Farm


35

Environment Plan (FEP) Handbook. The limitations of the FEP methodology were

recognised in the Defra guidance, where it was considered that in the absence of

a clear alternative it would be adequate for use in a pilot. It was clear from the

interviews that in practice this methodology was not viewed as fit for purpose, as

there were significant gaps concerning habitats and it was too focused on

agricultural environments.

Lack of evidence – There was a lack of evidence and guidance on timescales,

costs and the practicality of habitat restoration and re-creation. Existing technical

guidance (Defra, 2013a) was felt to be too vague (with very large ranges of

timescales) and with insufficient coverage of habitats.

Scope for manipulation – One of the pilot hosts and one LPA ecologist referred to

the metric being manipulated, for example the condition of habitats was

deliberately under-recorded to reduce their apparent value in order to reduce

costs for the developer. There was one recorded instance where this happened in

the pilots; the LPA had the original data so they were able to identify and correct

the calculation. It should be noted that most pilot hosts and LPA ecologists were

confident with the quality of the information they received, noting that within

current practice LPA ecologists rely on information provided by ecological

consultants.

The range of metric users’ opinions showed that there was some dissonance in their

expectations of the metric. Examples of this are presented in Table 5, for example, some users

wanted the metric to be simpler, but they also wanted it to account for other aspects of

ecological systems.

Table 5: Dissonance in users’ expectations for improvements to the metric

Metric users want the metric to be…

Simple

but also

Comprehensive

Flexible Consistent

Incentivising strategic offsets Reducing offset costs

Accounting for low value habitats Not over-estimating low value habitats

Potential improvements

At the final evaluation workshop, held in May 2014, pilot hosts and Natural England advisers

identified a number of improvements that could be made to the metric, including

(presented ranked in order of priority by votes cast):

1. Mandatory use of the metric.

2. Improve methodology and guidance on condition assessment.

3. Have a national metric with local variation (e.g. distinctiveness).

4. Increase the number of category distinctiveness scale from 1-3 to 1-5.

5. Use simplified version of the metric at pre-application.

6. Include non-regulatory species in metric when accounting for impact.

7. Improve guidance on the i) establishment, ii) restoration and iii) recreation of habitats.

8. Include ecological function and connectivity in the metric.

9. Better definition of irreplaceable habitats.

10. Revised hedgerow metric.

As noted in Table 5 there was limited consensus on the substance of such potential

improvements and a view that consultation / discussion, involving relevant professions, would


36

be necessary before any improvements were made. At the same event participants noted

that one of the strengths of the current metric was its relative simplicity and that this should

be retained.

Transparency of the metric

The vast majority of the metric users felt that, compared to current practice, the metric was

more transparent. The only negative opinions about the transparency of the metric came

from developer representatives who felt that it was not clear how the costs were determined

(that was not a metric issue).

3.5 Legal and development planning

This section focuses on the legal and development planning aspects of the pilots including

the role of national and local planning policy and regulations, any project specific legal

agreements and planning mechanisms.

National planning policy and biodiversity offsetting

In England’s plan-led system, applications for planning permission must be determined in

accordance with the local development plan, unless material considerations indicate

otherwise.

The National Planning Policy Framework (NPPF) is the key national planning policy document

for England and is a material consideration in determining planning applications. While it

does not refer explicitly to biodiversity ‘offsetting’, a number of paragraphs provide the

framework for operation of the mitigation hierarchy and the requirements that could enable

biodiversity offsetting.15

The most significant of these is paragraph 118, which specifically addresses the mitigation

hierarchy requiring that “When determining planning applications, local planning authorities

15 These include references to “moving from a net-loss of biodiversity to achieving net-gains for nature” (para 9), the

planning system “providing net-gains in biodiversity where possible” (para 109); requirement for a “strategic

approach in their Local Plans, planning positively for the creation, protection, enhancement and management of

networks of biodiversity and green infrastructure” (para 114); “promot[ing] the preservation, restoration and re-

creation of priority habitats, ecological networks” (para 117)

Box 7: Summary of legal and development planning findings

Pilot hosts had mixed views on whether existing national policy was sufficient to support the

requirement of no-net-loss of habitat from development, especially for ‘lower value habitats’. Their

definition and implementation of ‘significant harm as referred to by the NPPF was the key variation.

A number of emerging draft local development plans in the pilot areas include explicit reference

to biodiversity offsetting as a mechanism to achieve no-net-loss/net-gain in biodiversity, but due to

the timing of the pilots and the time required to produce plans few of these (with explicit reference

to biodiversity offsetting) have been adopted at the time of writing of this report.

Even where biodiversity offsetting is not explicitly referred to, most plans within the pilot areas

include policy requirements which reflect the NPPF. These include seeking a no-net-loss and/or net-

gain in biodiversity, requiring compensation for unavoidable loss, and enhancement of green

infrastructure networks and ecosystems.

Early engagement between applicants and planning authorities in the planning application

process was regarded by most participants as key to ensuring that the metric was used and where

appropriate biodiversity offsetting was considered as an option to compensate for unavoidable

losses. In most pilot areas a proactive approach to promoting the use of the metric and the

consideration of biodiversity offsetting was hindered by a lack of resources.

Consistent with current practice, section 106 legal agreements (s.106) were used to require off-site

compensation and long term management. Planning conditions were being used for on-site

enhancements. During the pilot programme no s.106 agreements were implemented, largely

because of the time taken to determine applications, agree s.106s and commence development.


37

should aim to conserve and enhance biodiversity by applying the following principles: if

significant harm resulting from a development cannot be avoided (through locating on an

alternative site with less harmful impacts), adequately mitigated, or, as a last resort,

compensated for, then planning permission should be refused”.

The National Planning Practice Guidance (NPPG) provides further explanation of how policy

should be applied. The NPPG makes specific reference to biodiversity offsetting as an option

for delivering compensation: “Where compensation is required a number of avenues have

been available. The applicant might offer a scheme tailored to the specific context, or

consider the potential for biodiversity offsetting with the local planning authority” (DCLG,

2013).

Local interpretation of national policy

The pilots relied on the NPPF’s references to no-net-loss and the implementation of the

mitigation hierarchy to push biodiversity offsetting. Based on their experience, the pilot hosts,

planning officers and LPA ecologists were divided on whether existing national policy was

sufficient to incentivise the use of the metric and of biodiversity compensation for non-

designated habitats.

Stakeholders from all but one of the pilots (CSWAPO) took the view that existing policy was

insufficient, and that planning policy would support the use of the metric and biodiversity

offsetting only in instances of ‘significant harm’ which was interpreted to mean harm to BAP

habitats or County Wildlife Sites. Pilot hosts felt that, under a voluntary system based on

existing planning policy, refusing an application on the grounds of failure to provide off-site

compensation for habitats on non-designated sites would be very difficult to justify in

planning terms, particularly given government aspirations around the need for development

to proceed.

The exception to this was the CSWAPO pilot. In this pilot, if the application of the metric

indicated that there was expected to be negative impact of more than one unit this was

considered significant (as a rule of thumb). Where ‘significant’ loss was identified, the pilot

required no-net-loss to be achieved by off-site compensation where on-site measures were

insufficient. In CSWAPO the pilot hosts, planning officers and LPA ecologists felt this was

warranted in planning terms. However, some agents (developer representatives) and

consultant ecologists felt that there was no clear planning rationale for these requirements. In

particular there was a concern that this was not a voluntary system as they could not opt-

out. The pilot hosts countered that they were simply implementing existing planning policy

and that there was precedent as a Planning Inspector had supported their interpretation of

national policy and the use of biodiversity offsetting (see case study CSWAPO2).

Sufficiency of local policy

In all but one of the pilot areas, LPAs sought to include biodiversity offsetting within local

planning policy and processes. The Nottinghamshire pilot host felt that there was too much

uncertainty about future biodiversity offsetting policy and decided not to integrate it into

emerging Local Plans. Appendix 4 includes a review of adopted or emerging development

plans in the pilot areas with references to biodiversity offsetting or related policy.

By the end of the pilot programme, 18 draft Local Plans in the pilot areas, including adopted

plans and those at a relatively advanced (submission) stage, included explicit reference to

biodiversity offsetting in policy or supporting text (Table 6). Of these, only one recently

adopted Local Plan included a reference to biodiversity offsetting within policy (Solihull

Adopted Local Plan), with a further three recently adopted plans making reference in

supporting text (Dartmoor Development Management Development Plan Document (DPD),

Teignbridge Local Plan, and South Hams Development Policies DPD).

The lack of explicit reference in adopted plans may be due to timing, and the lengthy

process of plan preparation (through consultation stages to examination and adoption) and

the short time in which the concept of biodiversity offsetting has been trialled through the


38

pilots. During this time few plans had been through the plan-making process to adoption (at

which point they have greatest weight in decision making).

Most of the Local Plans referred to have not yet been tested at Examination and so it is not

known whether they will be found sound and therefore if the policies and text relating to

biodiversity offsetting will be included within final adopted plans.

Table 6: Emerging plans in the pilot areas with explicit reference to biodiversity offsetting (at

the time of writing)

Emerging plans with reference to biodiversity

offsetting in policy

Emerging plans with explicit reference to

biodiversity offsetting in the supporting text to

policies

Rochford (Development Management DPD

Submission)

Uttlesford (Local Plan Pre-Submission)

Torbay (Local Plan Submission)

Devon County Council (Waste Plan

Submission)

Coventry (Core Strategy Submission)

North Warwickshire (Core Strategy Submission)

Nuneaton and Bedworth (Borough Plan

Preferred Options)

Norwich (Local Plan Development

Management Policies Submission)

Doncaster (Sites and Policies DPD Submission)

Essex CC (Minerals Local Plan Pre Submission)

Castle Point (Local Plan Draft)

East Devon (Local Plan Submission)

Exeter (Draft Development Delivery DPD)

North Devon and Torridge (Draft Local Plan)

Stratford on Avon (draft Core Strategy)

Warwick (Local Plan Publication)

Norwich (Local Plan Development

Management Submission)

Where reference to biodiversity offsetting is not explicitly included in adopted or emerging

Local Plans, most refer to relevant concepts that are in the NPPF. These include net-gain and

no-net-loss in biodiversity; compensation for unavoidable losses (that may be referred to

erroneously as ‘mitigation’); delivery of Biodiversity Action Plan targets; reference to

Biodiversity Opportunity Areas and delivery of green infrastructure and ecological networks.

