Since February 2024, every planning permission granted in England must deliver at least 10% biodiversity net gain. This landmark policy has created an entirely new market: developers need to buy habitat units, and landowners — particularly farmers — can supply them. For agricultural businesses with marginal or underutilised land, BNG represents a significant revenue opportunity that could rival traditional farming income while contributing to nature recovery.
What is Biodiversity Net Gain?
Biodiversity Net Gain (BNG) is a statutory requirement under the Environment Act 2021 that mandates all new development in England to deliver measurable improvements to biodiversity. The principle is simple: if a development harms nature, it must leave biodiversity in a better state than before, achieving at least a 10% net gain.
Developers can meet this requirement through three routes: on-site habitat creation (creating or enhancing habitats within the development site itself), off-site habitat creation (purchasing habitat units from landowners elsewhere), or through statutory biodiversity credits as a last resort. The off-site route is where the opportunity for farmers emerges.
The system uses Biodiversity Metric 4.0, a standardised calculation tool developed by Natural England that converts different habitat types into comparable “biodiversity units.” These units are based on habitat type, distinctiveness (how ecologically valuable it is), condition (how well-managed), strategic significance (location within nature recovery networks), and spatial connectivity (proximity to other habitats).
How the BNG Market Works
The BNG market operates as a trading system between developers who need to offset biodiversity loss and landowners who can create or enhance habitats. When a development is approved, an ecologist assesses the site using the Biodiversity Metric to establish a baseline. The development design then calculates how many units will be lost, and therefore how many must be gained to achieve the 10% uplift.
If the developer cannot achieve sufficient gains on-site, they must purchase off-site units. This is where agricultural landowners enter the market. A farmer can commit land to habitat creation or enhancement under a legally binding conservation covenant (minimum 30 years), have it assessed and registered, and then sell the biodiversity units generated to developers.
The transactions typically happen through three mechanisms: direct agreements between developers and landowners, habitat banking (where landowners create habitats in advance and bank the units for future sale), or through brokers and intermediaries who match supply with demand and handle the legal and ecological complexities.
What Agricultural Land is Worth in BNG Terms
The value of agricultural land for BNG depends entirely on what habitat can be created and how many biodiversity units it generates. The Biodiversity Metric 4.0 calculation considers the baseline condition of the land (what habitat exists now) and the target condition (what will be created).
Converting improved grassland (typical agricultural grass) to species-rich grassland, for example, might generate 3-5 biodiversity units per hectare over 30 years. Creating woodland on arable land could generate 8-12 units per hectare. Wetland creation on suitable sites might achieve 10-15 units per hectare. The higher the ecological contrast between baseline and target, the more units are generated.
Location matters significantly. Land within Local Nature Recovery Strategies (LNRS) strategic zones receives a multiplier, increasing unit generation by 15-25%. Proximity to existing priority habitats or protected sites also enhances value through the connectivity scoring.
For a typical lowland farm with 5 hectares of less productive land, converting to species-rich grassland might generate 15-20 biodiversity units. At current market rates (discussed below), this could represent £300,000-800,000 in gross value over the 30-year covenant period, with payments typically structured upfront or in installments over the establishment period.
Habitat Types That Generate Most Units
Not all habitats are created equal in BNG terms. The Biodiversity Metric assigns higher distinctiveness scores to rarer, more ecologically valuable habitats. For agricultural landowners, three habitat types consistently generate the highest returns:
Species-rich grassland is one of England's most threatened habitats, having declined by 97% since the 1930s. Converting improved grassland to species-rich meadow (with diverse wildflowers and grasses) generates substantial units. The habitat is relatively straightforward to establish through natural regeneration or targeted seeding, requires ongoing management (hay cutting, grazing), and suits most lowland farm locations. Establishment takes 5-10 years to reach target condition.
Woodland creation generates high unit scores, particularly if designed as native broadleaved woodland with diverse structure. Mixed woodland on former arable or improved grassland creates significant biodiversity uplift. The habitat requires careful species selection, protection from deer and livestock, and long-term management, but once established (15-20 years), maintenance is relatively low. Strategic woodland placement can enhance landscape connectivity and provide multiple co-benefits.
