Defra project code: WC 1051
Evaluation of the Biodiversity
Offsetting Pilot Programme
Final Report
Volume 1:
June 2014
Collingwood Environmental Planning Limited
in partnership with
The Institute for European Environmental Policy (IEEP)
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Volume 1: Final Report
June 2014
Project title:
WC1051: Evaluation of the Biodiversity Offsetting pilot
programme
Contracting
organisation:
Department for Environment, Food and Rural Affairs (Defra)
Lead contractor:
Collingwood Environmental Planning Limited
Address:
1E The Chandlery, 50 Westminster Bridge Road,
London, SE1 7QY, UK
Contact: Dr William Sheate (Project Director)
Jonathan Baker (Project Manager)
Tel.
+44 (0)20 7407 8700
Fax.
+44 (0)20 7928 6950
Email:
w.sheate@cep.co.uk
j.baker@cep.co.uk
Website:
www.cep.co.uk
Partner organisations:
The Institute for European Environmental Policy (IEEP)
Address:
IEEP Offices, Floor 3, 11 Belgrave Road, London
SW1V 1RB, UK
Contact: Dr Graham Tucker
Tel:
+44 (0)20 7799 2244
Fax:
+44 (0) 20 7799 2600
Email:
GTucker@ieep.eu
Website:
www.ieep.eu
Report details:
Report title:
Volume 1: Final Report
Date issued:
June 2014
Purpose:
To provide a synthesis of the information
collected across the two year evaluation of
the biodiversity offsetting pilot programme
Version no.:
2.4
Author(s):
Baker, J., Sheate, W.R., Bennett, T., Payne, D.,
Tucker, G. White, O and Forrest, S.
Reviewed by:
Eales, R. and Ten Brink, P.
Acknowledgements
The Steering Group would like to thank the pilots for being so
generous with their time and insights. They would also like to
thank the Complementary Projects, the Natural England
advisers and to all of those who provided their time and
expertise to the evaluation, including the team at CEP.
The Project Steering Group greatly valued the efforts and expert
help of Ian Smith from Natural England in helping to guide this
project and for his dynamic assistance with the production of
this final report, on the brink of his retirement. He is most fondly
and respectfully remembered.
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0. Executive Summary
0.1 Introduction
The evaluation project of the biodiversity offsetting pilot programme was a two year study
commissioned by Defra which began in July 2012, undertaken by Collingwood
Environmental Planning (CEP) in partnership with the Institute for European Environmental
Policy (IEEP). This is the Executive Summary of the Final Report of the evaluation.
The biodiversity offsetting pilot programme was established by Defra in April 2012, consisting
of six voluntary pilot areas that agreed to establish pilot groupings of Local Planning
Authorities (LPAs) and other interested stakeholder organisations to pilot the concept of
voluntary biodiversity offsetting in England. In so doing the pilot areas would also test the
biodiversity offsetting metric developed by Defra. The six pilots were:






Coventry, Solihull and Warwickshire (CSWAPO).
Devon (comprising three sub-pilots North, South and East Devon).
Doncaster.
Essex.
Greater Norwich.
Nottinghamshire.
Although six pilot areas are described, in practice there were eight as the Devon pilot
consisted of three sub-pilot areas. To distinguish between the three Devon sub-pilots, this
report refers to eight pilot areas.
The stated objectives of the evaluation were, to assess the extent to which the biodiversity
offsetting pilots:
A: Help to use resources more effectively to deliver greater benefits for biodiversity.
B: Streamline the process of agreeing compensation for biodiversity loss as required
by planning policy, in a cost effective way.
0.2 Key findings
The key findings emerging from the evaluation, grouped under the thematic headings used
across the evaluation are:
Governance
Every pilot was led by a pilot host who provided the majority of the leadership, momentum
and decision making for the biodiversity offsetting pilot areas. The pilot hosts also provided
ecological expertise; this was felt to be essential to implementing the biodiversity offsetting
approach.
Six of the eight pilots were supported by a group of stakeholders from different organisations,
mainly LPAs and Non-Governmental Organisations (NGOs). These pilot groups were reported
to work well and to provide a useful forum for the discussion of issues and the provision of
advice to the pilot hosts.
Within the pilot programme Natural England’s role was to provide technical advice and to
accredit offset providers and projects. The pilots welcomed the involvement of Natural
England, although they would have appreciated more proactive support particularly with
regard to promoting biodiversity offsetting within specific applications.
Process and management
Each pilot developed a biodiversity offsetting ‘strategy’ which varied in the level of detail
and length. Developing these documents provided a focus around which the biodiversity
offsetting metric (developed by Defra) could be tested and facilitated the discussion of
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biodiversity offsetting within the pilot groups. The strategies also resulted in principles and/or
specific areas where offset sites would be targeted.
Seven of the eight pilots used the metric in ‘live’ applications. Where the metric was used,
stakeholders felt that it was largely beneficial: providing a quantified, consistent, transparent
and relatively simple process that accounted for a wider range of biodiversity impacts than
current practice.
There were numerous examples across the pilots where the use of the metric was considered
to have led to improvements in the nature and extent of on-site mitigation and
compensation (above what was likely to have happened without the metric).
Despite broad support for the metric, some stakeholders had concerns. They noted that the
metric omitted certain ecological aspects (e.g. species, habitat function and connectivity),
it required additional processes and information requirements and, in the view of some, it
over-estimated the importance of lower value habitats and the impact of their loss.
Legal and development planning
All but one of the pilots felt that within a voluntary system existing national policy was not
sufficient to support biodiversity offsetting particularly for lower value habitats. The definition
of ‘significant harm’ as referred to in the National Planning Policy Framework (NPPF) was key
to this with CSWAPO using the metric to support their interpretation of significant. Through this
process, supported by good quality ecological data and substantial ecological expertise,
this pilot was able to use the metric on over 60 applications and secure offsite compensation
on six before the end of the pilot programme.
Partly in response to the perceived insufficiency of national policy, the pilots worked with
planning policy officers to include explicit reference to biodiversity offsetting as a mechanism
to achieve no-net-loss/net-gain in local planning policy. Because of the time taken to
prepare them, few plans with explicit reference to biodiversity offsetting were adopted
during the pilot programme.
Early engagement between applicants and planning authorities in the planning application
process was regarded by participants as key to ensuring that the metric was used and,
where appropriate biodiversity offsetting was considered as an option to compensate for
residual losses. However, in all but one of the pilot areas, a lack of resources hindered a
proactive approach to promoting the metric and biodiversity offsetting.
Consistent with current practice, section 106 legal agreements (s.106) were to be used to
require off-site compensation and long term management. Planning conditions were used
for on-site enhancements. During the pilot programme no s.106 agreements were formalised,
largely because of the time taken to determine applications, agree s.106s and commence
development. Although none were legally in place as many as 16 applications were
expected to result in s.106s including offsite compensation.
Costs
The time and costs to develop the biodiversity offsetting strategy varied depending on its
complexity. Very simple, informal strategies only required a few days of time to be prepared
whereas strategies that were complex or part of wider planning processes used significantly
more resources, up to £13,000.
Despite some inconsistency in the views of stakeholders, the general opinion was that
biodiversity offsetting and the use of the metric had the potential to lead to a marginal
reduction in time for planning decisions, but there was an initial learning period during which
it took more time.
Compared to current practice, in applications with residual biodiversity loss the use of the
metric and biodiversity offsetting increased the costs of compensation. Increases to cost
occurred because of the higher standards required by the metric compared to current
practice, in particular requiring management ‘in perpetuity’ and using risk multipliers
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In the pilot programme costs for offsets were subject to significant negotiation between
applicants and LPAs, with applicants refusing to meet full costs and not pursue biodiversity
offsetting (and therefore no-net-loss) in many instances.
The lack of costed management plans and the insufficiency of existing evidence on the
costs of habitat restoration and recreation meant developers and pilot hosts were not able
to accurately predict the costs of specific offsets. Searching for and preparing appropriate
offset sites entailed costs which developers were reticent to meet – these costs were sensitive
to the exchange rules (which determine which habitats can replace certain habitats) and
how far offset sites could be from the impact site. Offset providers were also reluctant to use
their time to prepare management plans without a commitment that the plan would be
funded.
Ecological implementation and monitoring
The pilots felt that biodiversity offsetting and the application of the metric more clearly
demonstrated and strengthened the application of the mitigation hierarchy in most
applications. However, evidence from two applications suggested that biodiversity offsetting
was presented as a ‘validated route’ for compensation and in doing so may have
undermined the mitigation hierarchy.
In the absence of guidance on the meaning of ‘in perpetuity’ for offset sites, pilots were
working with offset providers to prepare management plans of around 25-30 years. This was a
pragmatic response undertaken to incentivise developers and potential offset providers to
work with the pilots.
LPAs favoured offset sites which were close to the impact, ideally within the same local
authority, whilst being consistent with local ecological priorities. This preference is based on
LPAs wishing to retain the benefits of developer contributions within their own authorities.
The accreditation process for offset providers was considered to be straightforward by both
offset providers and Natural England, while the project viability assessment was seen as more
complicated, although in practice each was tested in only one case.
0.3 Conclusions
The pilots were atypical in that the LPAs volunteered to participate in the pilot programme;
they had access to ecological expertise and exhibited a high level of enthusiasm for
exploring biodiversity offsetting. This possible bias should be borne in mind when attempting
to extrapolate or scale up findings from the pilot programme to any form of national system.
The level of biodiversity offsetting activity within the pilots was lower than expected so some
aspects of biodiversity offsetting remain untested and considerable evidence gaps remain,
particularly for long term impacts. The use of the metric and the governance and strategy
arrangements were reasonably well tested. But there was a general lack of experience and
evidence related to offset delivery and management, although some evidence began to
emerge towards the end of the pilot programme.
The evaluation identified a number of barriers to voluntary biodiversity offsetting. These
included resource constraints, immaturity of the offset market and a lack of perceived