Within a plan-led system, such requirements were considered by the pilot hosts to be

important to justify the use of the metric and biodiversity offsetting – where appropriate.

Participants in the pilots generally felt that the inclusion of biodiversity offsetting in policies

and development plan text would provide a basis for discussions with developers; including

at an early stage to ensure that the metric is applied and the option of biodiversity offsetting

is understood and planned for early on.

Validation checklists

In two authorities (CSWAPO and Essex16) the metric was included in validation checklists. The

pilot hosts considered this to be important as it meant applicants would be made aware of

and have to apply the metric at an early stage.

Delivery mechanisms

Most of the pilot hosts and LPA ecologists had experience of using conditions to on-site

secure mitigation and compensation, and s.106 agreements for off-site compensation

measures. Within the pilots, the use of conditions was consistent with current practice, with

conditions formulated to require the avoidance, restoration, creation, translocation and

management of habitats within the boundaries of the site.

S.106 legal agreements have been used to secure funding for off-site measures, with the

amount of funding for biodiversity informed by application of the metric combined with

negotiation between LPA ecologists and developers representatives (agents and ecological

consultants). Payment of funds required by s.106 agreements generally does not occur until

development commences and there is often a delay between permission being granted

16 South Devon indicated that they planned to include it if possible.


39

and development commencing. This has resulted in there being no examples where the

s.106 money has been paid and used to date, due to the slow progress of applications within

the pilots.

In one pilot, the Wildlife Trust was anticipated to be the main provider, but costs associated

with preparing management plans and the risk of developers choosing not to use biodiversity

offsetting the Trust decided not to provide any offsets.

The LPA in this pilot used the metric to calculate impact and secured funding through s.106

agreements from two applications. These funds are to be used for habitat restoration and

management on the council’s own land. This model of the LPA securing compensation funds

via s.106 and then looking for schemes was common to all of the pilots and was considered

by interviewees to be a pragmatic solution given the lack of worked-up and accredited

offset schemes.

Although this approach was pragmatic, there were some identified risks:

The funds may not be sufficient to secure the necessary compensation – The funds

delivered via s.106 were based on estimates of how much it might cost to secure the

compensatory biodiversity units rather than a costed proposal for a specific offset

site. The s.106 agreements were also subject to negotiation between developers and

the planning authorities; this tended to reduce the amount of funding finally agreed.

The Essex and CSWAPO pilot hosts reported that the current state of understanding of

habitat restoration and re-creation costs was insufficient and it was possible that their

best-guesses were underestimates. This process either places delivery risks upon the

LPA / ultimate offset provider (who have committed to deliver x amount of units for

£y) and/or it reduces the likelihood of no-net-loss or net-gain because less biodiversity

enhancement than anticipated might result.

The offset is not developed in a timely or efficient manner – Interviewees with

experience of off-site compensation noted concerns with the capacity and

capability of LPAs to spend the s.106 funds. A number of examples emerged where

funding had not been spent for significant periods of time because LPA officers did

not have the time to develop management schemes. One example of this lag time

was the ‘test-offset’ project in Essex where there was a gap of 19 years between the

funding being received and spent. Interviewees also noted that developing

restoration schemes is rarely part of the role of LPA ecologists and they may not

necessarily have the experience and skills to do this. In addition, the payment of s.106

funds on commencement means that delivery of compensatory measures will only

occur after rather than before habitat loss has occurred.

This approach was very similar to current practice, and remains prevalent because of the

practical challenges of aligning a development with a specific offset. The practical

challenges include:

Speculative nature of management plans – There was no guarantee that the

development will commence once planning permission has been secured and

therefore it is not guaranteed that funding for the offset will be forthcoming. If a

specific management plan were linked to an application, the offset provider would

be obliged to hold that land (without funding) until the development commenced.

This could be years or not at all.

Absence of a functioning market of offset schemes – Few offset providers came

forward during the pilot programme and there is a resultant lack of offset sites on

which to spend s.106 funding. The lack of offset sites creates a difficulty of linking a

specific offset to a development. Identification of compensatory measures is more

opportunistic and occurs after the development has commenced, as is normal with

s.106 agreements. This was considered by a number of developer representatives

and pilot hosts to be the single biggest challenge to linking applications to specific

schemes. Interviewees suggested that a market, i.e. a large collection of prepared

management plans, was necessary. Such a market would provide a range of sites


40

and options and help make costs known to applicants and LPA officers. As previously

noted, one key reason this market does not currently exist is provider reticence to

spend resource on speculative management plans and the lack of a clear

requirement for biodiversity offsetting to be considered and implemented within a

voluntary system. Within CSWAPO and Essex the EBL officers did use the Environment

Market Exchange17 to identify potential offset sites. Although the Exchange includes a

large number of registered sites for CSWAPO, Essex and non-pilot areas most of these

are ‘bronze’ sites - meaning that very little information has been provided. This is a

very low level of commitment from the offset providers and is, in effect, of very limited

utility on its own. Within CSWAPO and Essex the Exchange was considered a useful

starting point, but during the pilot programme it did not act as a functioning market

for offsets.

3.6 Costs

This section explores time inputs and other expenditure of local authorities, developers, and

other stakeholders as appropriate. Where data allow, these time inputs and costs are

compared with current practice (including any efficiencies of the process).

Total estimated pilot costs

The overall costs of the pilots for the LPA pilot hosts, members of the pilot groups and Natural

England suggest that inputs to the pilot were extremely variable across the pilots.

Two staff in the Essex and the CSWAPO pilots were full time and funded by EBL; both of these

pilots also used LPA resources. Staff resources dedicated to biodiversity offsetting amongst

the other local authorities were much lower, and/or overlapped with similar duties. For

example, in Doncaster, it was estimated that over the course of the pilot the hosts spent a

maximum time of 500 hours / 70 days (with an approximate cost of £10,000). Most others

reported that they spent about ½ to 1 day per week on the biodiversity offsetting work (over

two years this comes to approximately 50 – 100 days). Inputs also varied greatly according to

requirements (especially after the initial setting up period).

The main cost elements identified for the pilots were:

1. Setting up pilot groups.

17 http://www.environmentbank.com/environmental-markets-exchange.php

Box 8: Summary of cost findings

It was not possible to fully assess costs due to variation and gaps in cost recording.

Time and costs to develop the biodiversity offsetting strategy varied depending on its complexity.

Very simple, informal strategies only required a few days of time to be prepared whereas strategies

that were complex or part of wider planning processes used significantly more resources, up to

£13,000.

Despite inconsistencies across stakeholders, the general view was that biodiversity offsetting and

specifically the use of the metric has the potential to lead to a marginal reduction in time for

planning decisions, but there was an initial learning period during which it takes more time.

Compared to current practice, the use of the metric and biodiversity offsetting tended to lead to

increased biodiversity compensation requirements and costs.

In a voluntary system any costs will be subject to significant negotiation between applicants and

LPAs, with applicants refusing to meet costs and not pursuing biodiversity offsetting in many

instances.

Existing cost evidence was insufficient to allow for the accurate prediction of the costs of specific

offsets since site specific factors are significant.

Searching for appropriate offset sites can have significant costs within the early stages of market

maturity – these costs were sensitive to the exchange rules and spatial boundaries set for any

search.

http://www.environmentbank.com/environmental-markets-exchange.php


41

2. Development of biodiversity offsetting strategies.

3. Building capacity and awareness.

4. Individual offsets

a. Development side – use of the metric and negotiation.

b. Offset side – finding suitable offsets and developing management plans.

It should be noted that all pilots provided evidence on the first three of these cost elements,

while seven of the eight engaged within individual offsets (on the development side) and

only two proceeded to considering actual offsets.

Setting up pilot groups

The pilot hosts had to invest time and resources in forming and coordinating the pilot groups

and completing the EoI for being an offsetting pilot project. It was difficult to calculate this

time as activities were often relatively small and/or already part of existing duties (e.g.

relating to working within existing groups). Due to a lack of recorded information, it was not

possible to determine non-host costs associated with the establishment of the pilot groups.

Despite this lack of information it is apparent that the establishment of the groups and

submission of the EoIs took the hosting groups a substantial amount of time especially for

those pilots based on new groups. Essex County Council estimated at least 75 hours of time

by County Council Officers, plus about 100 hours of time by EBL in support of the EoI alone.

Doncaster County Council estimated 120 hours of time covering the development of the bid

and subsequent guidance, plus another 120 hours of time for local stakeholders. Others were

not able to estimate time inputs, but most indicated that it was weeks of work in total, whilst

Warwickshire Country Council stated that it was a substantial amount of effort with a cost in

the thousands.

With the limited comparable information on costs, it was not possible to draw reliable

conclusions on the costs of the different approaches to setting up the pilot groups. However,

the size of the group appeared to be an important factor in determining costs; the largest

group (Essex with 22 organisations) taking at least 175 hours to set up. Considerable time was

required to set up the pilot groups. This is unsurprising and can be seen in other recent

environmental partnership initiatives notably the Catchment Based Approach (Cascade,

2012) and NIAs (CEP, 2013). These are primarily one-off establishment costs.

Costs related to developing the biodiversity offsetting strategies

It proved difficult to quantify the costs accurately for developing the biodiversity offsetting

strategies as time inputs to the work were not clearly discernible or recorded and had to be

estimated by the pilots. These estimates provide only an indication of the order of magnitude

of such costs, rather than precise values, though clearly the development of the strategies

required considerable time and effort for all of the pilots and many of the Natural England

advisers. Table 7 shows there was significant variability in self-reported costs for strategy

development.

Table 7: Self-reported costs related to developing the biodiversity offsetting strategies

Costs related to developing the biodiversity

offsetting strategies

£13,000 for Coventry, Warwickshire and Solihull

(including setting up the pilot group)

£6,000 – 8,000 for East Devon

£5,000 – 8,000 for south Devon

4 weeks of officer time in Doncaster

10 days of officer time in Essex

£750-£1000 for Nottinghamshire

Most of the pilots were unable to estimate how much time was spent on developing the

strategies by non-host partners, one pilot estimated around £3,500 and another suggested


42

‘only a couple of days’ across all members of the pilot groups.