Wetland habitats — including reedbeds, wet woodland, ponds, and marshes — generate some of the highest unit scores due to their rarity and ecological value. However, they require suitable hydrology, which limits where they can be created. Farms with poorly drained land, floodplains, or springs may have premium wetland opportunities. Creation costs are higher, but unit generation and market value reflect this scarcity.
Typical Payment Ranges and Agreements
The BNG market is still nascent, so pricing continues to evolve. As of early 2024, biodiversity units are trading between £20,000 and £42,000 per unit, with significant regional variation. Southern England and areas with high development pressure typically see higher prices; northern and rural markets are lower but growing.
Statutory biodiversity credits (government backstop) are priced at £42,000 per unit for area habitats and £48,000 per unit for linear habitats (hedgerows, watercourses). Private market rates are typically 20-40% below statutory credit prices, as they offer developers cost savings and greater flexibility.
A typical BNG agreement is structured as a 30-year conservation covenant (the legal minimum under the Environment Act). The landowner commits to creating and maintaining the habitat to specified conditions, verified through monitoring reports every few years. Payment structures vary: some agreements pay the full amount upfront (minus holdbacks for delivery risk), others structure payments over the establishment period (e.g., 20% on signing, 40% at year 3, 40% at year 5 when condition targets are met).
Annual management payments are sometimes included to cover ongoing maintenance costs (grazing, cutting, scrub control). These might be £100-300 per hectare per year, inflation-linked, and continue for the covenant duration.
Getting Your Land Assessed
The first step for any landowner considering BNG is a baseline habitat assessment using the Biodiversity Metric 4.0. This requires an ecologist to survey your land, identify existing habitats, assess their condition, and calculate current biodiversity units.
The ecologist will then model potential habitat creation scenarios: what could be created on each parcel, how many units each option would generate, timescales for establishment, and likely costs. This feasibility assessment (typically £2,000-5,000 for a farm-scale project) provides the business case for proceeding.
Key factors the assessment considers include soil type and pH (determines what can grow), hydrology (drainage, flooding, water table), topography (slope, aspect, elevation), existing ecological features (hedgerows, ponds, veteran trees that enhance connectivity), designated sites nearby (SSSIs, Local Wildlife Sites that increase strategic significance), and Local Nature Recovery Strategy alignment (confirms strategic location multipliers).
Once you have the feasibility study, you can decide whether to proceed to full habitat creation and unit registration. Registration requires detailed habitat creation and management plans, legal agreements (conservation covenant), and enrollment with a national register (maintained by Natural England) to ensure units are not double-counted.
Habitat Banks and Brokers
Most farmers entering the BNG market work with intermediaries rather than negotiating directly with developers. Several models exist:
Habitat banking companies pay farmers upfront to create habitats, take ownership of the biodiversity units, and sell them to developers over time. This transfers market risk to the bank but typically results in lower per-unit payments (farmers receive 40-60% of eventual market value). The benefit is certainty: you receive payment before habitat creation, and the bank manages all developer negotiations and monitoring obligations.
Brokerage services match landowners with developers seeking units, charging a commission (10-20%) on successful transactions. Brokers handle due diligence, legal agreements, and unit registration but don't take ownership of units. Landowners retain more value but also more risk: units may take years to sell, and you must complete habitat creation before receiving payment.
Aggregators and cooperatives pool units from multiple landowners to offer developers larger, more attractive packages. This can increase marketability (developers prefer buying in bulk) while spreading risk across multiple sites. Some agricultural cooperatives and farmer clusters are establishing BNG arms to support members.
Direct developer agreements offer the highest returns but require significant capability: you need ecological expertise, legal support, project management capacity, and often upfront capital for habitat creation. This route suits larger farming businesses or those already engaged in environmental land management.
Risks and Considerations
While BNG presents genuine opportunity, landowners must consider several risks and trade-offs:
The 30-year commitment is legally binding and registered against the land title. This is longer than most farm tenancies and restricts future land use options significantly. If you sell the farm, the covenant transfers to the new owner, which may affect property value positively (income stream) or negatively (restricted use).
Opportunity cost must be carefully evaluated. Is the BNG payment competitive with 30 years of agricultural income from that land, accounting for inflation, policy changes, and potential productivity improvements? For productive land, farming may remain more profitable. For marginal land currently generating little income, BNG becomes attractive.
