The trading rules in a Biodiversity Net Gain Assessment

The biodiversity metric trading rules are the reason a scheme can show a 10 per cent gain in raw units and still fail its biodiversity gain plan. The rules stop a developer replacing something scarce with a lot of something common. Lose a species-rich grassland and you cannot make it up with amenity lawn, however many square metres of lawn you propose. Lose a hedgerow and no amount of new grassland will substitute for it.

For anyone scoping a major application, the trading rules matter earlier than the headline percentage does. They determine what the site can physically deliver, and therefore how much has to be bought off site.

What the trading rules prevent

The statutory metric converts habitats into biodiversity units using area, distinctiveness, condition and strategic significance, then applies multipliers for risk. Without constraint, the arithmetic would allow a developer to trade quality for quantity.

The trading rules sit on top of the arithmetic as a set of requirements about what may compensate for what. They operate habitat by habitat rather than across the whole site total, so a scheme has to satisfy them for every parcel it loses, not merely in aggregate.

This is why a metric output showing a comfortable surplus can still be unacceptable. The surplus may be made up of low distinctiveness units that cannot answer the loss of a single medium distinctiveness parcel.

Distinctiveness bands and the same or better test

Habitats are assigned a distinctiveness band running from very low through low and medium to high and very high. The band is a property of the habitat type, not a judgment made on site, and the condition assessment is a separate axis.

The compensation requirement tightens as distinctiveness rises:

• Very high distinctiveness habitats cannot be traded at all. Bespoke compensation has to be agreed with the local planning authority, usually with Natural England involved.
• High distinctiveness losses must be compensated with the same habitat type, in the same or better condition.
• Medium distinctiveness losses must be compensated within the same broad habitat group, at the same or better distinctiveness and condition.
• Low distinctiveness losses must be compensated with habitat of the same or better distinctiveness.
• Very low distinctiveness habitats generate no units and need no compensation.

The practical consequence is that the medium band is where most development sites live, and the broad habitat group constraint is what bites. Losing medium distinctiveness grassland means creating or enhancing grassland, not woodland, whatever the landscape architect would prefer.

Getting the baseline classification right therefore matters enormously, and it starts with the Preliminary Ecological Appraisal and the habitat condition work behind it.

Area, hedgerow and watercourse units kept apart

The metric runs three modules. Area habitats are measured in hectares, hedgerows and other linear features in kilometres, and watercourses in kilometres of river or stream.

Each module produces its own units, and the units do not convert between modules. A scheme that removes 400 metres of hedgerow must deliver hedgerow units to compensate. Planting a woodland block instead satisfies neither the trading rules nor the gain requirement for the hedgerow module.

That separation catches schemes at two points. Access roads through boundary hedges are the obvious one, because a single new junction can remove a surprising length of hedgerow when the visibility splay is drawn. The other is culverting or realigning a watercourse, where the watercourse module is engaged and the river condition assessment needs a specialist.

Design responses are straightforward once you know the rule. Reinstate hedgerows behind new frontages, thread them through the layout as boundary structure, and translocate where the hedge has value and the programme allows.

Spatial risk and the off-site multiplier

Units delivered away from the impact are worth less than units delivered on site. The metric applies a spatial risk multiplier that reduces the value of off-site compensation according to how far it sits from the development, with steps based on whether the compensation lies within the same local planning authority area or National Character Area, adjacent to it, or further afield.

The factors are set out in the current metric user guide and they have been revised, so take them from the published version you are using rather than from a previous project file.

Two consequences for a land team. First, off-site units bought a long way from the site cost more, because more of them are needed to produce the same net figure. Second, an early search for compensation land within the same authority area or character area is worth doing before the layout is fixed, since a nearby habitat bank can change the arithmetic enough to free up developable area.

Strategic significance is a separate factor from spatial risk, and it rewards delivery in locations identified in the local nature recovery strategy. Check the strategy for the area, because it can lift the value of the same habitat by a meaningful margin.

Temporal risk and why delay costs units

Habitats take time to reach the condition claimed for them. The metric handles that by discounting units for the number of years to target condition, using a standard annual discount rate.

The effect compounds. A grassland reaching good condition in five years loses a modest share of its value. A woodland reaching target condition in thirty years loses most of it, which is why tree planting is a weak answer to a unit deficit even though it is the intuitive one.

Two design moves reduce the penalty. Deliver habitat early, because the clock runs from the point the habitat is created rather than from the end of the build programme, so phasing habitat creation into the first phase rather than the last is worth real units. And choose habitats that reach target condition quickly where the trading rules allow a choice.

Improving existing habitat usually reaches target condition faster than creating habitat from bare ground, so retaining and improving beats clearing and recreating, even before the trading rules are considered.

Irreplaceable habitats outside the metric

Some habitats are not in the metric at all. Ancient woodland, ancient and veteran trees, blanket bog, limestone pavement and several coastal habitats are treated as irreplaceable, and the regulations made for the biodiversity gain condition deal with them separately.

Where irreplaceable habitat would be lost, the metric cannot generate a compensation figure because the habitat cannot be recreated. The gain plan takes a different form, bespoke compensation has to be agreed, and national policy on irreplaceable habitats applies to the planning decision in its own right. Buffer zones around ancient woodland and around veteran trees are the usual design answer, and they need to be drawn on the constraints plan before the layout is developed.

Identify these at the earliest stage. A veteran tree discovered after the layout is fixed is a very expensive discovery.

Designing with the rules rather than against them

1. Get the baseline surveyed in season and classified properly, with condition recorded parcel by parcel.
2. Map the constraints that the trading rules will create: every medium or high distinctiveness parcel, every hedgerow, every watercourse, every irreplaceable feature.
3. Test the layout against the metric early, in outline, before the engineering is committed.
4. Retain and improve existing habitat where you can, because it scores better on temporal risk than creation does.
5. Search for off-site compensation within the same authority area or character area before assuming credits.
6. Treat statutory biodiversity credits as the last resort the regime intends them to be.

A Biodiversity Net Gain Assessment using the statutory metric must be completed by a competent person under the Environment Act 2021 regime, and the biodiversity gain plan is approved by the local planning authority after permission is granted. A Landscape Strategy should be drawn to match the metric assumptions rather than developed separately, because a landscape plan that shows different habitats from the metric is an inconsistency an officer will find.

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