Those pilots who developed detailed offsetting strategies tended to have higher self-

reported costs. It also appears that the decision of most of the pilots to avoid formal decision

making processes avoided costs associated with public / stakeholder consultation and sign-

off by councillors.

Building capacity and awareness

The pilot hosts spent a great deal of time undertaking capacity building and awareness-

raising within their pilot areas. For example, the Essex officer indicated they had set up and

attended over 75 events, meetings and discussions with LPA officers, potential offset

providers and developer representatives. The CSWAPO officer, with their LPA host, also

developed and undertook a significant amount of training on the use of the metric with

metric users. In total 115 attendees from 65 consultancies participated with these training

activities.

For most of the pilots, capacity building work was undertaken as part of their normal role and

it was not possible to identify specific resource use beyond the time spent setting up of the

pilot groups.

Natural England costs

The Natural England advisers were resourced to provide a maximum of 2.5 days per week

support to each of the pilots over the length of the pilot programme (two years). Only a small

fraction of this time was actually used.

Advisers said they had spent between two to ten full days providing support to the

development of the offsetting strategies, with most providing estimates of around five days.

This was the biggest single resource contribution by the advisers. The main reason for this

under-utilisation of resources was the general lack of projects emerging from the pilots

coupled with Natural England’s limited role.

Compensation costs and viability

Evidence from the pilot programme indicated that using the metric to quantify biodiversity

loss increased mitigation and compensation requirements and, therefore, related costs. This

led to either negotiation and/or a refusal by the developer to meet these costs. In a number

of the cases where the applicants agreed to meet the costs, issues emerged about the scale

of these costs and how they impacted on the viability of the application.

Developer representatives, LPA ecologists and planning officers referred to specific instances

where higher than expected costs for biodiversity (due to the use of the metric) meant that

other developer contributions (such as affordable housing, Sustainable Urban Drainage and

traffic infrastructure) had to be reduced. The pilot hosts and LPA ecologists noted that, in

effect, developers are willing to provide a certain amount of money and that the allocation

of this ‘pot’ was based on the decisions of the planning case officer, informed by other

officers such as the LPA ecologist. One developer representative in particular felt that the

increased costs for biodiversity were potentially very significant and that the current process

of introducing these costs during the planning process reduced the viability of the

development. The planning officers felt that, in comparison with the other developer

contributions and the total budget for the development, these costs tended to be quite

small. However, it was accepted that the earlier the costs were introduced the more able

the developers were to manage them.

Within CSWAPO, the financial sum and number of biodiversity units were both included within

the s.106 agreement and the applicant had the choice of paying the LPA or delivering an

approved offset scheme for the number of units. Within the pilot the funds were based on a

‘worst-case scenario’ where it was assumed that the offset site was in a non-strategic area

(as per the biodiversity offsetting strategy). This was done to reduce the risk of non-delivery,

but also to incentivise the developer to find their own scheme.


43

One of the impacts of using the worst case scenario was that if the viability assessment and

planning contributions are assessed using a biodiversity offsetting sum, and a specific

scheme is then secured for a lower price (rather than paying this financial option to the LPA),

the remaining money is not reallocated back into the developer contributions ‘pot’. In effect

the LPA would lose out on developer contributions.

The pilot hosts hoped the costs of any biodiversity mitigation or compensation could be

factored into land acquisition costs as the system develops. Due to the relatively short

duration of the pilot programme this was not observed during the pilot phase. The other

option would be to factor any compensation costs into the viability assessment. This is not

straightforward as off-site compensation costs cannot be set until the mitigation hierarchy

has been followed. Within the pilot programme there was insufficient evidence about the

costs of offsets. Crucially, the pilot programme was also relatively new and some of the

applications that experienced this problem had undergone pre-application discussions and /

or been designed prior to the pilot programme. This meant it was not possible to introduce

these requirements at a sufficiently early stage for them to be built into viability ‘studies’.

These issues around viability only occurred in the CSWAPO pilot, which was semi-mandatory.

Within the voluntary pilots, developers were more able to negotiate down costs for off-site

compensation.

Costs related to offset sites

It was not possible to provide information on the actual costs of biodiversity offsetting under

any of the pilots.

CSWAPO prepared some estimates of the capital costs of habitat creation and restoration

and on-going management for their project planning (see Appendix 5). These suggest that

typical costs for habitat creation/ restoration and maintenance would range from £3,000 –

£18,000 per ha over 30 years (assuming 3.18% inflation rate18) depending on habitat type

(averaging over 30 years £13,000 per ha for grasslands, £10,000 for woodlands and £5,000 for

wetlands). Future costs depend greatly on the inflation rate over the period.

The pilot hosts noted that these estimates were subject to a number of limitations. Firstly, they

are based on agri-environment and BAP costs. Agri-environment payments to landowners

are based on income foregone calculations according to EU Common Agricultural Policy

rules, and should therefore be treated with caution when applied to offset cost estimates.

Most notably, agri-environment contracts are normally only for 10 years, and many

landowners may require greater incentives to enter into the longer-term agreements

required to secure offsets.

Secondly, costs will vary greatly depending on the total area created and/or managed, as

per hectare costs decrease considerably with increased area as a result of efficiency savings

(Armsworth et al., 2011). The CSWAPO pilot hosts and potential LPA providers feel that habitat

banks that pool offsets are likely to be much more-cost effective than single offsets.

The estimated offset costs do not include the costs of finding suitable offset sites (and

possible brokerage fees), site surveys and the production of management plans and legal

agreements for them. Typically the cost of site location and management planning would

be expected to be in the order of a few thousand pounds. Evidence from the Essex test-

offset, suggested that a large amount of time and effort could be required to find

appropriate sites and develop management plans. In the case of the test-offset, 57 days of

staff time, with an approximate cost of £27,000, were required to find a suitable site (against

very tight search parameters) and develop the final management plan.

As the market for offsets matures, the time spent searching for suitable offset sites may

decrease. Within the pilots there are some indications this is already happening. In addition,

the exchange rules and spatial boundaries of any search will also affect the number of

potentially suitable sites and search times.

18 3.18% is selected because it was the average over the last 30 years.


44

Streamlining

Opinions on whether the use of the metric, or use of biodiversity offsetting, helped to

streamline (i.e. simplifying the process and reduce the total resource use and time spend) the

development process varied. There was little evidence or consensus that the metric had

helped to speed up the application and decision making process, or that it had reduced

costs to applicants/developers and planning authorities.

When asked whether biodiversity offsetting was more efficient than current practice four of

the nine pilot hosts said it was, with one stating it was less efficient and one feeling it was as

efficient. Three others felt that they didn’t know. Of the Natural England advisers, one felt it

was more efficient, one that it was less efficient, one that it was as efficient and three did not

know.

Those who thought it was more efficient referred to the increased standardisation and

transparency under the programme, especially in relation to the metric outputs. This result

was consistent with responses elicited from pilot hosts when specifically talking about the

metric.

One pilot host pointed out that it was difficult to judge changes in efficiency because the

issues associated with biodiversity offsetting were variable and very context-specific (in

relation to the significance and complexity of impacts on biodiversity). The efficiency of the

process also varied according to developer attitudes and the engagement and enthusiasm

of others involved in the process.

The respondents who felt that the pilot scheme was less efficient than current practice

indicated that this was due to the additional work that was required to populate the metric

and to find offsets. This additional work included consultant ecologists, acting on behalf of

the applicant, undertaking habitat surveys and applying the metric calculation, followed by

checking the application of the metric. This involved supporting with evidence the

judgments made, particularly regarding condition of the habitats. This resulted in a marginal

increase in up-front costs to developers, over and above Phase 1 habitat surveys or

ecological impact assessments. Using the metric and requiring the offsetting of any residual

biodiversity loss almost certainly resulted in additional issues having to be considered by

those involved in the planning and permitting process.

Implementing an approach that was new and emerging increased the time and costs for all

parties. However, pilot leads reported that applying the metric was becoming quicker and

easier as experience grew, particularly with consultant ecologists gaining experience and

capability together with training being provided for planners and ecologists.

Participants felt that applying the metric may have had little impact on the time required to

determine applications. This was because in most cases there were many other issues that

needed to be addressed when preparing and determining planning applications, of which

biodiversity was one that was dealt with concurrently with other issues. Biodiversity (excluding

protected species and sites) is often one of a number of issues requiring resolution, and is

generally not the major factor in causing delays to or increasing costs of development

(Defra, 2012a). While developers are sensitive to any costs, experience from the pilots

suggested that the use of the metric had helped to resolve biodiversity issues and that that

applicants were reasonably content with its use.

Total costs

With the limited available data it was not possible to calculate the overall costs of the pilot

schemes or individual offset projects. Total costs would not be comparable and of limited

value due to the great variation in the approaches taken by the pilots. It is possible to

conclude that the development of the biodiversity offsetting pilots involved substantial costs,

especially for those that were ambitious and invested time in the development of their pilot

group, biodiversity offsetting strategies, awareness raising and capacity building. The two

pilots that progressed to identifying offset sites both had a full-time offset officer (supplied by

EBL), in addition to other host staff, which might suggest that such a level of staff investment is


45

needed to implement schemes and achieve voluntary biodiversity offsetting in practice.

Some of the actions necessary to establish and operate biodiversity offsetting resulted in one-

off establishment costs, but others would be expected to be on-going dependent on

demand for offsets. Some actions that incur costs would be expected to occur in the

absence of biodiversity offsetting (e.g. ecological assessments for EIA and planning

applications) whilst others might be new (e.g. finding suitable offset locations and providers).

Additional costs and processes related to the metric are likely to be largely one-off, as the

metric becomes established into current processes and user capacity increases. Assuming

offsets are required for a larger number of applications than current compensation

arrangements, costs related to the offset are essentially new and additional.

