Biodiversity is the wide variety of plant and animal species in their natural environment and is key to human economic and social well-being. The major cause of biodiversity loss is the alteration, fragmentation and destruction of habitats caused by human activities, including agriculture, forestry, transport, industry and housing. David Alexander considers the emergence of offsetting to compensate for biodiversity losses due to development projects.


The natural environment provides a range of benefits or ecosystem services including food, water, materials, flood defences and carbon sequestration. Biodiversity underpins virtually all of them. Biodiversity offsetting is a market-based conservation tool that measures negative impacts on biodiversity, replacing the loss largely through nearby improvements. The aim is to achieve a “no net loss” or a “net gain” in biodiversity.

The Department for Environment, Food and Rural Affairs (Defra), Natural England and local authorities are working together in six pilot areas to test the biodiversity offsetting approach. The pilots — Devon, Doncaster, Essex, Greater Norwich, Nottinghamshire and Warwickshire/Coventry/Solihull — should develop a body of knowledge and evidence that the Government will use to support greater and more effective use of biodiversity offsetting in England.

Defra has also received expressions of interest from organisations that have offered to work, principally on past projects, to see how or whether outcomes might have been different if the biodiversity offsetting approach had been used. The organisations include Atkins, Aggregate Industries, Balfour Beatty, Eco Bos and Code 7 Consulting, Somerset Biodiversity Partnership, Worcestershire County Council and Golder Associates.


The Natural Environment White Paper (2011) stated that Defra would test biodiversity offsetting over two years, starting in April 2012. It stressed that “a healthy, properly functioning natural environment is the foundation of sustained economic growth, prospering communities and personal well-being”.

The National Ecosystem Assessment illustrates that over 30% of the services provided by the natural environment are in decline. In the Lawton Report, Making Space for Nature (2010), it was clearly demonstrated that nature in England is highly fragmented and unable to respond effectively to new pressures such as climate and demographic change.

The Coalition Government made clear its wish to retain the protection and improvement of the natural environment as core objectives of the planning system, and to establish and test a new, voluntary approach to biodiversity offsetting.

Guiding principles

Defra has set out the guiding principles of its approach to biodiversity offsetting, largely reflecting those in Making Space for Nature. Following consultation, there was general agreement that any biodiversity offsetting approach should build on, rather than replace, existing protection for biodiversity, and that offsetting should aim to deliver real and additional conservation benefits by:

  • not changing existing levels of biodiversity protection

  • delivering real benefits for biodiversity through:

    • seeking to improve the effectiveness of managing compensation

    • expanding and restoring habitats, rather than merely protecting the extent and condition of what is already there

    • using offsets to enhance England’s ecological network by creating more, bigger, better and joined-up areas for biodiversity

  • providing additionality on top of what would have happened anyway

  • creating habitat which lasts in perpetuity

  • using the mitigation hierarchy with avoidance and mitigation taking priority

  • managing at the local level alongside:

    • national biodiversity priorities for England

    • a standard framework that provides a level of consistency

    • partnerships that make sense spatially at county, catchment or natural area levels

    • the right level of national support and guidance to build needed capacity

    • the involvement of local communities

  • being simple and straightforward for developers, local authorities and others

  • being transparent, giving clarity on offset calculations and allowing people to see offset resources used

  • being good value for money.

Offsetting and the planning system

Good developments incorporate biodiversity considerations early, with current planning policy set out in the National Planning Policy Framework (NPPF):

  • “The planning system should contribute to and enhance the natural and local environment by … minimising impacts on biodiversity and providing net gains … where possible, contributing to Government’s commitment to halt the overall decline in biodiversity, including by establishing coherent ecological networks … more resilient to current and future pressures.” (para. 109)

  • “When determining planning applications … if significant harm resulting from a development cannot be avoided, adequately mitigated or, as a last resort, compensated for, then planning permission should be refused.” (para.118)


There are seven steps in calculating biodiversity units.

  1. Apply the mitigation hierarchy and, if compensation is needed, developers can use the biodiversity offsetting mechanism.

  2. Map the habitat type(s) affected by a development. In the pilots, habitats are pre-assigned to one of three habitat type bands: high (6); medium (4); or low (2). This is the starting point for calculating the number of biodiversity units per hectare that must be compensated.

  3. Assess the baseline condition of each habitat. The methodology used is that covering the Higher Level Schemes for Environmental Stewardship. Each habitat will need to be weighted good (3), moderate (2) or poor (1).