support in planning policy. Despite these barriers challenges experienced by the pilots were
being resolved and there was a sense of progress as the programme developed.
In general stakeholders considered the metric to be an effective, efficient and transparent
tool to quantify and communicate the impact of a development on habitats. Overall, the
use of the metric, informed by ecological expertise, tended to support the application of the
mitigation hierarchy, although there were some applications where biodiversity offsetting
was presented as a ‘validated route’ for compensation which may have undermined the
hierarchy. In most instances developers sought to challenge the need to meet the increased
biodiversity compensation requirements identified by the metric (due to the fact that
compared to current practice these costs were higher) unless required to do so by a robust
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interpretation of national planning policy or the inclusion of biodiversity offsetting, no-net-loss
or the use of the metric into local planning policy. The pilot hosts all stated (and this was
supported by the evidence collected through the evaluation) that the application of the
metric in particular highlighted the current and on-going failure of planning applications to
meet the objective of no-net-loss, or achieve net-gain of biodiversity.
It is apparent that the current system needs to be improved in some way if no-net-loss policy
is to be met.
Assessment against evaluation objectives
Evidence from the pilot programme suggests that whilst biodiversity offsetting has the
potential to deliver improvements in biodiversity outcomes it will require additional resources
and ecological expertise in local authorities to deliver it and in instances where residual
biodiversity loss is identified will increase costs overall for developers compared to current
practice. It is likely that it would, at best, deliver only marginal benefits in terms of streamlining
the planning process for agreeing compensation for biodiversity loss.
0.4 Suggested options for improvement
Discussions with the pilots and others who engaged with the pilot programme through
interviews and workshops identified the following suggested options to improve the process
and efficacy of biodiversity compensation:
1. The use of a Defra habitat metric could be made mandatory within planning
applications to support the implementation and monitoring of current biodiversity
policy.
2. Defra and Natural England could consider making improvements to the metric based
on the evidence from the pilot programme.
3. Defra and Natural England could produce updated technical guidance on
biodiversity offsetting including:
a. A minimum definition of ‘in perpetuity’.
b. An updated list of habitats that are defined as ‘irreplaceable’ (i.e. not subject
to biodiversity offsetting).
c. Improved guidance on the mitigation hierarchy and a definition of
compensation as a last resort.
d. Improved evidence and guidance on habitat restoration difficulty and time to
target condition including the identification of key determinants (such as type
of management / characteristics of the site) to achieving target condition.
4. LPAs could continue to develop local policy for no-net-loss and compensation for
residual loss, reflecting existing national planning policy.
5. If, in addition to the metric, a mandatory biodiversity offsetting system were to be
introduced, a transition period would be needed to allow the market for offsets and
delivery, accreditation and monitoring mechanisms to develop. In the view of the
authors this transition ought to be at least one year.
6. Natural England, Defra and NERC could review and prioritise emerging evidence
needs based on the experiences of the pilots.
7. A targeted evaluation of a number of the pilots’ projects that were close to
completion at the end of the pilot programme could be undertaken to maximise
learning from the pilots, particularly around offset delivery.
8. A scoping study could be undertaken on the feasibility of LPAs undertaking habitat
assessments within local planning policy, in particular within site allocation plans.
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Contents
0. Executive Summary ........................................................................3
0.1 Introduction ................................................................................................................................... 3
0.2 Key findings ................................................................................................................................... 3
0.3 Conclusions ................................................................................................................................... 5
0.4 Suggested options for improvement ....................................................................................... 6
List of figures ........................................................................................................................................ 9
List of tables ......................................................................................................................................... 9
Glossary .............................................................................................................................................. 10
1. Introduction ...................................................................................11
1.1 Context and purpose of the Final Report ............................................................................. 11
1.2 Background and policy landscape ....................................................................................... 11
The pilots and the complementary projects .............................................................................. 13
2. Evaluation framework and research methods ...........................15
2.1 Evaluation framework ............................................................................................................... 15
2.2 Research methods .................................................................................................................... 17
2.3 The counterfactual .................................................................................................................... 19
2.4 Supplementary research .......................................................................................................... 19
2.5 Summary of evidence gathered ............................................................................................ 20
3. Evaluation Findings .......................................................................22
3.1 Results of piloting biodiversity offsetting in each area ....................................................... 22
3.2 Evidence gathered against evidence needs ...................................................................... 23
3.3 Governance ............................................................................................................................... 23
3.4 Process and management ...................................................................................................... 26
3.5 Legal and development planning ......................................................................................... 36
3.6 Costs ............................................................................................................................................. 40
3.7 Ecological implementation and monitoring ........................................................................ 45
4. Analysis and Discussion ...............................................................50
4.1 Analysis results ............................................................................................................................. 50
4.2 The consideration of biodiversity within a voluntary system.............................................. 50
4.3 Costs and efficiency of biodiversity offsetting ..................................................................... 54
4.4 National and local planning policy ....................................................................................... 55
4.5 Future biodiversity offsetting system ....................................................................................... 57
4.6 Barriers to voluntary biodiversity offsetting ............................................................................ 59
5. Conclusions ...................................................................................63
5.1 Summary assessment against evaluation objectives ......................................................... 63
5.2 Assessment of the evaluation objectives .............................................................................. 63
5.3 Limitations to the conclusions .................................................................................................. 64
5.3 Suggested next steps ................................................................................................................ 64
6. References.....................................................................................66
7. Bibliography ..................................................................................68