3.7 Ecological implementation and monitoring

This section considers any ecological delivery and (non-cost) outcomes. It also presents

findings related to the accreditation and review of biodiversity offsetting projects by Natural

England

Improved biodiversity outcomes from the use of the metric

The pilot hosts noted that use of the metric in planning applications resulted in better

expected outcomes for biodiversity. This was particularly apparent in the CSWAPO pilot

where, due to the semi-mandatory nature of the pilot, it was more likely that residual losses

would be compensated. The metric calculations encouraged developers to consider

avoidance and mitigation measures, as far as possible, due to the potential costs of

offsetting residual losses. This meant that some developers reviewed their planning proposals

in light of the metric calculations. Consequently, there was improved application of the

mitigation hierarchy and demonstration of reduced total impact of development proposals.

LPAs ecologists and planning officers felt that the metric made it easier to communicate the

need for biodiversity outcomes within an application. There were several examples within the

CSWAPO and Essex pilot where use of the metric was anticipated to enable a substantial

gain for biodiversity19.

In particular, there was considerable value in the metric flagging the loss of high value but

non-designated habitats. The pilot hosts considered that under current practice it would

have been very difficult to secure compensation for non-designated, high value biodiversity

sites.

There were also examples of the metric leading to improvements to on-site biodiversity

19 For example case studies CSWAPO3, 7 and 8 and Essex3.

Box 9: Summary of ecological implementation and monitoring findings

Pilot hosts noted that in several cases use of the metric had resulted in expected gains for

biodiversity compared to current practice. Calculation of a biodiversity score made it easier for

LPAs to make the case for mitigation and compensation and to structure and present objective

arguments about biodiversity loss to developers.

Biodiversity offsetting and the application of the metric were considered useful by pilot hosts in

more clearly demonstrating the application of the mitigation hierarchy. Some concerns remained

about the potential for biodiversity offsetting to undermine the mitigation hierarchy but were not

viewed as substantial by the pilots.

In the absence of guidance on the definition of ‘in perpetuity’ for offset sites, pilots were working

with offset providers to prepare management plans for around 25-30 years.

The accreditation process for offset providers was considered to be straightforward by both offset

providers and Natural England, while the project viability assessment was seen as more

complicated, although in practice each was tested in only one case.


46

management in CSWAPO, North Devon, Nottinghamshire and Doncaster20. These gains were

smaller in scale as there were fewer instances where substantial off-site compensation was

agreed. The metric was used to pitch the price of any offsets, but in every case the sum was

always negotiated down.

The pilot hosts and Natural England advisers were asked whether, in their opinion, they

thought biodiversity offsetting as experienced in the pilots would result in better, worse, or the

same biodiversity outcomes. Most of the pilot hosts (six out of nine) and Natural England

advisers (four out of seven) considered the biodiversity offsetting approach as tested in the

pilots to be likely to result in better outcomes for biodiversity compared to current practice.

Others (two pilot hosts and two advisers) felt that they had not had the opportunity to test

this sufficiently to form an opinion. One pilot host and one Natural England adviser felt the

outcomes were no different (although they had not had the opportunity to test the metric).

Consideration of ecosystem services

One of the aims of the North Devon pilot was to apply biodiversity offsetting in relation to

losses of ecosystem services. By the end of the pilot programme an approach was being

developed, but had not been implemented. Using land cover maps, the pilot was in the

process of assigning ecosystem services to different habitats (informed by the National

Ecosystem Assessment). The pilot anticipated that any losses of ecosystem services resulting

from development would be replaced on a like-for-like basis (e.g. for carbon sequestration or

flood attenuation).

Other pilot hosts mentioned that public access (which could be defined in terms of

ecosystem services) was a key factor when considering the loss of any green space. They felt

that in most instances the LPA had a requirement to deliver access to green space, and that

this could be addressed by existing policy, rather than by aligning this with biodiversity

offsetting in any way.

Local authority offset providers indicated that any offsets would be expected to incorporate

some recreation and amenity considerations. The potential NGO offset provider and most of

the pilot hosts felt that biodiversity was the priority and it was necessary to keep the system

simple and not complicate it by considering ecosystem services.

Assessment of biodiversity impacts

Monitoring biodiversity impacts

One of the unexpected benefits of the metric quantifying biodiversity impact was that it

provided useful monitoring data for biodiversity (habitat) losses across an authority during the

pilot programme. CSWAPO applied the metric to a large number of applications (63 by the

end of the pilot programme) and, at the same time, recorded the impact scores on each of

these applications. These data provided a summary of potential biodiversity (habitat) impact

during the pilot programme. Although there are caveats about the use of the data (which

are presented in Volume 2: The Pilot Reports), the monitoring undertaken by CSWAPO

demonstrated the potential for the metric to be used as a simple tool for monitoring

cumulative biodiversity losses arising from development across a local authority area.

Application of the mitigation hierarchy

Pilot hosts found using the metric helped to demonstrate the mitigation hierarchy more

clearly to developers. However, while pilot hosts and LPA ecologists were clear on the

application of the mitigation hierarchy, such that compensation should be taken after

appropriate avoidance and mitigation measures, they reported examples of this approach

not being followed in all applications.

There were two identified applications where stakeholders reported that a development was

20 For example case studies CSWAPO1, 5 and 7, Devon1 and 2 and Notts1.


47

going ahead despite there being a substantial impact on biodiversity (case studies

CSWAPO1 and Essex2). In the first of these cases the site was allocated for development

within the Local Plan and the value of habitats on site was below that of County Wildlife Site

standard. In the other case the application went to appeal and it was argued that the offset

would result in net-gain.

In both cases the LPA ecologists objected to the applications on the grounds of significant

loss. But the decision was made respectively by Committee and on appeal to grant

permission subject to off-site compensation. Pilot hosts suggested that additional guidance

was required on the application of the mitigation hierarchy and the place of biodiversity

offsetting to avoid these situations occurring in future.

It was also reported that some developers were misinterpreting biodiversity offsetting and

viewing it as an excuse to remove habitats on site and then pay a financial sum for

compensation. Pilot hosts and LPA ecologists said that they had addressed this where it

occurred; however, they expressed concerns that in LPAs with limited or no ecological

expertise this issue was a real risk and that the mitigation hierarchy needed to be applied to

all applications.

On the basis of these discussions pilot hosts and Natural England advisers felt there was

potentially a rationale for the value of habitats (as defined in the metric) to be accounted

for within planning policy formation, particularly site allocation plans. This was something that

had been trialled in the Somerset Complementary Project and that had been explored in

the Essex pilot. The Essex hosts recognised there was potential value to this but, within the

pilot programme, the time and data requirements meant it had not been attempted.

Offset providers

Discussions were held with four organisations interested in providing offset sites on their land21.

The primary reason these groups engaged with biodiversity offsetting was the opportunity to

secure additional funding.

Two of the potential providers were local authorities who felt that funds secured via

biodiversity offsetting would enable them to change management regimes and increase the

biodiversity value of land for which they were responsible (including amenity grassland, parks

and nature areas). Both of these interviewees referred to their on-going ‘change agendas’

due to cuts in local authority funding and the need to find new funding sources to maintain

and ideally improve existing management. In particular the interviewees hoped to improve

the biodiversity management of sites that were currently unmanaged. Both the interviewees

felt that any offset site would have to provide multiple benefits, including opportunities for

education, volunteering and recreation. This was felt to be necessary considering the wide

remit of their organisation and the need to demonstrate as much value for money as

possible.

One of the other potential providers was a nature NGO who hoped to improve existing

reserves or ideally to acquire new reserves. The NGO expressed a number of concerns

around biodiversity offsetting and in particular the need to ensure that offsets were not being

secured from developments that had very high impacts. They stated that they would only

offset impacts for certain applications (low impact and when all on-site opportunities had

been exhausted). They considered this to be necessary to ensure the coherence of the

mitigation hierarchy and the reputation of their work when commenting upon development

applications.

A commercial business working with landowners and farmers within the agricultural supply

chain had recently started developing a role brokering relationships between landowners

and EBL. Their view was that farmers and other land managers might be interested in using

less productive land as offset sites; assuming the economics worked out for the land

managers (Table 8).

21 This included one land agent, two local authority estate managers and the reserve manager for a nature NGO.


48

Table 8: Opportunities and threats presented by biodiversity offsetting to potential offset

providers

Opportunities

New and additional funding for improved biodiversity management

Greater flexibility, specificity and lower administration costs than for example Heritage

funding, HLS / ELS funding or traditional s.106 (which often require the money to be

spent in a tighter spatial areas than those proposed within the pilots)

Funding secured via biodiversity offsetting is not a subsidy

Guarantee a long term income from unproductive land

Threats

Signing up to a long term management plans with fixed costs might present risks over

time (opportunity cost)

Time and effort required to develop management plans

No guarantee that funding will be provided (as application may be refused or may

not commence post determination)

Often required to develop management plans to short time scales

Offsets with low annual turnover (less than £5,000 p/y) not felt to warrant transaction

costs for private landowners

Private land owners lose long term flexibility to manage their land, particularly if there

is a risk that offset site becomes designated in the future

Long term management

The long term nature of offset projects distinguished them from other forms of habitat

management funding schemes. One of the local authority providers expressed a hope to

designate any offset sites as a Local Wildlife Site. They were also interested in working with

local communities to support the offset so that in 30 years’ time the site would be protected

by the community as well as by any designation it may have achieved.

The commercial business working with landowners and farmers also recognised that it was

important to think long term. For example when a farmer or land manager was considering

using their land for an offset they needed to be aware that at the end of the 30 years the

offset may have changed the nature of their land – i.e. it should now be of high biodiversity

value and have reduced their management options, effectively forever. Discussing these

issues upfront was felt to be imperative to ensure the land managers were aware of the

implications of becoming an offset provider. Despite these issues they were increasingly

confident that land managers would come forward if the demand for offsets was there.

Accreditation process

One of Natural England’s roles in the pilots was to provide support to the LPA on the

capability of offset providers, and the viability of the biodiversity offsetting management plan

that they may have submitted. This was to have been through the application of a trial

‘accreditation’ process, which would test the provider and project against a set of best-

practice questions, summarised as a recommendation to the LPA (broadly as ‘acceptable’,

‘needs more work’ or not acceptable’). Ultimately the decision was for the authority issuing

planning permission.

No explicit guidance was provided by Defra on the style or format of offset project

management plans as it was hoped that best practice would emerge from the pilots.