  4. Combine the habitat type and condition weighting to calculate an overall number of biodiversity units. For example, a development that will result in the loss of six hectares of lowland meadow in moderate condition, but in the high distinctiveness band, will give the following: Distinctiveness (6), Condition (2), Number of hectares (6) = 72 biodiversity units lost (6 x 2 x 6).

  5. Consider the particular requirements for the type of offset needed. If the habitat is in the high distinctiveness band, the offset should be “like-for-like”. Where the habitat is of low distinctiveness, the offset could involve a “trade up” to reflect improvement in the extent or condition of the ecological network.

  6. Managing hedgerows. Hedgerows are very important features within many rural landscapes with a high biodiversity contribution. Loss must be offset with like-for-like habitat re-recreation, measured in metres rather than biodiversity units. The condition of the hedgerow will affect the offset requirement: good (3); moderate (2); poor (1). For example, the loss of 100m of good hedge will require 300m of newly planted hedge. A poor hedge will require 100m. A similar approach will be needed for hedge banks, ditches and rows of trees.

  7. Decide how the compensation will be provided. Sometimes, conservation activity carried out on site by the developer can reduce the offsite requirement. Alternatively, someone else can provide the offset via the local planning authority, Natural England or existing contacts with local wildlife/conservation bodies. Standards are important to ensure quality delivery of offsetting. It is likely that an independent body would need to set standards and certify offset providers.

Nottinghamshire pilot

This covers the whole county and includes waste and other county council development, excluding minerals. For housing, industrial and commercial development, Bassetlaw, Gedling, Newark & Sherwood and Nottingham City councils will all be involved.

A Local Offsetting Strategy sets out the process to be implemented. Planning applications will be considered normally and decisions made in line with the development management process. The “mitigation hierarchy” will be fundamental. Offsetting does not replace the need to deliver essential mitigation for protected species and nor does it apply to statutory designated sites.

The process should operate as follows.

  • Offsetting can be used to deliver compensation requirements for all types, sizes or scales of development except minerals.

  • Pre-application discussions with planning officers, with additional support from Natural England and ecological consultants.

  • If using an offset provider, it is only the delivery of the biodiversity units that is being bought.

  • Offset providers must produce an approved Biodiversity Offset Management Plan (BOMP) to guide conservation work and ensure that work will not be funded, which would be completed anyway through public funds.

  • Offset needs to be maintained in perpetuity or at least for the lifetime of the scheme involved.

  • Habitats created through offsetting should be of high value, appropriate to the local area and correctly located in the county. In addition, they should be of sufficient scale and in proximity to other habitat areas, thus strengthening the ecological network.

  • Offsets from multiple developments can be pooled together at the same site, thus delivering more substantial biodiversity gains.

  • Habitats to be created or restored should be drawn from the 14 habitat types of the Nottinghamshire Local Biodiversity Action Plan (LBAP).

  • Offsets should be spatially located within Nottinghamshire to provide more, bigger, better and joined themes that contribute to landscape-scale conservation and proximity to the development to which they relate, starting with the same parish, the same local authority area and, finally, any other participating local authority.

  • Offsetting should contribute to local green infrastructure strategies.


While a future article must assess and analyse the pilot offsets after April 2014, there are several interim issues and concerns, notably from the Parliamentary Office of Science and Technology.

  1. How far can market-based schemes provide effective conservation strategies?

  2. How can offsets ensure outcomes that would not otherwise happen?

  3. There must be high thresholds for conservation outcomes to discourage developers from targeting biodiversity as a weak link.

  4. Offsets in one area may cause those harming biodiversity to move to other locations.

  5. There may be restoration difficulties for woodland in general and ancient woodland in particular. Similar problems could occur with grasslands and heathlands.

  6. A subjective element will remain in defining and quantifying biodiversity losses and gains, since every element of biodiversity cannot be measured or is yet fully understood.

  7. Species recovery lag-time may not be achieved within the timeframe of the offset.

  8. Upkeep of the offset site could affect the wider context of the biodiversity network.

  9. Enforcement is vital, since low rates of compliance can render the offset agreement in-effective.

  10. Offsetting too far from the development site reduces its value for local communities.

  11. Should the proposed voluntary approach become mandatory?

Biodiversity offsetting is a concept that must prove itself before any widespread application is implemented. Avoidance and minimisation within the hierarchy should be given priority until such time as the pilots are able “to test and refine its operation, to ensure it meets the conditions set out for a safe and effective system”. Potential budget reductions, including that covering conservation work within the Common Agricultural Policy, will prove challenging to those attempting to advance the role of biodiversity offsetting at a time when “development” is emerging as the first among equals.

Last reviewed 12 December 2012