8. Appendices ...................................................................................71
Appendix 1 – Complementary projects ...................................................................................... 71
Appendix 2 – Collated evaluation questions ............................................................................. 71
Appendix 3 – Summary of evidence ............................................................................................ 71
Appendix 4 – Review of pilot Local Planning Authority (LPA) development plans ............ 71
Appendix 5 – Offset costs ............................................................................................................... 71
Appendix 6 – Roles and responsibilities........................................................................................ 71
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List of figures
Figure 1: Evaluation Framework Overview .......................................................................................... 15
Figure 2: Biodiversity offsetting activities within the pilot programme ........................................... 22
Figure 3: Schematic representation of stakeholder perceptions on key aspects of voluntary
biodiversity as tested by the pilot programme .................................................................................. 50
Figure 4: Mitigation hierarchy in practice: fuzzy boundaries. Taken from Defra (2014a)........... 51
Figure 5: Emerging criteria used by the pilots for offset site selection ........................................... 56
Figure 6: Pre-requisites for a biodiversity offsetting system (from pilots’ experience) ................. 58
Figure 7: Mapping of barriers to voluntary biodiversity offsetting ................................................... 60
Figure 8: Identified cost elements and comparative scale ............................................................. 63
List of tables
Table 1: Host organisations of each pilot ............................................................................................ 13
Table 2: The Complementary Projects that provided information ................................................. 14
Table 3: Interview points and the number of interviewees in each stakeholder group ............ 21
Table 4: Pilot progress at the end of the pilot programme (dark bands indicate progress) ..... 23
Table 5: Dissonance in users’ expectations for improvements to the metric ............................... 35
Table 6: Emerging plans in the pilot areas with explicit reference to biodiversity offsetting (at
the time of writing) ................................................................................................................................... 38
Table 7: Self-reported costs related to developing the biodiversity offsetting strategies .......... 41
Table 8: Opportunities and threats presented by biodiversity offsetting to potential offset
providers..................................................................................................................................................... 48
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Glossary
Additionality
Biodiversity unit
Blue line boundary
Complementary projects
Conditions
Conservation credit
Counterfactual
Developer contributions
Down-trading
Exchange rules
Green infrastructure
Habitat banking
Habitat condition
Habitat distinctiveness
Mitigation hierarchy
Offset site
Pilot groups
Pilot hosts
Red-line boundary
Section 106 (s.106)
Sustainable urban
draingae systems (SUDS)
Validation checklist
A property of a biodiversity offset (or any action), where the conservation
outcomes it delivers are demonstrably new and additional and would
not have resulted without the offset (or the action).
The output from the metric which states the total impact (positive or
negative) of the development.
A wider area around the red-line boundary which may be owned by
the applicant but is not included within the application.
Voluntary projects identified by Defra to provide additional learning.
As an alternative to outright refusal, the LPA may grant permission subject
to conditions, for example, restricting what the applicant can do on the
premises, or requiring the applicant to get specific approval for aspects
of the development, such as the materials to be used, before they can
proceed.
The amount of biodiveristy that needs to be delivered to compensate for
the residual loss of biodiversity units from a development.
The process currently followed for agreeing compensation for biodiversity
loss within planning applications, without the use of the metric or other
biodiversity offsetting mechanisms.
The general term for funding sectured via planning conditions / s,106.
An exchange rule whereby the loss of habitats can not be offset by
habitats of lower-dinstinctiveness.
The priorities with which habitats can be offset against each other.
Related to down-trading.
A network of natural spaces and other environmental features.
Combining funding from multiple developments into a single offset site.
The quality of the habitat. Within the pilot prpogramme this was based
primarily on Natural England’s “Higher Level Stewardship: Farm
Environment Plan (FEP) Manual”.
Reflects, amongst other factors, the rarity of the habitat concerned (at
local, regional, national and international scales) and the degree to
which it supports species rarely found in other habitats. Guidance was
provided alongside the pilot, setting out the distinctiveness rating for
different habitat types.
A policy for ensuring development activities do not have unnecessary
impacts on the environment, by requiring that impacts should be first
avoided, then reduced/mitigated and only as a last resort be
compensated for.
The location where the off-site compensaiton will be delivered.
The steering groups developed to support the pilot hosts.
The individuals who submitted expressions of interest and led the pilot.
The area that is subject to the application.
Section 106 of the Town and Country Planning Act 1990 (as amended) known as planning obligations, are agreements between developers
and local planning authorities that are negotiated as part of a condition
of planning consent.
A natural approach to managing drainage in and around properties
and other developments. SUDS work by intercepting rainfall, slowing and
holding back the water that runs off from a site and allowing it to
percolate into the subsoil and groudwater.
Sets out the information requirements a planning application needs to
include when submitted.
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1. Introduction
1.1 Context and purpose of the Final Report
The evaluation of the biodiversity offsetting pilot programme was a two year study
commissioned by Defra and undertaken by Collingwood Environmental Planning (CEP) in
partnership with the Institute for European Environmental Policy (IEEP). This report describes
the research approach, the findings, conclusions and suggestions for next step. It addresses
the two evaluation objectives set by Defra and provides an assessment of the extent to
which biodiversity offsetting:
A. Helps to use resources more effectively to deliver greater benefits for biodiversity.
B. Streamlines the process of agreeing compensation for biodiversity loss as required by
planning policy, in a cost effective way.
This report is intended to be used by Defra to advise Ministers about the potential efficacy of
biodiversity offsetting in England. It is expected that other stakeholders such as Local
Planning Authorities, developers and Non-Governmental Organisations (NGOs) will also be
interested in the evaluation.
1.2 Background and policy landscape
Biodiversity offsetting seeks to achieve no-net-loss, or a net-gain, of biodiversity by
compensating for any residual adverse biodiversity impacts of development. It does this by
seeking to provide an equivalent level of, or additional, measurable biodiversity benefit
somewhere other than the development site (i.e. offsite). The need for quantification of
biodiversity impacts associated with development and the commitment to demonstrate nonet-loss of biodiversity differentiates biodiversity offsetting from ‘traditional’ biodiversity
compensation.
There are a number of biodiversity offsetting schemes in place internationally and it is
established good practice to follow the ‘mitigation hierarchy’ (Box 1). This means that
biodiversity offsetting should be used only when the developer has looked firstly to avoid
damage to biodiversity and secondly made attempts to reduce, or mitigate any impacts. If
that is not possible, then off-site compensation may be undertaken. Within England, the
National Planning Policy Framework (NPPF) refers to the need to follow the mitigation
hierarchy in paragraphs 118 and 152. The mitigation hierarchy is also enshrined in EU and UK
law, through the requirement of the EU Environmental Impact Assessment (EIA) Directive
2011/92/EU1 and the UK EIA implementing regulations to avoid, reduce or remedy significant
adverse effects of a proposed project on the environment.
Box 1: Mitigation Hierarchy
The hierarchy is defined in paragraph 118 of the NPPF. The mitigation hierarchy is a policy for ensuring
development activities do not have unnecessary impacts on the environment:

In the first instance harm should be avoided, for instance by locating development at a
different site.

Where this is not possible the impacts should be mitigated, for instance through the detailed
design of the development.

Lastly any residual impacts should be compensated for, for instance by restoring or recreating
habitat elsewhere.
International experience (see for example Ecosystem Market Place, 2011 and European
Commission, 2014) suggest that provided biodiversity offsetting is carried out in accordance
with the mitigation hierarchy and other key principles, it can have potential benefits for both
1
Article 5 (3) (b)
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biodiversity and developers – although there are also recognised costs (see for example
POST, 2011).
Defra have been developing the evidence and policy base around biodiversity offsetting for
some time. A scoping study (Defra, 2009) explored the potential design and use of offsetting
in an English context. The results of that study flagged up numerous risks and opportunities
(Defra, 2011a) and led to Defra taking an incremental evidence-based approach, which has
developed over five years. Other research relating to biodiversity offsetting includes Phase 1
(Defra, 2012a), Phase 2 (Defra, 2011b) and Phase 3 (Defra, 2012b) of the Policy and
Biodiversity Offsets Research. These research projects explored the literature and real
planning cases to understand the application and impact of biodiversity planning policy,
and what the impact of the emerging Defra biodiversity offsetting metric would have been
to these cases.
The Making Space for Nature review led by Professor Sir John Lawton (Defra, 2011b)
emphasised the need to take a more landscape scale approach to biodiversity
conservation. Habitat restoration through biodiversity offsetting was suggested as one way
this could be delivered. The review also identified principles that should be followed in the
establishment of any offset scheme, and these were largely taken up by Defra in the
development of the pilots and subsequent policy. These principles (Defra, 2011c) are used as
part of the evaluation framework in this evaluation.
The Natural Environment White Paper (NEWP) published in June 2011 built on the Making
Space for Nature Review and signalled Defra’s commitment to testing the voluntary
approach to biodiversity offsetting with pilots. A voluntary approach is one where developers
could choose whether to use the biodiversity offsetting metric to assess their project’s
impacts and choose whether to use compensation for residual adverse biodiversity impacts
(Defra, 2013).
The pilots
The overall aim of the biodiversity offsetting pilots was “to develop a body of information and
evidence to inform a future decision about whether to use biodiversity offsetting across
England” (Defra, 2011d, p.2). The pilot programme and the work of the pilots, was primarily
exploratory.
Prior to initiation of the pilots and in consultation with stakeholders, Defra and Natural
England developed a metric and Technical Guidance to facilitate the quantification of
biodiversity impacts (Defra, 2013a). These materials were designed to provide guidance and
some structure for how the pilots should manage and deliver biodiversity offsetting within
their local context. More general guidance on the biodiversity offsetting process was also
produced for the key stakeholder groups in the pilots: Local Planning Authorities, developers
and offset providers2. Biodiversity offsetting, as set out in the guidance, was not intended to
weaken existing levels of legal protection e.g. for SSSIs, international designations, or high
value biodiversity such as ancient woodlands, which cannot be replaced or re-created.
In July 2011, Defra requested Expressions of Interest (EoI) from Local Planning Authorities
(LPAs) to join the pilot programme, without any grant aid. In September 2011, the pilots were
selected by Defra. The pilots were chosen to ensure geographical and ecological diversity
with a preference for areas with high predicted levels of development (to increase the
likelihood that offset projects would come forward).
The pilots began in April 2012 and finished at the end of March 2014. The evaluation covered
in this report was commissioned in June 2012 and completed in June 2014.
At the same time as undertaking the EoI for the pilots, Defra invited organisations to come
forward as ‘Complementary Projects’. These were to run alongside the pilot programme
exploring specific aspects of biodiversity offsetting to enhance the evidence base with
2
See https://www.gov.uk/biodiversity-offsetting for the full list of guidance and materials available to the pilots
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specific case studies and examples that were not related to the pilots. The results of the
Complementary Projects, where they have been provided, are also considered within this
evaluation.
Natural England provided each of the pilots with up to 0.5 full time equivalents (FTE) of
adviser time. The advisers worked with the pilots to advise on the development of their
biodiversity offsetting strategy, the assessment of biodiversity impacts and use of the metric.
They also intended to accredit any offset providers that the pilots presented and to review
the capability and viability of any specific offset proposals. No funding was provided to the
pilots.
Prior to the pilots commencing work, the Localism Act (2012) came into force bringing
significant change to the planning system, notably the National Planning Policy Framework
(NPPF), which was published as the pilots were being set up in March 2012. These, and other,
changes were highly relevant to the work of the pilots who were tasked with developing their
pilots whilst managing substantial changes to the existing systems of planning policy and
guidance. The impacts of these changes are considered by this evaluation.
During the pilots, Defra consulted on biodiversity offsetting policy through a Green Paper and
accompanying Impact Assessment in September 2013 (Defra, 2013). The Green Paper set
out various options for biodiversity offsetting in England and sought views and evidence to
support future policy decisions. The emerging findings from this evaluation fed into the
consultation.
The pilots and the complementary projects
The six pilot areas selected by Defra and their host organisations are presented in Table 1.
Table 1: Host organisations of each pilot
Pilot name
Lead organisation
Coventry, Solihull and Warwickshire
(CSWAPO)
North Devon
Devon
Warwickshire County Council
North Devon UNESCO Biosphere Reserve
East Devon
East Devon District Council
South Devon
Teignbridge District Council
Doncaster
Doncaster Council
Essex
Essex County Council & Environment Bank Ltd
Greater Norwich
Norfolk County Council
Nottinghamshire
Nottinghamshire County Council
Although six pilot areas are described, in practice there were eight as the Devon pilot
consisted of three sub-pilot areas which each developed their own Biodiversity Offsetting
Strategies and governance arrangements3. In order to be able to distinguish between the
three Devon sub-pilots, this report refers to eight pilot areas.
Introduction to the pilots
The pilots were managed and coordinated by the hosts who were based in the lead
organisation. The hosts were primarily responsible for: coordinating with other stakeholders
(often via a pilot or steering group), preparing the biodiversity offsetting strategies and
seeking opportunities to test biodiversity offsetting. At the start of the pilot programme seven
of the eight hosts were ecologists (the exception being East Devon’s original host); at the end
all eight were ecologists.
Technical guidance materials were developed by Defra and Natural England. Natural
3
It is understood that the three Devon sub-pilots were all intending to submit their own bids for pilot status. When they
became aware of the other Devon bids they chose to submit a joint bid which was accepted by Defra.
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England also provided advisers to support the pilots. The pilots were encouraged to develop
and implement approaches as they saw fit, within some agreed boundaries set by Defra.
The size of the pilot areas varied with four of the pilots operating at the county level. The
Doncaster pilot was alone in being at the metropolitan scale.
Coordination of five of the pilots was based on existing groups of organisations. In these
cases the processes and responsibilities of the biodiversity offsetting pilots had been
integrated into the work of the existing group or through a sub-set of that group.
Pilot groups were set up in each pilot to provide support and coordination with key
stakeholders. These groups varied in size from two to twenty two organisations. All pilots
involved a wide group of organisations. The exception was Doncaster where the
involvement of non-LPA stakeholders was not considered appropriate by the host.
Introduction to the Complementary Projects
Table 2 presents a summary of the Complementary Projects and their focus. Summaries of
the findings of the Complementary Projects, where they have been provided, are referred to
at relevant points in this report (and Appendix 1).
Table 2: The Complementary Projects that provided information4
Complementary Project
Atkins
Parsons Brinckerhoff5 /
Thames Link Partnership
Doncaster Metropolitan
Borough Council and the
Yorkshire Wildlife Trust
The Somerset Biodiversity
Partnership
4
Focus
Retrospective study that tested the metric on a real case to identify
any challenges and potential biodiversity benefits
Retrospective study considered the developers perspective and what
lessons could be learned from their experience
Retrospective application of the metric to historical cases with the
intention of identifying differences in outcomes and implementation
challenges
Based on extensive spatial biodiversity data and recent biodiversity
compensation experience this project looked at integrating species
into the metric and its application early in the planning process
Four other Complementary Projects volunteered but for various reasons they did not progress and/or provide Defra
with any information.
The project was originally established by Balfour Beatty but completed by Parsons Brinckerhoff (a Balfour Beatty
company)
5
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2. Evaluation framework and research methods
It was recognised that only a relatively small number of biodiversity offsetting projects might
be delivered and that quantitative indicators would not be appropriate due to the small
sample size and the non-random design of the pilot selection. A qualitative approach was
therefore adopted which used three primary research methods: literature review; document
analysis; and semi-structured interviews and follow on discussions.
2.1 Evaluation framework
An Evaluation Framework was developed in consultation with the Project Steering Group, the
pilots and a small number of other stakeholders. The evaluation framework formed the
methodological basis for the work undertaken over the two years of the project.
Figure 1: Evaluation Framework Overview
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The evaluation framework, presented in Figure 1, consists of the following elements:

Evaluation objectives were set by Defra.

Evaluation criteria (Box 2) were derived from Defra’s principles for biodiversity
offsetting (Defra, 2011c). They provided a greater level of detail against which the
findings could be assessed.

Evaluation questions were devised for use in the semi structured interviews. The
questions included some specific questions provided by Defra and others developed
by the evaluation team as the pilot programme developed. Appendix 2 includes the
full list of questions asked across the evaluation. The questions and responses were
arranged under themes to give a logical reporting structure.

Evaluation themes structured the information collection, analysis and reporting. Every
question asked across the evaluation was ‘tagged’ with a theme (see Appendix 2).
This created a direct link from the questions back to the evaluation objectives. When
results were analysed the responses relevant to individual questions were filtered by
theme and then reviewed. This allowed for effective and efficient cross-pilot thematic
analysis. The themes were:

o
Governance – Including the nature and structure of relationships between
Local Planning Authorities and Natural England; and interactions with other
stakeholders.
o
Process and Management – Including strategic elements and relationships
with other initiatives; the process of using the biodiversity offsetting metric, and
the transparency of the process.
o
Legal and Development Planning – Including the role of national and local
planning policy and regulation, any project specific legal agreements and
planning mechanisms or conditions. The offset providers’ use of brokers and
any pooling of funds and resources were also considered.
o
Costs – Including time inputs and other expenditure by local authorities,
developers, and other stakeholders. This included a comparison with
traditional compensation arrangements and identified any efficiencies of the
process.
o
Ecological implementation and monitoring – Including outcomes from the
metric in practice; the nature and size of habitats lost or restored; ecological
outcomes; the process for accreditation, and the role of Natural England.
Three stages to the pilots were identified. This staged approach allowed for flexibility
in information collection. For example, not all pilots reached Stage 3 and so the focus
of the evaluation for those pilots switched to exploring the reasons for that. The stages
were:
o
Stage 1: Setting up of the pilot – this included the time from the LPAs’ decision
to submit an Expression of Interest to there being an agreed and established
pilot group.
o
Stage 2: The development of the pilot offsetting strategy – this included all nondevelopment-specific discussions around biodiversity offsetting and the
development of a final biodiversity offsetting strategy in any form.
o
Stage 3: Individual development projects and associated offsets – including
the accreditation of offset providers, the process by which projects were
identified and developed, and the use of the metric within specific cases.
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Box 2: Evaluation Criteria
1.
Biodiversity offsetting should ensure no change to existing levels of protection for biodiversity.
2.
Biodiversity offsetting should deliver real benefits for biodiversity through:
3.
a.
Seeking to improve the effectiveness of managing compensation for biodiversity loss.
b.
Expanding and restoring habitats, not merely protecting the extent and condition of what
is already there.
c.
Contributing to enhancing England’s ecological network by creating more, bigger, better
and joined areas for biodiversity (as discussed in Making Space for Nature).
d.
Providing additionality; not being used to deliver something that would have happened
anyway.
e.
Creating habitat which lasts in perpetuity (with a clear and agreed understanding of what
is meant by perpetuity).
f.
Being at the bottom of the mitigation hierarchy, and requiring avoidance and mitigation of
impacts to take place first.
Biodiversity offsetting should be managed as much as possible at the local level and:
a.
Within national priorities for managing England’s biodiversity and ecosystem services.
b.
Within a standard framework, providing a level of consistency for all involved.
c.
Through partnerships at a level that makes sense spatially, such as county level, catchment
or natural area.
d.
With the right level of national support and guidance to build capacity where it is needed.
e.
Involving local communities.
4.
Biodiversity offsetting should be as simple and straightforward as possible, for developers, local
authorities and others.
5.
Biodiversity offsetting should be transparent, giving clarity on how the offset calculations are
derived and allowing people to see how offset resources are being used.
6.
Biodiversity offsetting should be good value for money.
2.2 Research methods
Three primary research methods were used to collect information:
Literature review
The literature review had two objectives, firstly to provide information to support the analysis
of evaluation findings and secondly to refine the evaluation questions. A literature review of
research exploring biodiversity offsetting and biodiversity compensation was undertaken at
an early stage of the project and updated as new research became available. A reference
list (literature cited in this report) is available at the end of this report as is a bibliography
which includes all other literature that was reviewed.
Document analysis
A review of relevant documentation was undertaken depending on what stage the pilot
had reached. For example within Stage 3 this might include planning documents (such as
planning applications and related information), accreditation documentation and metric
calculations. Within Stage 2, relevant documents included the biodiversity offsetting strategy
and related documents in draft and final forms. Other materials such as Steering Group
minutes were reviewed where they were available. The final biodiversity offsetting strategies
were subject to an assessment against the evaluation criteria and the results are presented in
the pilot reports (Volume 2: The Pilot Reports) and integrated into Section 3. Natural England
also provided monthly progress reviews of the pilots which were used to monitor progress and
track emerging issues to pick up during interviews.
Semi-structured interviews
The evaluation team carried out semi-structured interviews with the relevant stakeholders at
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defined stages during the pilot6. These interviews were face to face (15) or via telephone
(83), as convenient for the interviewees. Where possible face to face interviews were
preferred for the final / reflective interviews as face to face allows for more exploratory
interviews. Questions were elaborated from the initial list of evaluation questions provided by
Defra, grouped by evaluation theme and focused on ‘inputs’, ‘processes’ and ‘outputs’
consistent with the logic model set out in Government guidance on evaluation (HM Treasury,
2011). The results of the interviews were recorded in a proforma for subsequent collation and
analysis (Appendix 2 includes the full list of questions asked).
Semi-structured interviews were considered appropriate as the pilots and individual pilot
stakeholders had a great diversity of experience and expertise and it was therefore
necessary to retain some flexibility during the interviews. Furthermore, as the pilot programme
developed and a relatively small number of projects emerged it was apparent that an
exploratory approach, one which allowed for discussion about how and why the pilots were
progressing, would be required.
Where possible, interviews were undertaken with a number of individuals and different
stakeholder groups to obtain a range of opinions and insights. Table 3: Interview points
and the number of interviewees in each stakeholder group
summarises the stakeholders interviewed across the project. There were also numerous
update discussions between the pilots and the evaluation team across the pilot to track the
pilots’ progress.
Interviews were also undertaken with officers from LPAs who had the opportunity to join the
pilot programme but, for various reasons, chose not to.
Workshops
In addition to the three primary research methods, two workshops were held with the pilots,
Natural England advisers and Defra staff: the first in November 2012 to discuss the draft
evaluation framework; and the second near the end of the evaluation project in May 2014
to discuss the emerging findings.
Quality assurance
Throughout the information collection progress reports were produced which presented the
emerging findings of Stage 1 and Stage 2. An Interim Report covering Stages 1 and 2 was
produced in June 2013 for review by the Project Steering Group.
After the completion of information collection, all of the proforma and results of the
document analysis and literature review were collated and analysed in respect of the
evaluation questions and themes. The results were shared with the pilots and the Steering
Group in a final workshop in early May 2014, which provided an opportunity to test the
emerging findings of the evaluation with representatives from the pilots. This Final Report,
having been subject to multiple quality assurance reviews including external peer review,
presents the results of the evaluation and reflects the findings from the final project workshop
with the pilots, Natural England and Defra.
Research limitations
Limitations of the research relate to the design of the pilot programme, the nature of the
pilots and the evaluation’s research approach.
The biodiversity offsetting pilots were a voluntary initiative; there is therefore a high risk of
selection bias (at the programme and project level) because the pilots volunteered to
participate in trialling offsetting. Furthermore, more interviews were undertaken with those