In practice, only one offset provider requested accreditation by Natural England, and only

one project management plan was submitted by them. In this instance, both the provider

and their project plan were ‘approved’. This provider (a nature NGO) had been involved in

discussions early on in the pilot application process about the possibility of acting as a

provider. The accreditation process involved completing an application proforma. The

information required included:

Experience of similar projects.


49

Governance arrangements.

Organisational structure.

Risk management.

In the one accreditation during the pilot phase the organisation worked on numerous similar

projects and all information was readily available. Additional information was required for the

biodiversity offsetting management plan. The project viability assessment was found to be

more complicated than the provider accreditation process, although in part this was

because, in the absence of guidance from Defra on ‘in perpetuity’, it was necessary to

discuss and agree a period for the management plan (a 25 year plan was agreed).

In this instance Natural England reported that they spent approximately three days

completing the accreditation process. However, this had been the first time that the

assessment framework had been tested and involved substantial internal consultation.

Difficulties were encountered in that insufficient information was initially available to satisfy

the risk assessment and project management sections of the assessment. An audit trail was

produced to justify decision making and provide reassurance to the LPA who had requested

the provider be accredited. Confirmation of accreditation took about three weeks following

submission. The whole process was considered to be relatively simple (compared to HLS and

ELS).

Compared to HLS it was noted that few resources appear to be allocated to monitoring

outcomes of biodiversity offsetting. The intention is that with biodiversity offsetting, up front

checks were undertaken to ensure that the provider is capable and trustworthy. It was

considered by those involved that if biodiversity offsetting became mandatory a more formal

and robust accreditation process might be required. It was noted that Natural England’s role

was a temporary arrangement for the pilot programme and that under a fully functioning

scheme there would need to be different arrangements for approving offsets and providers.

Transparency of offset delivery

Most of the pilots were unable to test the transparency of offset delivery. Where this was

tested to some extent (CSWAPO and Essex) pilot hosts, LPA ecologists and potential offset

providers felt that the processes used within biodiversity offsetting were more transparent

than current practice as it set out (via management plans) what biodiversity was being lost

and how it was being compensated for. Despite these views the lack of delivered offsets

makes it difficult to evaluate these opinions and in particular whether, due to commercial

concerns, completed and costed management plans will be made publicly available.


50

4. Analysis and Discussion

This section includes a cross-thematic and cross-pilot analysis including a discussion based on

the evaluation criteria.

4.1 Analysis results

Figure 3 summarises schematically the overall perceptions of stakeholders involved in the

pilot programme against four major aspects. It suggests that compared to current practice

biodiversity offsetting is generally perceived as being able to deliver potentially better

biodiversity outcomes, in a more transparent and marginally more streamlined way, but at

higher overall cost. Evidence from the evaluation suggests that current practice is not

meeting the targets of existing policy.

Figure 3: Schematic representation of stakeholder perceptions on key aspects of voluntary

biodiversity as tested by the pilot programme

The rest of this section elaborates on this summary and pulls together learning points about

barriers to voluntary biodiversity offsetting as tested in the pilot programme and considers the

requirements for a biodiversity offsetting system, whether voluntary or mandatory – within the

scope of the evidence collected across the evaluation.

4.2 The consideration of biodiversity within a voluntary system

Mixed evidence on the mitigation hierarchy

The evidence relating to the application of the mitigation hierarchy is mixed. Evidence from

multiple examples suggests that using the metric reinforced the mitigation hierarchy through

two primary mechanisms; prioritising on-site measures, and providing greater clarity on

biodiversity impacts and how these are, or are not, addressed. There were also specific cases

where biodiversity offsetting was presented as a way of achieving no-net-loss in a way that

may be considered inconsistent with the mitigation hierarchy; which is defined in relevant

national policy.

Using the metric to clarify biodiversity impacts and related mitigation / compensation had a

number of benefits. The UK supplementary project looked at current practice and found that

current application of the mitigation hierarchy is often ‘fuzzy’ (Defra, 2014a): mitigation,

compensation and enhancement are often bundled together with no indication of which

habitats are being mitigated or compensated for, as illustrated in Figure 4. As a result, it is

unclear how the mitigation hierarchy has, or has not, been applied and also whether the

overall package of measures would address the impacts of the development.

Key:

Total range of opinion

Majority of opinion

Current practice

Higher cost Lower cost

Less transparent More transparent

Poorer

biodiversity outcomes

Better

biodiversity outcomes

Less streamlined More streamlined


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Figure 4: Mitigation hierarchy in practice: fuzzy boundaries. Taken from Defra (2014a)

The metric addresses this by quantifying: the baseline condition of a site; the impact of the

development; mitigation measures; enhancement measures; and, any residual impacts

(which may require off-site compensation). The result is greater clarity about the application

of the mitigation hierarchy. The metric is not the only mechanism for achieving this, for

example British Standard BS42020:2013 suggests that all ecological reports should include a

summary of net-losses and net-gain and provides a template to support this (BSI, 2013)22.

The pilot programme also identified examples where on-site measures had been improved

through the use of the metric. Most of the pilot hosts felt that biodiversity offsetting

strengthened the mitigation hierarchy, but there were some specific cases which indicated

that this did not always occur.

For example, it was noted by one of the pilot hosts and a small number of stakeholders who

engaged with specific applications that biodiversity offsetting provided a ‘validated process

for off-site compensation’. Their concern was that within specific applications, biodiversity

offsetting could undermine arguments about the primacy of avoidance or appropriate on-

site enhancements as biodiversity offsetting was presented as an effective and easier option

for addressing biodiversity impacts.

Most of the pilot hosts felt that this was unlikely to be a problem, but case study Essex2

indicated that it could be. In this instance, the ecologist’s recommendation to refuse the

application on the grounds of biodiversity loss and insufficient on-site measures was overruled

because it was argued and the appeal Inspector agreed that the offset site would have

greater biodiversity value than the impact site and as such the development would not result

in significant biodiversity impacts.

It was also reported by two of the pilot hosts that developers had misunderstood biodiversity

offsetting and, initially, saw it as an opportunity to secure a development via payment

without the need to undertake any mitigation or on-site compensation.

LPA ecologists within the pilots were aware of these risks and they were clear that in

instances where permission was granted despite some residual loss, biodiversity offsetting

should be noted as a last resort within the planning decision. The LPA ecologists also felt that

the increased costs of off-site compensation and paragraph 118 of the NPPF meant there

remained effective deterrents to the mitigation hierarchy being undermined. One of the pilot

hosts noted that these sorts of examples exist within current practice and that in fact the use

of the metric increased the amount of compensation that was achieved in these instances.

Although some applications may see improvements to on-site measures there will be

instances where developments are approved because biodiversity offsetting ‘validates’ off-

site compensation. The evidence from the pilots suggested that the metric will reinforce the

mitigation hierarchy in more instances than it is undermined, but it is not clear how this trend

22 Available from:

http://www.biodiversityplanningtoolkit.com/stylesheet.asp?file=281_summary_of_net_loss_and_gain_form

http://www.biodiversityplanningtoolkit.com/stylesheet.asp?file=281_summary_of_net_loss_and_gain_form


52

will vary should biodiversity offsetting become more widespread.

The specific cases where these risks emerged were all subject to planning reasons supporting

the case for the development – either the site being allocated or the LPA failing to meet their

five year housing supply. In these instances it was very likely that permission would be

granted as LPA ecologists and planning officers had limited options to refuse development,

even where there were Local Wildlife Sites. In the absence of biodiversity offsetting

compensation only happens in relation to high biodiversity value sites (Defra, 2014a). Many

of the cases that came forward were Local Wildlife Sites suggesting that the threshold for

compensation may be lowered by biodiversity offsetting. However, this also raises a question

as to the degree of protection offered by Local Wildlife Site designation.

Provision of ecological expertise

The pilots were atypical in all having ecologists; approximately two thirds of LPAs do not have

in-house ecological expertise (Policy Exchange, 2012). In the absence of ecologists, planners,

or other LPA staff, are required to manage the application with support from consultant

ecologists. This includes determining any mitigation and compensation that may be required.

ALGE (2013) noted that planners and councillors have a limited understanding of the

mitigation hierarchy, so should biodiversity offsetting become more widespread there is a

greater likelihood that the mitigation hierarchy could be undermined. This emphasises the

importance of ensuring sufficient ecological expertise is available to local authorities if

biodiversity offsetting is to be delivered in accordance with the Defra principles.

Options for improving the enforcement of the mitigation hierarchy

As well as ensuring ecological expertise is provided within each LPA the pilots noted two

options for reducing the risks associated with the potential for undermining the mitigation

hierarchy.

The first of these was to use the metric when preparing local planning policy. Pilot hosts felt

that this would allow developers to better understand the biodiversity value of their sites and

prospective sites and could lead to development proposals avoiding areas of higher

biodiversity value due to the related higher costs. This approach has been undertaken within

Somerset (see Appendix 1), but attempts to test it within the pilots were suspended due to

lack of data and resources.

The second option, supported by pilot hosts and Natural England advisers, was to test

planning applications in terms of: ‘no alternative’, ‘mitigation applied’, and ‘compensation

as a last resort’. It was thought that such tests would provide assurances about the

application of the mitigation hierarchy. There is precedent for this; GHK (2013) noted that the

BBOP ‘Standard on Biodiversity Offsets’ highlights the role of ’Biodiversity Offset Management

Plans’ in documenting how the mitigation hierarchy has been applied23. Coupled with

evidence supplied by the metric this could demonstrate compliance with the mitigation

hierarchy. A similar exercise was undertaken in France when they set up their biodiversity

offsetting system24.

Managing multiple, related compensation requirements

The pilots identified managing multiple compensation processes as a challenge. For example

the South Devon pilot’s biodiversity offsetting strategy focused on improving conditions for

two protected species. Achieving this meant integrating existing and new processes –

including those relating to SSSIs, Habitat Regulations, existing compensation for species25 and

biodiversity offsetting. The challenge within applications was delineating what was required

by the different compensation processes. This is important as biodiversity offsetting is not

23 Page (x) of Executive Summary (GHK, 2013).

24 European Commission (2014), p.164 of the appendices.

25 South Devon and Teignbridge Local Authority have an existing system for impacts on cirl bunting breeding

grounds where compensation of £62,000 is required for each hectare that is lost.


