According to a keynote speech given last week by the Chancellor of the Exchequer, George Osborne, the UK economy is turning a corner towards recovery and the construction industry is playing a significant role in the nascent upturn.  However, one of the challenges for the government is how to encourage property development without compromising the natural environment.  One possible solution is biodiversity offsetting and the government has recently launched a consultation on a green paper that proposes the extension of its scope in England which closes on 7 November 2013.

Offsetting can be seen as an extension of the ‘polluter pays’ policy.  In essence, it allows for a development to proceed notwithstanding that it may have an adverse impact upon the environment provided that the developer pays compensation to provide an environmental gain elsewhere.  The key idea is to ensure that there is no net environmental loss.  Biodiversity offsetting is already used in more than 20 countries (including the United States, Germany and India) and is already used in a limited capacity in England.  However, following recent pilot projects, the government proposes to make its application more general.

The government’s proposals for offsetting are based on the use of a standard metric which would be used to provide a ‘score’ for a habitat affected by a development.  The score would be based upon the habitat’s:

  • Distinctiveness (based upon its rarity and the degree to which it supports species found in other habitats);
  • Quality; and
  • Size.

 In calculating benefit provided by the offset area, the score would also take into account:

  • The risk associated with restoring or recreating a habitat (as not all proposals may be successful);
  • The time it will take to restore or recreate the habitat (as there may be some net loss in the short-term); and
  • The location of the off-set (i.e. how far away it will be from the affected site).

The government anticipates that offsetting would take effect under the auspices of the planning regime and any system of offsetting would need to be compliant with the existing complex regulatory framework under EU habitats and conservation law.  Furthermore, the government accepts that the application of offsetting must follow the mitigation hierarchy, so that it would only be an option where an adverse impact cannot be avoided or mitigated. 

It is noteworthy that the government’s proposals coincide with a recent Law Commission consultation on the use of conservation covenants.  Conservation covenants are voluntary agreements entered into by landowners (but which ‘run with the land’ so as to bind successors in title) to do, or refrain from doing, something in order to promote the natural environment (for example, maintain an area of woodland).  Conservation covenants are seen as being a key tool for the implementation of offsetting.

However, the green paper has drawn criticism from conservation groups who view offsetting as an example of the commoditisation of the environment.  For example, Friends of the Earth described the proposals as ‘a licence to trash nature’.  They have warned that developers could build on cherished nature sites and then simply pay to protect areas where land is cheaper. Furthermore, they say that communities would have no chance to object to losing local nature sites and no say in where new habitats are sited.   They also argue that new sites would not adequately account for the ‘natural capital’ provided by green spaces and biodiversity, such as the pollination of plants delivered by bees or the natural drainage and flood protection provided by trees.

Apart from protecting the natural environment, the government is confident that biodiversity offsetting would make the planning process quicker, more certain, cheaper and simpler.  Given the high priority given to reducing red tape by the government as a means of unlocking the economy, it seems likely that offsetting is destined to become a more regular feature of the English planning and conservation regimes.