Establishment costs and risks are significant. Habitat creation requires upfront investment (fencing, seeding, planting, infrastructure) that may not be fully covered by initial payments. Ecological risk exists: if habitats fail to establish to target condition (due to weather, pests, soil issues), you may not achieve the contracted unit delivery, triggering payment clawbacks or legal disputes.
Management obligations continue for 30 years and must meet specified standards verified through monitoring. This requires ongoing labor, equipment, and expertise. Failure to maintain condition breaches the covenant and can result in financial penalties.
Market uncertainty remains high. BNG policy is new, and market mechanisms are still developing. Unit prices, demand levels, and transaction processes may change significantly. Regulatory amendments could alter metric calculations, strategic area designations, or covenant requirements.
Stacking with Other Payments
One of the most important questions for farmers is whether BNG can be combined with other land-based income streams. The Environment Act explicitly allows stacking in principle, but specific schemes have restrictions:
Sustainable Farming Incentive (SFI) payments can generally be stacked with BNG, provided the actions are genuinely additional. For example, you can receive SFI payments for low-input grassland management and BNG payments for creating species-rich grassland, as long as the BNG covenant delivers outcomes beyond the SFI requirements. You cannot, however, claim SFI for actions that are already required under your BNG covenant.
Countryside Stewardship (CS) has stricter rules. You cannot receive CS payments for the same actions as BNG on the same land parcel. However, you can have CS agreements on some fields and BNG covenants on others within the same farm.
Woodland Carbon Code (WCC) and Peatland Carbon Code can potentially be stacked with BNG, as they reward different ecosystem services (carbon sequestration vs. biodiversity). However, buyers may discount combined projects, preferring “pure” carbon or biodiversity investments. Legal and accounting advice is essential to ensure all obligations can be met without conflict.
Nutrient trading schemes (nutrient neutrality offsets required in sensitive catchments) may be stackable with BNG, particularly for wetland creation that addresses both nutrient mitigation and biodiversity. Some projects have successfully attracted payment from both markets.
Similar Schemes Emerging in the EU
While England is the first jurisdiction to mandate biodiversity net gain at this scale, similar approaches are developing across Europe:
The EU Nature Restoration Law, adopted in 2024, sets binding restoration targets for member states: 20% of land and sea restored by 2030, all degraded ecosystems by 2050. While this doesn't create an immediate BNG-style offsetting market, it drives substantial funding toward habitat creation and creates frameworks that could evolve into trading systems.
Germany has operated an “Eingriffsregelung” (impact mitigation) system for decades, requiring compensation for habitat loss from development. Eco-accounts allow landowners to create habitats in advance and sell the credits. This is now being modernized with standardized metrics similar to England's approach.
France introduced a “No Net Loss” policy in 2016, requiring mitigation hierarchy application to all projects. A growing market for biodiversity offsets operates through mitigation operators, including agricultural cooperatives offering habitat banking services to farmers.
Netherlands is piloting biodiversity credit systems, particularly focused on farmland biodiversity as part of agricultural transition policies moving farms toward nature-inclusive models. Provincial governments are establishing frameworks for trading ecological value generated by farmers.
For farmers operating across multiple jurisdictions or planning long-term strategies, understanding these emerging systems offers opportunities to position land for multiple biodiversity markets as European frameworks mature and potentially harmonize over the next decade.
Taking the Next Step
Biodiversity Net Gain represents a significant structural shift in how we value agricultural land. For the first time, habitat creation can compete economically with food production, supported by statutory demand rather than discretionary grants.
If you're considering BNG for your land, start with these steps: identify marginal or underutilised parcels that generate low agricultural returns, commission a baseline biodiversity assessment and feasibility study, model financial returns against opportunity costs and farming income over 30 years, research habitat banking companies and brokers operating in your region, consult agronomic and legal advisors about covenant implications, and consider integration with wider farm diversification and environmental strategies.
BNG is not suitable for every farm or every field, but for those with the right land in the right location, it offers a genuine route to transform underperforming assets into long-term income while contributing meaningfully to nature recovery. As the market matures and Europe develops similar systems, early participants may gain strategic advantages in a growing ecosystem services economy.