53

appropriate for SSSIs or Habitat Regulation species and it is also necessary to prove that any

offset is additional to what would have happened anyway. As demonstrated in the case

study Devon4, the challenge was due to multiple, but non-aligned, processes in place to limit

biodiversity impacts. Should biodiversity offsetting become widespread it is likely this sort of

complex compensation context will occur again.

In this case the pilot hosts resolved the issue by using their biodiversity offsetting strategy to set

out the statutory requirements for various species and habitats and to specify how ‘habitat

offsetting’ should go beyond this by being designed to meet the needs of other affected

protected species. The time taken to achieve this ‘alignment’ was one reason South Devon

did not publish their strategy until autumn 2013.

Other applications with species managed this by separating the consideration of impacts on

habitats and species (see case studies CSWAPO3 and 5). Some integration did occur in a

few instances but this was limited to ensuring that on-site improvements accounted for

species interest where possible.

Ensuring the additionality of any offsets

The principle of additionality – that any off-site habitat enhancements would not have

happened anyway – is central to ensuring no-net-loss within biodiversity offsetting. Across the

pilots, demonstrating additionality was undertaken by EBL (in Essex and CSWAPO) or the LPA

ecologists. Experience suggested that this was a relatively simple bureaucratic exercise

whereby at an early stage of developing the management plan, a short investigation was

made into what, if any, existing management was being undertaken. Within the pilots, few

projects came forward so checking on additionality was not considered a problem, but

some challenges did emerge.

One challenge relates to where land is owned, but not necessarily managed by, a local

authority; in this instance would management related to an offset be considered additional?

Within one of the pilots, a search for potential offset sites showed that in a given year

authorities may only manage a certain percentage of the sites for which they are responsible

(10% a year in this instance). The pilots and key stakeholders discussed whether these sites

could be included as potential offset sites or whether the principle of additionality precluded

this. Ultimately it was felt that these sites could be included, the reason being that there were

no formal requirements or obligations to manage this land for biodiversity.

These types of cases are likely to be quite common. Potential local authority offset providers

reported that on-going budget cuts threaten their ability to manage existing sites and they

are keen to secure biodiversity offsetting, where appropriate, to make up for this shortfall.

The need to ensure additionality also limited the potential supply of offset sites as potential

providers had concerns about the opportunity costs of signing their land exclusively to an

offset agreement. As the costs of offsets become more apparent it is possible that concerns

related to opportunity cost will clarify and land managers will be able to make more

informed decisions about what funding options are suitable for them.

Averted risk offsets

Two of the pilots suggested that in instances where the condition of a site was expected to

degrade and there was no planned management it might it might be appropriate to

consider whether maintaining the condition might be an exception to the principle to

additionality. Their view was that these sites would be low risk options for restoration.

International experience suggests that so called ‘averted risk offsets’ might be appropriate

for sites where continued degradation is felt to be likely26. Biodiversity offsetting, as tested

within the pilots, would not allow this to be classed as an offset and none of the pilots took

forward any sites of this type. It is possible that concerns about degradation, budget cuts

26 GHK (2013 ) defines averted risk offsets as “biodiversity offset interventions which prevent future risks of harm to

biodiversity from occurring” (p.xvii)


54

and the challenges of identifying suitable sites may cause some LPAs to explore this.

Pragmatic perpetuity

A number of the biodiversity offsetting strategies made reference to creating or restoring

habitat that lasts in perpetuity, but in practice those few management plans emerging from

the pilot programme were for 25-30 years. It is questionable whether this meets an objective

definition of perpetuity.

The majority of the pilots and Natural England advisers reflected that agreeing a sufficiently

robust but achievable definition of perpetuity was a significant challenge. Although all

recognised the importance of ensuring impacts were compensated for over a sufficiently

long time period, potential offset providers and developers were reticent about entering into

open ended or very long term management agreements. This was particularly so given that

the offsets were emerging from a two year pilot project with a policy framework that was felt

to be unclear.

The length of the management plans was a pragmatic response based partly on a need to

reduce total costs given the reluctance of developers to engage with the pilots. The fate of

those sites at the end of the 25-30 year management plan cannot be tested. It is impossible

to know whether they might acquire some sort of designation; what level of protection, if

any, they may acquire or whether they will be legitimate sites for development in the future

unless owned by a dedicated land owner. The experience set out in the case study Essex2

suggests that current practice means that off-site compensation has little, if any, protection

and that there is significant potential to improve this. Conservation covenants are one

option, but the policy is still to be determined.

Compensation consistency

Even with the more pragmatic definition of perpetuity for off-site compensation there is a

significant discrepancy between the standards for on-site measures and any offsets. Drayson

and Thompson (2013) showed that on-site measures are often poorly set out, rarely enforced

and management is required for relatively short time periods. The metric can improve on-site

measures, but in the absence of improved enforcement and target setting it is possible any

gains will be on paper. It may be necessary to consider bringing some of the quality

assurance processes used for offsets to on-site measures in order to bolster the mitigation

hierarchy overall.

4.3 Costs and efficiency of biodiversity offsetting

There were two key aspects to voluntary biodiversity offsetting as tested in the pilots: the use

of the metric and off-site compensation. The pilots found that the costs and efficiency of

these two aspects differed - this is explored within this sub-section.

Simplicity and streamlining

The statement that it would take ‘20 minutes’ to populate the metric was found to be

apocryphal (EAC, 2013). The metric relies on Phase 1 habitat surveys, which are currently

required, with an additional condition assessment. Ecological consultants that had used the

metric noted that although it was relatively simple to use, it did involve some additional work

translating the results of the survey into the metric.

Current practice relies on negotiations relating to biodiversity impacts. Interviewees felt these

were often subjective and reliant upon the strength of argument and feeling of individuals.

Most metric users felt that the metric made these discussions simpler by providing a consistent

framework around which all parties could engage. This benefit was noted in all the pilots who

used the metric, its impact was largely marginal because related costs were minor, and

there was no evidence that determination periods were being reduced by more efficient

negotiation. In most instances, other factors were more significant determinants of the time


55

taken to arrive at a decision.

Some pilots also refined the Defra metric. This complicated the process of negotiating and

agreeing biodiversity impacts in specific applications as metric scores changed over time.

Costs to developers

All the pilots who used the metric provided evidence suggesting that compared to current

practice total costs for biodiversity offsetting were higher. This was because the scale of

compensation required to match residual impacts was significantly higher when the metric

was used compared to current practice. This is partly as the metric accounts for delivery risks

and time delays and partly as current practice is poorly applied. In most instances either the

impact of these costs was reduced through negotiations, or the developer chose not to use


The increase in total costs resulting from the use of the metric is consistent with predictions in

Defra (2009) where it was suggested that there are “hidden costs” to development and that

biodiversity offsetting would highlight and capture these. The evidence from the pilots

supports this as, according to the applications which applied the metric, most developments

are likely to result in net-loss unless they provide off-site compensation. Current compensation

practice does not make this point with the clarity or confidence that the metric provides.

Research into the pattern of biodiversity compensation costs across the planning system

(Defra, 2011b; 2012b; 2014a and Policy Exchange, 2012) suggests that current practice

secures funded off-site compensation very rarely and that this tends to occur for applications

with impact on high value sites (county value or higher). The experience of the pilot

programme supports this broad finding.

The EMTF (2012) and others predicted the increase in total costs, but suggested that the

increase would be ‘offset’ by the efficiency and streamlining improvements of biodiversity

offsetting. The evidence from the pilots suggests that although there are marginal

improvements to the process of agreeing compensation, developing and finalising off-site

compensation was not simple. In fact stakeholders felt it was creating additional processes

and requirements making the system more complex and more costly (although not

substantially when compared to other costs).

It is possible that the lack of process benefits observed within the pilot programme is the result

of the relative immaturity of the offset market and the lack of experience of those involved

and that therefore these challenges might abate over time. The trend across the pilots, in

particular CSWAPO, was for continuing and accelerating improvements in efficiency as

understanding and experience developed. Within the pilot programme there was insufficient

experience of offset delivery to determine what benefits, if any, can be delivered.

4.4 National and local planning policy

Planning policy and compensation for residual loss

The strength with which ‘significant harm’ (as set out in the NPPF) was interpreted was central

to the extent to which biodiversity offsetting was required within the pilots. Assuming that, as

with the pilots, most LPAs will interpret this as the loss of higher value habitats, it will be for

Local Plans to incentivise biodiversity offsetting in any future system. Where plans are

including biodiversity offsetting or other related concepts (see Appendix 4) there is the

possibility that planning policy as it stands would support the wider use of biodiversity

offsetting. In the absence of changes to national planning policy, the development of local

policy with regard to no-net-loss and ’significance’ is likely to be key in shaping the potential

future implementation of any form of biodiversity offsetting.

It was noted by the pilot hosts of CSWAPO and Essex that relying on interpretation of national

policy and the development of local policy to support voluntary biodiversity offsetting may

lead to inconsistent take up of ‘locally determined mandatory biodiversity offsetting’. Their


56

view was that this situation would risk missing out on the benefits of a consistently applied

national system.

Local priorities within a national framework

All of the pilot hosts appreciated the opportunity to develop the pilot as they, and their

stakeholders, saw fit. This meant allowing for local variation in terms of governance

arrangements and strategy development.

There was no clear lesson from the pilots on what geographical scale (i.e. county, district or

metropolitan) is most appropriate for the management of biodiversity offsetting.

One key local priority that emerged was for offset sites to be located as close as possible to

the impact, with a number of pilots indicating a desire for offset sites to be in the same LPA as

the impact.

Within the biodiversity offsetting strategies this is expressed as a preference (see Essex and

Doncaster for example) which is incentivised by the use of a spatial multiplier with the metric

– i.e. fewer biodiversity units are required if the offset site is situated in the areas identified by

the pilots. From discussions with pilots and LPA officers it appears that some LPAs have

indicated that they will not support biodiversity offsetting if it results in the loss of biodiversity or

developer contributions from their LPA. This could happen in instances where there is

asymmetry of supply and demand for offset sites within specific LPA boundaries. This is an

important issue; Rushcliffe and Southend LPAs identified this as one of the reasons they did

not join the pilot programme.