pilots that progressed further, meaning there is a potential bias in the results towards those
6
Table 3:
Interview points and the number of interviewees in each stakeholder group
describes these stages.
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pilots.
The pilots are different to other planning authorities in a number of respects. For example
each of the pilots was led by an LPA ecologist. Research indicates that nationally only
around a third of LPAs have ecologists (Policy Exchange, 2012). Other noted differences
include an enthusiasm for testing biodiversity offsetting, a willingness to innovate and
relatively high predicted levels of development.
The pilot programme was intended to be voluntary, meaning that applicants did not have to
use biodiversity offsetting unless they wished to do so. As a result, it is possible that the
projects that used biodiversity offsetting were in some way atypical and that atypical
projects were therefore evaluated. The exception was the CSWAPO pilot where a much
broader range of projects was evaluated.
This report recognises and discusses potential selection bias and the implications of it within
specific sections where it is considered to have affected the results.
Other limitations include the length of the pilot programme, which at two years meant it
would not be possible to evaluate or monitor long term biodiversity outcomes and impacts.
The time scale also presented challenges in that many planning applications can extend
beyond this time scale. Major planning reforms as a result of the Localism Act 2012 were also
being implemented, some of which had the potential to change existing compensation
practices. This made comparisons between existing compensation and biodiversity offsetting
less straightforward.
The length of the pilot programme also reduced the potential for a market for offsets to
emerge and for developers to account for the costs of biodiversity compensation within their
business planning and in particular when acquiring land. It is therefore possible that the costs
and challenges identified in this report are only relevant to the early stages of a biodiversity
offsetting system.
The primary data gathering technique used was semi-structured interviews. Although this was
the most appropriate technique considering the progress of the pilots there are potential
biases emerging from talking to a relatively small number of stakeholders who were aware of
and worked with other pilot stakeholders. The risk of this bias is reduced somewhat by the
range of stakeholders interviewed, the range of opinions expressed and the triangulation of
other evidence sources such as planning documentation and the literature.
It should be noted that all the case studies presented in this report are confidential and that
some relevant information has been removed for reasons of commercial sensitivity.
Where possible these limitations are identified and discussed within the results and analysis.
2.3 The counterfactual
Supplementary guidance to the Magenta Book (HM Treasury, 2012) indicates the
importance of defining the counterfactual; in this case, what would have occurred within
the participating LPAs in the absence of the biodiversity offsetting pilot programme. The
counterfactual was therefore defined as:
The process currently followed for agreeing compensation for biodiversity loss within
planning applications, without the use of the metric or other biodiversity offsetting
mechanisms.
Throughout the report this is referred to as ‘current practice’.
2.4 Supplementary research
Defra commissioned the evaluation team to undertake two related but distinct pieces of
additional research, intended to support the evaluation. These were standalone research
projects published separately by Defra. This report draws on the findings of these studies in
the analysis and conclusions, in particular with regard to the counterfactual . The projects are
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summarised in Box 3.
Box 3: Summaries of supplementary research projects
Indicative Costs of Current Compensation Arrangements for Biodiversity Loss: Illustrative Case Studies
This research provided evidence regarding the costs of compensation for non-protected biodiversity
within the English planning system (Defra, 2014a). The results formed a baseline of existing (nonbiodiversity offsetting compensation) practice and provided evidence on:
1.
The existing costs of compensation for residual biodiversity loss.
2.
The existing costs of compensation for residual biodiversity loss, including delays caused by
negotiations/surveys, and issues around any land undeveloped because of on-site
compensation.
3.
The relative frequency or occurrence for these costs.
A review of recent biodiversity offsetting practice in Germany
The research (Defra, 2014b) was led by CEP’s evaluation partners IEEP and examined biodiversity
offsetting experiences in Germany where biodiversity offsetting has been a legal requirement since the
1960s. The study sought to review current practice and to describe the long-established German off-site
compensation system and typical costs.
2.5 Summary of evidence gathered
In total 98 interviews were undertaken during the two years of the evaluation. A further 31
update discussions were held during the pilot programme, initiated by the evaluation team
to follow the progress of the pilots and specific applications.
Table 3: Interview points and the number of interviewees in each stakeholder group
summarises the interview points in the evaluation and the number of interviewees across the
pilots and their stakeholder group.
Not every pilot progressed to every interview point, so for example, not all pilots developed
formal biodiversity offsetting projects or accredited offsetting providers. CSWAPO progressed
furthest and this is reflected in the larger number of interviews undertaken for that pilot.
Where pilots did not progress to certain points the focus of the reflective interviews was on
the reasons for this. Appendix 2 supports the summary presented here and includes a full list
of all the questions asked at the interview points and a description of how interviewees were
identified.
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Table 3: Interview points and the number of interviewees in each stakeholder group
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3. Evaluation Findings
This section includes the findings structured by the evaluation themes. This structure ensures
that the reporting relates the evidence to the evaluation criteria and objectives, and the
specific questions explored with the pilots (Appendix 2).
3.1 Results of piloting biodiversity offsetting in each area
The pilot hosts wished to join the pilot programme for several reasons: the most significant of
these was to see if there were better ways of undertaking mitigation and compensation for
biodiversity loss. Other incentives to join included a wish to secure no-net-loss; a keenness to
be innovative and the possibility of securing new and additional funding sources for
biodiversity.
In practice, most of these aspirations were unmet. Pilots found that the pilot period of two
years was insufficient to integrate and to test biodiversity offsetting within a planning system
where project planning can take years. Within all of the pilots, significant periods of time
were used getting planners, developers and consultants to understand and engage in the
process. This was exacerbated due to the pilots’ time and resource constraints and the
relative downturn in economic development during the pilot programme; hence the first
year of the pilot saw very few possible projects coming forward. The second half of the pilot
saw more development proposals with the potential for testing biodiversity offsetting,
although few of these proceeded to formal offsets. Partly this was because developers were
able to withdraw in many instances, and partly because the projects had not gained
planning permission by the end of the pilot programme.
Since the initiation of the pilot programme in 2012, all of the pilots: formed pilot groups;
developed some form of biodiversity offsetting ‘strategy’; sought to incentivise biodiversity
offsetting generally and within specific developments; and raised capacity across LPAs and
other groups such as ecological consultants. Figure 2 shows the activities involved in piloting
biodiversity offsetting.
Figure 2: Biodiversity offsetting activities within the pilot programme
A key issue emerging from the evaluation is that while few actual ‘offset’ projects were
agreed or delivered (i.e. offsite habitat creation on land owned by a third party and funded
by developer contributions), the metric was widely used to implement the mitigation
hierarchy, quantify losses and propose mitigation and on-site compensation, as well as to
calculate financial contributions for off-site compensation.
All but one of the pilots (Greater Norwich) used the metric on live planning applications, but
only two (Essex and CSWAPO) progressed to a complete biodiversity offsetting project i.e.
where an offset site has been identified and is expected to be implemented (Table 4). The
reasons for variation in progress are discussed under each of the evaluation themes.
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At the end of the programme all of the pilots planned to continue to promote and pursue
opportunities for biodiversity offsetting, including use of the metric. The momentum of the
pilots increased across the two years and it is likely that more opportunities and projects have
emerged since the cessation of information collection for the evaluation.
Table 4: Pilot progress at the end of the pilot programme (dark bands indicate progress)
Pilots
CSWAPO
Pilot group
set up
Final
biodiversity
offsetting
strategy
Metric used
within a
planning
application
Accredited
offset
provider
63

