Nutrient neutrality credits and the section 106

In a nutrient neutral catchment, a housing scheme cannot be permitted until the authority can conclude, as competent authority under the Habitats Regulations, that the development will not adversely affect the integrity of the protected site. Where the site is already in unfavourable condition because of nutrient enrichment, that conclusion needs mitigation, and the mitigation has to be secured before the permission is granted rather than promised afterwards.

Credits are how most schemes deliver it. The section 106 agreement is how the authority makes sure the credits stay attached to the development for as long as the effect lasts.

Why nutrient neutrality arises in some catchments and not others

The trigger is a combination of two things: a habitats site that is failing because of nitrogen or phosphorus, and a hydrological connection between your site and that habitats site.

Affected catchments include the Solent, Stodmarsh in Kent, the Somerset Levels and Moors, the River Wye and Lugg, the Tees and the Eden, among others. The list has changed over time as advice has been issued, so check whether your site is in an affected catchment with the local planning authority rather than relying on a list in an article.

The legal mechanism is regulation 63 of the Conservation of Habitats and Species Regulations 2017. A plan or project likely to have a significant effect on a European site, alone or in combination with others, requires an appropriate assessment, and permission can only be granted if the authority can conclude no adverse effect on integrity. The standard is a high one, and uncertainty is resolved against granting permission.

One important qualification. Legislation now places a duty on sewerage undertakers to upgrade nutrient significant treatment plants by a specified date, and requires authorities to assume that upgrade when carrying out the assessment. That changes the arithmetic in catchments where the treatment works is the dominant source, though it does not remove the requirement. Check how the authority in your area is applying it, because practice varies.

Calculating the nutrient budget

The budget compares the nutrient load leaving the site before development with the load after, and the difference is what you have to mitigate.

The calculation typically works through these steps.

1. Establish the existing land use and its nutrient export, using the published export coefficients for the catchment. Arable land exports more than permanent pasture, which matters enormously to the outcome.
2. Calculate wastewater load from the proposed dwellings, using the occupancy assumptions in the catchment methodology and the consented or achieved nutrient concentration at the receiving treatment works.
3. Calculate surface water load from the developed area, taking account of any drainage measures that reduce it.
4. Add the precautionary buffer the methodology requires.
5. Subtract the existing load from the total future load to give the budget in kilogrammes of total nitrogen or phosphorus per year.

Two points decide most budgets. The existing use baseline, because a site that has been in arable production carries a high existing export and therefore a smaller net increase, while a greenfield pasture site or a brownfield site with no agricultural history does not. And the treatment works concentration, because a works already achieving a low consent leaves less room for improvement.

Get the calculation done by someone who does them regularly in your catchment. The methodologies are catchment specific and the authority's ecologist will check the inputs line by line.

Sources of mitigation and credit schemes

Mitigation falls into three broad groups.

On-site measures, such as taking land out of intensive agriculture, creating wetland, or installing a package treatment plant to a standard better than the public works achieves. These work well on larger sites with land to spare and poorly on small infill plots.

Credits purchased from a scheme. Some authorities operate their own scheme, some are run by public bodies and some are private habitat banks. You buy a quantity of nutrient reduction, evidenced by a certificate, and the authority accepts it in the appropriate assessment.

Strategic solutions, where the authority, the water company or a partnership delivers catchment scale mitigation and allocates capacity to schemes. These are attractive when available and often oversubscribed.

Whichever route you take, the mitigation has to be additional, meaning it delivers a reduction that would not have happened anyway. A land use change that was already funded through an agri-environment scheme generally does not count.

Securing mitigation for as long as the effect lasts

This is the part that surprises people. The nutrient load from a new dwelling continues for as long as the dwelling exists, so the mitigation has to be secured for a comparable period. Authorities commonly require 80 years or more, and some require longer.

That means more than a payment. It means land secured by legal agreement or conservation covenant, a management plan setting out what will be done and by whom, a funding mechanism that survives the developer, and monitoring with reporting to the authority. A credit scheme should be able to evidence all of it, and you should ask to see the mechanism rather than accepting the certificate alone.

Ask three questions of any credit provider. What secures the land for the full period. What funds the management for the full period. And what happens if the provider fails.

Where the section 106 does the work

The obligation usually does four things.

It restricts occupation, or sometimes commencement, until the mitigation is secured and evidenced to the authority. It records the quantity of nutrient mitigation attributed to the development in kilogrammes per year. It ties the development to the specific certificate or allocation so that the same credits cannot be counted twice. And it provides for monitoring and, where the authority operates one, a monitoring fee.

Where mitigation land is provided by a third party, the agreement is often tripartite, with the landowner joined so that the obligation binds the mitigation land as well as the development site. Get the credit provider's standard form early and give it to your solicitor at the same time as the draft agreement, because reconciling the two is where weeks disappear.

Review mechanisms cut across this, since a scheme that has bought credits at one price and is later subject to a viability review needs the treatment of that cost agreed in the drafting. Our note on overage clauses and review mechanisms covers the drafting points.

Nutrient mitigation is separate from biodiversity net gain and is not interchangeable with it. A habitat creation project can sometimes deliver both, and where it does, the metric units and the nutrient credits have to be accounted for without double counting the same land. Treat the Biodiversity Net Gain Assessment and the nutrient budget as separate calculations that happen to share a site.

How the authority reaches its conclusion

The authority screens the proposal, then carries out the appropriate assessment, consults the statutory nature conservation body and records its conclusion. Your mitigation is evidence within that assessment rather than a substitute for it.

The established approach in England is that mitigation measures are considered at the appropriate assessment stage rather than at screening, which is why schemes rarely screen out in an affected catchment. Retained case law in this area is subject to change, so check the current position before advising on it.

Expect the authority to want the mitigation certain, quantified and secured at the point of decision. A resolution to grant subject to completion of an agreement is normal. An assessment that relies on mitigation to be identified later is not, and permissions granted on that basis are vulnerable.

Costs to build into the appraisal

Credit prices are quoted per kilogramme of total nitrogen or phosphorus per year, and they vary substantially between catchments and between providers. Do not carry a figure from another catchment into your appraisal. Get a written quotation for your actual budget, with a validity period, and test the scheme against a higher price as well.

Build in four other lines. The cost of the nutrient budget calculation and any ecological input. Legal costs for a tripartite agreement, which exceed a standard section 106. The monitoring fee, where the authority charges one. And programme risk, because credit availability moves and an allocation that exists at resolution may not exist six months later.

Where the total cost threatens deliverability, that is an input to a Viability Assessment rather than a reason to defer the mitigation, since the authority cannot grant permission without a lawful conclusion on the habitats question.

This is general guidance, not legal advice. Catchment methodologies, credit schemes and the statutory position are all moving, so check the current requirements with your local planning authority and take specialist advice before relying on any of it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.

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