Reducing the search area in such a way reduces the potential number of sites which have

appropriate ecology. The result is a reduction in the potential size of the market for offsets

and therefore potentially higher transaction and offset costs. On the other hand, LPAs have

to balance the needs of their constituents for other local open space benefits, such as

amenity and recreation.

The test-offset in Essex took longer to finalise than anticipated because of the challenge of

finding a site that met the practical, political and ecological requirements. This experience

was echoed in other instances in Essex as well as CSWAPO. Needing to meet all three

requirements substantially reduced the potential number of appropriate sites, as summarised

in Figure 5.

Figure 5: Emerging criteria used by the pilots for offset site selection


57

The need to meet these three criteria also restricts the potential for market forces to reduce

total costs for offsets as suggested in other research (EMTF, 2012; GHK, 2011). Supplementary

research undertaken as part of this evaluation indicated that the political restriction of offset

markets was common to the German system with most offsets being provided within very

local areas and by local authorities (Defra, 2014b). As a result there was little evidence of

market forces at play in the German biodiversity offsetting system.

Despite these concerns, it is apparent from the pilots that local provision of offsets sites will be

preferred in any future biodiversity offsetting system. This is based on community (local

political) preference and is a pragmatic response to local constituency concerns rather than

necessarily having strong ecological basis. It is an indication of the value of other ecosystem

services provided by green space to the local community in addition to biodiversity.

Contribution to ecological networks

Where projects have emerged, the strategies shaped the search for potential offset sites.

From the limited information available, it appears that any offsets would potentially have

contributed to ecological networks such as NIAs and local biodiversity opportunity mapping.

The pilots referred to the bigger, better, more connected concept across the pilot

programme and within their strategies (Defra, 2011b). Some pilots felt that the pilots’ main

impact, in the absence of a significant number of projects, was to provide a forum to

elaborate and expand upon their thinking in this area.

Community involvement

At the strategic level the pilots did not engage with communities, with the exception of

CSWAPO whose strategy was subject to public consultation as part of their GI strategy

process. The pilots felt this was proportionate for a voluntary pilot as the time and resource

requirements for any effective community consultation were estimated to be significant and

not feasible within the capacities of the pilots. Pilots were also not clear what the objectives

of strategic engagement with communities might be in a time-limited pilot.

Within specific applications there was limited evidence of any community involvement

beyond existing options to respond to planning applications. There were some instances

where community interests were being considered within the criteria and searches for

potential offset sites. For example the test-offset in Essex worked with a local biodiversity

community group to identify possible sites. Potential offset providers also referred to the

importance of delivering community benefits, such as access and recreation, in any offset

delivery sites. Experience from Essex and North Devon suggests that the most appropriate

entry point for community involvement is the development of principles or criteria for offset

site selection, i.e. during the development of biodiversity offsetting strategies.

LPAs, and planning committees in particular, are likely to value amenity of green space

highly and feel that communities should have a role in deciding where offset sites should go.

Notwithstanding this four of the pilots referred to the importance of ensuring that biodiversity

retained primacy over any ‘cultural ecosystem service’ considerations especially as

increased access might negatively impact on biodiversity outcomes.

4.5 Future biodiversity offsetting system

Certain pre-requisites for biodiversity offsetting emerged from the pilots; these increased the

likelihood of offset projects being developed, and indicate the features required for a

national system of biodiversity offsetting, whether it be voluntary or mandatory. These are

summarised in Figure 6.

LPAs need access to ecological advice. The effective and efficient use of the metric and the

development of appropriate off-site compensation depend on a high level of ecological

expertise. This will help reduce both the likelihood of some of the risks highlighted in relation to

the mitigation hierarchy and the possibility of missing some of the potential benefits.


58

Figure 6: Pre-requisites for a biodiversity offsetting system (from pilots’ experience)

Interviewees felt that Natural England would need to provide additional resource and that

ideally this capacity would be able to engage with biodiversity offsetting in general, rather

than only where biodiversity offsetting affects existing (statutory) policy priorities.

All of the pilots felt that within the pilot programme the balance of local flexibility and

national consistency as set though the metric / guidance on biodiversity offsetting strategies

worked well. This meant that authorities could play to their particular strengths and

weaknesses.

Mandatory biodiversity offsetting

The pilots and Natural England advisers were asked to reflect on their experiences and to

consider the implications of a mandatory system. A mandatory system could take many

forms, and while it might address some of the deficiencies identified in a voluntary system, it is

as likely to throw up additional issues not identified or considered in this evaluation, which

was of a voluntary system.

All of the pilot hosts and Natural England advisers felt a mandatory system would be more

likely to lead to no-net-loss being achieved. The hosts felt current practice did not address

residual biodiversity loss and that using the metric would be likely to result in positive benefits,

with biodiversity gains likely to exceed those delivered within the short term of the pilot

programme.

Implications

All of the pilot hosts and Natural England advisers cautioned that, to be effectively

managed, a mandatory system would require substantially more resources; for example a

dedicated resource within LPAs to focus on biodiversity offsetting. Such a role might include

strategy preparation, promotion, identification of providers, and implementation of an

advocacy role to secure the necessary mechanisms for offset provision.

Natural England and pilot hosts noted that a mandatory offsetting system would require a

greater input from Natural England (although this would depend on the role defined for

Natural England). As Natural England currently deals with high risk cases affecting

designated sites, which are not appropriate for biodiversity offsetting, another role would be

required to support a mandatory system that took account of lower risk sites. A summary of

the potential roles and responsibilities identified is presented in Appendix 6.

Pilot hosts and Natural England advisers noted that in a mandatory system all LPAs would

need in-house ecologists to secure the process (or District Authorities would need to have

resources to buy in more ecological time) and that this could be achieved through service

level agreements. Access to ecological expertise was viewed by respondents as the primary


59

determinant of effective biodiversity offsetting and this was considered to be especially true

for any mandatory system. New expertise would also be required, particularly in

understanding habitat condition and how to develop and accredit restoration and re-

creation schemes.

One pilot host felt that the voluntary approach to biodiversity offsetting actually resulted in

more work for LPAs as dealing with biodiversity offsetting became case specific, rather than

a consistent approach being applied for all applicants. The pilot hosts and Natural England

advisers had mixed opinions on potential efficiency gains, with some hoping the process

would improve over time and others cautioning that any biodiversity offsetting system would

be complicated and that there would remain significant challenges.

It was also considered important that an effective national monitoring scheme was

developed to check implementation of the offset including the efficacy of on-site mitigation.

4.6 Barriers to voluntary biodiversity offsetting

Experience from the pilots indicates that a voluntary system will deliver few instances of

biodiversity offsetting unless LPAs take a strong interpretation of national planning policy. The

evaluation sought to understand the emerging barriers to voluntary biodiversity offsetting.

Every ‘barrier’ identified during the interviews was mapped27 by the project team to

understand the potential interactions and relative importance of the barriers and how these

emerging issues related to the evaluation’s objectives. The results of the mapping exercise

can be seen in Figure 7, and the barriers are further discussed in this section. Barriers in bold

text reflect broadly the key barriers identified in the mapping exercise, structured by the

numbered clusters of interactions (1-4) that emerged in Figure 7.

1. Increased costs to developers and historical failure to achieve no-net-loss

Use of the metric in the pilots has tended to show a higher level of biodiversity impact from

development than current practice. This was seen across the pilots but also within research

that applied the metric retrospectively (Defra (2012b) and within the Atkins and Doncaster

Complementary Projects. The implication of this historical under-accounting for biodiversity

impacts was that the use of the metric gave a more complete view of the requirements, and

thereby the costs, of biodiversity mitigation and compensation in most instances, when

compared to conventional practice. When faced with increased upfront costs, which were

in many cases subject to significant uncertainty, most applicants chose not to pursue

biodiversity offsetting. This is possible within a voluntary system. Where the use of the metric

and off-site compensation was undertaken there was still significant negotiation around the

extent of the off-site compensation required. This was partially based on concerns around

viability and other priorities for s.106 funding such as education or affordable housing.

The use of the metric and its information requirements were viewed as an additional process

even in instances where additional mitigation and/or compensation (and costs) were not

required. The pilots were keen to use the metric and require compensation for residual

impacts, but in most instances existing national planning policy was considered insufficient to

require biodiversity compensation for the loss of lower value habitats and it was felt to be

disproportionate to refuse applications which were causing the loss of lower value habitats.

Cases which arose in most of the pilots reflected this trend, and biodiversity offsetting tended

to be applied to planning applications that impacted designated sites. Interviewees also

cited the on-going political imperative for ‘sustainable development’ and in particular

housing, which meant that LPAs and officers were under pressure to facilitate development.

27 Using VenSim under licence


60

Figure 7: Mapping of barriers to voluntary biodiversity offsetting

Uncertainty over future

biodiversity offsetting policy and

the pilots themselves

Immaturity of

offset market

Practical, ecological and political

limitations reducing potential

amount of offset sites

Difficulty of linking a specific

offset scheme to a

development

Lack of capacity and buy-in

for biodiversity offsetting from

planners

Lack of capacity and buy-in for

biodiversity offsetting from NGOs

and environmental stakeholders

Lack of clarity / evidence

around the costs of offset

sites

Lack of clarity / evidence

around difficulty and timing of

restoration / recreation

Metric too

simple

Metric requiring

additional processesInadequacy of the FEP

handbook for condition

assessment

Ongoing changes to

planning system

Natural England's

risk-based policy

Historical underpayment

for biodiversity impacts

Challenges of linking specific

developments to specific offset

schemes prior to commencement

Lack of integration of the pilots

and with other natural

environment initiatives

Need for upfront costs

from offset providers

Higher costs to

developers

Other priorities and

requirements for

planning-gain

Lack of LPA

resource

Inexperience of

ecological

consultancies

The lack of worked through

real life examples of offset

delivery

Lack of support for

biodiversity offsetting within

the NPPF

Lack of policy support for

biodiversity offsetting at local

plan level

Biodiversity offsetting

regarded as an additional

requirement

Gaps and limits in

ecological data

Lack of status and

profile of the pilots

Biodiversity offsetting

seen as a nice to have

1

2

3

4


61

2. Lack of policy support in local planning policy

Linked to (1), local planning policy reflected the insufficiency of national planning policy to

require biodiversity compensation and the uncertainty over national biodiversity offsetting

policy, with few Local Plans containing a specific biodiversity offsetting policy. More robust or

clearer national planning policy in this area was seen by the pilots as being needed to

bolster LPAs’ position in negotiating with developers over the use of biodiversity offsetting.

