Combining environmental payments: biodiversity net gain (BNG) and nutrient mitigation

Selling biodiversity units and nutrient credits

You can sell biodiversity units or nutrient credits, or both, from a piece of land if you are:

• the landowner
• the long-term leaseholder
• the tenant farmer
• a business or organisation that carries out habitat creation or enhancements

Biodiversity units

Biodiversity units are calculated using the size of the habitat, its quality and location.

You should use the biodiversity metric to calculate how many biodiversity units you can generate from your site. The biodiversity metric 4.0 will be made available later in 2023, this is anticipated to become the statutory metric once BNG becomes mandatory. If you do not have expertise in using the metric, you should employ an ecologist to do this for you.

Nutrient credits

Nutrient mitigation makes sure a new development does not add to nutrient loads in water bodies where protected sites (or Habitats Sites) are in ‘unfavourable condition’ as a result of the polluting effects of excessive nutrients. Nutrient mitigation is also known as nutrient neutrality.

You can create nutrient credits by reducing or capturing nutrients that would otherwise end up in protected water bodies.

Before you sell units or credits

As a land manager there are steps you can take to prepare your site to sell biodiversity units before November 2023.

Stacking credits and units from different nature markets

Nature markets provide a way for land managers to receive payment for making improvements that benefit nature.

If you use your land to undertake environmental projects, you may be able to sell these services as credits or units to different buyers. Nature markets include carbon sequestration and flood alleviation.

Stacking is when multiple credits or units from different nature markets are sold separately from the same activity on a piece of land.

Stacking biodiversity units and nutrient credits

You can sell biodiversity units and nutrient credits from the same piece of land by stacking them. You can sell the units and credits to the same developer or different developers, provided you meet the eligibility criteria for each market.

Selling more units and credits

You may be able to sell more biodiversity units or nutrient credits after you achieve your planned habitat condition.

Selling more units on an existing biodiversity gain site

If you achieve your habitat creation and enhancements before the end of the existing legal agreement, you may be able to sell more biodiversity units. You can do this if you’re able to make further enhancements.

To sell more biodiversity units, you need:

• confirmation that the original planned habitat creation and enhancements have been completed
• a new or updated legal agreement to cover the remaining time on the initial agreement, plus at least 30 years for the new habitat works

When a BNG agreement ends but you still have a nutrient agreement

If your BNG and nutrient mitigations are stacked, you’ll need to consider the different timescales of the schemes. You need to commit to at least 30 years for mandatory BNG and you can commit to up to 125 years for nutrient mitigation.

If your nutrient agreement is still in place but your original BNG legal agreement has ended, you can sell more biodiversity units providing you maintain the level of nutrient mitigation provided by the site. You will need to show you can further enhance the existing habitats.

To do this, you need to:

• calculate the baseline after the original BNG legal agreement has ended

• only sell the biodiversity units created by the new changes in habitat condition or distinctiveness

• have a new or updated legal agreement to cover any remaining time on the initial agreement, plus 30 years for the new habitat works

How BNG and nutrient mitigation work with other schemes

If you have already received an environmental grant payment or sold nature market credits, you can use the same land to create further habitat enhancements.

You can sell biodiversity units and nutrient credits if it’s clear what the original sales contract or grant payment paid for. To do this, you need to calculate the baseline for BNG and nutrient mitigation once the original planned habitat works have been completed.

For example, if you have an arable field and you received a grant to create a modified grassland, you could improve the habitat to a grassland managed for conservation. This enhancement could then be sold as biodiversity units and nutrient credits.

Public grants

If you’re selling biodiversity units and nutrient credits, you can receive an environmental public grant to:

• help get your project ready for investment - this could mean preparing the land to sell biodiversity units or nutrient credits on an otherwise unsuitable site or project

• access funding which is repaid in full on sale of the biodiversity units or nutrient credits

• pay for a specific aspect of the project, which is not part of the habitat creation or enhancement

There may be lots of relevant environmental public grants available to you. An example of a public grant is the Natural Environment Investment Readiness Fund.

Basic Payment Scheme

If you receive Basic Payment Scheme (BPS), you can still use your land to sell biodiversity units and nutrient credits.

Agri-environment schemes

You may be able to sell biodiversity units and nutrient credits and receive funding from the following agri-environment schemes:

• Sustainable Farming Incentive (SFI)
• Countryside Stewardship (CS)

• Environmental Stewardship (ES)

• Landscape Recovery (LR)

You cannot sell an enhancement funded by an agri-environment scheme as a biodiversity unit or nutrient credit. However, you can use the same land to create further habitat enhancements on top of an existing agri-environment agreement.

To do this, you need to:

• take into account what the agri-environment agreement will achieve when you calculate your baseline
• only sell biodiversity units or nutrient credits that are a result of new works and not those you have already agreed to sell through delivering SFI standards or as part of a LR agreement

You can receive SFI, CS, ES and LR payments on the same landholding as BNG and nutrient mitigation as long as either:

• you can show they are taking place on different parcels of land
• the agri-environment scheme does not pay to create or enhance habitat and they do not impact on the BNG or nutrient mitigation

Examples of works that may not create or enhance habitat include new public access, maintaining heritage features and building walls.

What to do at the end of an agri-environment agreement

You may need to employ an ecologist to calculate the baseline of the land at the end of the agri-environment agreement. You can then sell biodiversity units and nutrient credits if you can create further habitats or enhancements on the land.

You can choose to end your CS, ES and LR agreement early and sell biodiversity units and nutrient credits instead. You can do this if you can create further habitats or enhancements.

Voluntary carbon codes

Voluntary carbon codes including the Woodland Carbon Code (WCC) and Peatland code.

You can sell biodiversity units and nutrient credits from the same land you used to sell carbon credits. You can do this if you can further enhance the habitat and it does not impact the carbon value.

You need to make sure that the baseline takes into account what the voluntary scheme paid for.

Corporate social responsibility (CSR) payments

If you have created or enhanced habitat to sell to a private company as part of their CSR, you should not sell them as biodiversity units or nutrient credits.

You may be able to sell biodiversity units and nutrient credits with CSR payments. You can do this if you can further create or enhance the habitat.

You need to make sure that the baseline takes into account what the CSR contract paid for.

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