3. Immaturity of biodiversity offsetting and lack of offset sites

The pilots identified ‘teething problems’ which were felt to be primarily relevant to the early

stages of introducing biodiversity offsetting. These problems generally relate to a lack of

capacity, experience and expertise in biodiversity offsetting.

For example, most consultant ecologists (and LPA ecologists) were not familiar with the

mechanics or requirements of the metric and as a result there was a learning curve for those

involved. This was relevant to the additional information requirements (for example habitat

condition assessments are required for the metric but not normally included within habitat

surveys) and dealing with specific issues as they emerged (such as whether gardens could

be included as mitigation; what distinctiveness scores are appropriate for locally important

habitats etc.). These issues were new to all of those involved and it took time and resources

to address them. This learning curve led to concerns from developers in particular that

biodiversity offsetting was creating additional processes and costs, as in (1).

There was an insufficiently developed market for offsets – i.e. there were no ‘off the shelf’

costs and accredited offset providers and offset sites for developers to pick from. Linking

developments and offset schemes was therefore made more difficult. This meant that there

was a lack of evidence for the costs of habitat restoration and re-creation so that the costs

for offsets had to be developed on a case by case basis.

The lack of a market meant that substantial amounts of time had to be spent searching for

possible offset sites, which diverted available resources. Most potential offset providers were

reticent to develop management plans where there was no guarantee that they would be

delivered. Providers were also concerned that even if the offset was required there were

often significant time lags between permission and commencement, during which the

providers would have to hold their sites in abeyance, with a potential opportunity cost.

Developers were not willing to commit to offsetting delivery in the absence of clear costs or,

for example, if their development did not go ahead or circumstances changed. This

‘chicken-and-egg’ issue was significant in the pilots. Providers also wanted to see ‘proof of

concept’, or worked up examples which set out in detail the costs, legal agreements and

accreditation processes for offset sites. This was felt to be important in part to enable them to

compare potential revenues from biodiversity offsetting against other options such as HLS or

productive farming. These detailed examples did not emerge during the pilot programme.

4. Lack of capacity/resources and buy-in among key stakeholders and LPAs

There was a substantial amount of concern about biodiversity offsetting as a concept in

particular from nature NGOs. These groups were expected to come forward as potential

offset providers, but they proved to be reticent to proffer their sites or to support the use of

biodiversity offsetting within specific projects. A related issue was Natural England’s ‘risk-

based approach’ (i.e. prioritisation of applications that impact on designated sites) and their

policy of not promoting biodiversity offsetting within specific applications.

Both pilot hosts and Natural England advisers noted difficulties in getting a sufficient breadth

and depth of understanding and support for biodiversity offsetting within the participating

LPAs. In some instances, there was a feeling that support for biodiversity offsetting was limited

to the pilot hosts and a small number of individuals. Planning officers and LPA ecologists were

not sufficiently aware or incentivised to require the use of the metric and there was


62

insufficient understanding of the metric. Thus, the resource pressures on LPAs and lack of

support for biodiversity offsetting meant that testing a voluntary system was not a priority. This

was exacerbated by the short term status of the pilots and uncertainty over the future of

biodiversity offsetting. The consequences were that developers and providers were reluctant

to sign up to long term agreements, and that policy planners had to be persuaded to

include biodiversity offsetting in emerging strategic plans.


63

5. Conclusions

This section presents an assessment against the evaluation objectives, the conclusions and

suggested next steps.

5.1 Summary assessment against evaluation objectives

Evidence from the pilot programme suggests that whilst biodiversity offsetting has the

potential to deliver improvements in biodiversity outcomes it will require additional resources

and ecological expertise in local authorities to deliver it, and will increase costs overall for

developers. It is likely that it would, at best, deliver only marginal benefits in terms of

streamlining the planning process for agreeing compensation for biodiversity loss.

5.2 Assessment of the evaluation objectives

The evaluation had two objectives, to provide an assessment against whether biodiversity

offsetting can:

A. Help to use resources more effectively to deliver greater benefits for biodiversity.

B. Streamline the process of agreeing compensation for biodiversity loss as required

by planning policy, in a cost effective way.

Within the voluntary pilot programme the evidence suggested that the process of agreeing

compensation for biodiversity loss is likely to be marginally streamlined. The market for offsets

was immature and this led to some additional processes and complexity. In addition, the

evaluation and supplementary research indicated that non-statutory biodiversity is a

marginal element in most planning applications. Any benefits for biodiversity and

development that might be achieved through streamlining compensation arrangements will

have marginal impact on the overall time scales and decision-making processes for planning

permission, since many factors other than biodiversity influence the time scale for decisions.

It is likely that, compared to current practice, biodiversity offsetting could deliver potentially

greater benefits for biodiversity, assuming ecological expertise is provided within LPAs. Where

planning policy is in place and implemented, the use of the metric was valuable in

supporting the mitigation hierarchy and supported on-site measures as well as securing

additional resources for off-site compensation. It was found that the metric improved the

implementation of no-net-loss policy. Despite this, there were signs that biodiversity offsetting

may also undermine the mitigation hierarchy in some cases.

Figure 8: Identified cost elements and comparative scale


64

By addressing some of the failures in current practice, overall costs are likely to be higher

under a biodiversity offsetting regime. Evidence from the pilots suggests that these increased

costs are likely to outweigh any marginal cost benefits that might occur from any speeding

up of biodiversity compensation arrangements. Increased costs accrue from the cost

elements presented in Figure 88.

The evaluation identified barriers (Section 4.6) to voluntary biodiversity offsetting. Based on

the experience of the pilots, a voluntary system would be likely to focus on a relatively small

number of higher impact developments.

The metric was found to be an effective, efficient and transparent tool to quantify and

communicate the impact of a development on habitats. Evidence also suggested that in

most instances the use of the metric, informed by ecological expertise, tended to support

the application of the mitigation hierarchy. However, within the pilot programme there were

some applications where biodiversity offsetting was presented as a validated route for

compensation and this may have undermined the hierarchy.

Based on the experience of the pilots, developers can refuse to meet the increased

biodiversity compensation requirements identified by the metric (due to the increased cost)

unless required to by an interpretation of national planning policy and/or the inclusion of

biodiversity offsetting, no-net-loss or the use of the metric into local policy. Biodiversity

offsetting appears to lower the threshold of biodiversity loss at which compensation becomes

negotiable, so that the focus for compensation may shift towards lower level, non-statutory

sites.

The application of the metric, and other findings of the evaluation, highlights the current and

on-going failure of planning applications to support net-gain and to halt biodiversity loss (as

targeted in England’s Biodiversity Strategy). The interpretation and implementation of current

policy within the planning system needs to be improved if these aims are to be met.

5.3 Limitations to the conclusions

The pilots were atypical in that the authorities and organisations involved volunteered to

participate in the pilot programme; they had access to ecological expertise and exhibited a

high level of enthusiasm for exploring biodiversity offsetting. This should be remembered

when attempting to extrapolate or scale up findings from the pilot programme to any form

of national system. For example at present approximately only a third of LPAs across England

have access to a local authority ecologist. Evidence from the pilots suggests that ecological

expertise is likely to be critical to the implementation of any biodiversity offsetting scheme

(voluntary or mandatory).

The level of biodiversity offsetting activity within the pilots was lower than expected so some

aspects of biodiversity offsetting remain untested and considerable evidence gaps remain,

particularly regarding long term impacts. The use of the metric and the governance and

strategy arrangements were reasonably well tested, but there was a general lack of

experience and evidence related to offset delivery and management, although some

evidence began to emerge towards the end of the pilot programme.

5.3 Suggested next steps

Discussions with the pilots and others who engaged with the pilot programme through

interviews and workshops identified the following suggested options to improve the process

and efficacy of biodiversity compensation:

1. The use of a Defra habitat metric could be made mandatory within planning

applications to support the implementation and monitoring of current biodiversity

policy.

2. Defra and Natural England could consider making improvements to the metric based

on the evidence from the pilot programme.


65

3. Defra and Natural England could produce updated technical guidance on

biodiversity offsetting including:

a. A minimum definition of ‘in perpetuity’.

b. An updated list of habitats that are defined as ‘irreplaceable’ (i.e. not subject

to biodiversity offsetting).

c. Improved guidance on the mitigation hierarchy and a definition of

compensation as a last resort.

d. Improved evidence and guidance on habitat restoration difficulty and time to

target condition including the identification of key determinants (such as type

of management / characteristics of the site) to achieving target condition.

4. LPAs could continue to develop local policy for no-net-loss and compensation for

residual loss, reflecting existing national planning policy.

5. If, in addition to the metric, a mandatory biodiversity offsetting system were to be

introduced, a transition period would be needed to allow the market for offsets and

delivery, accreditation and monitoring mechanisms to develop. In the view of the

authors this transition ought to be at least one year.

6. Natural England, Defra and NERC could review and prioritise emerging evidence

needs based on the experiences of the pilots.

7. A targeted evaluation of a number of the pilots’ projects that were close to

completion at the end of the pilot programme could be undertaken to maximise

learning from the pilots, particularly around offset delivery.

8. A scoping study could be undertaken on the feasibility of LPAs undertaking habitat

assessments within local planning policy, in particular within site allocation plans.


66

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8. Appendices

Appendix 1 – Complementary projects

See separate document – “Appendix 1 – Complementary projects.pdf”

Appendix 2 – Collated evaluation questions

See separate document – “Appendix 2 – Evaluation questions.pdf”

Appendix 3 – Summary of evidence

See separate document – “Appendix 3 – Summary of evidence.pdf”

Appendix 4 – Review of pilot Local Planning Authority (LPA)

development plans

See separate document – “Appendix 4 – Review of LPA development plans and

policies.pdf”

Appendix 5 – Offset costs

See separate document – “Appendix 5 – Offset costs.pdf”

Appendix 6 – Roles and responsibilities

See separate document – “Appendix 6 – Roles and responsibilities.pdf”

Evaluation of the Biodiversity Offsetting Pilot...

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