East Devon
2
South Devon
4
North Devon
4
Doncaster
5
Essex
11
Offset site
agreed
*
1
*^
Greater Norwich
Nottinghamshire
6
Notes: The numbers indicate the number of planning applications relevant to specific stages
during the pilot programme.
*CSWAPO and Essex had agreement in principle for management plans for offset sites but
these were not formalised before the end of the pilot programme.
Essex had a ‘test-offset’ where a historical s.106 was used to test the processes for agreeing
a long term offset.
^
3.2 Evidence gathered against evidence needs
Due to the progress of the pilots previously described there remain some aspects of
biodiversity offsetting that were not-tested, or only tested to a small extent, by the pilots.
Appendix 3 presents a summary of this analysis.
Generally the pilot programme and the evaluation collected a substantial amount of
evidence about setting up the pilot groups, developing biodiversity offsetting strategies and
the use of the metric to understand biodiversity impacts. Evidence gaps remain on the
actual delivery of offsets and the related costs.
3.3 Governance
Box 4: Summary of Governance findings

Overall, the governance arrangements, where pilot hosts were supported by a steering or working
group, were reported to work well.

Four of the six pilots were supported by a pilot group of stakeholders from different organisations,
mainly LPAs and NGOs.

The pilot groups proved a useful forum for the discussion of issues and the provision of advice to the
pilot hosts.

The pilot hosts provided the majority of the leadership, momentum and decision making for the
pilots.

The need for ecological expertise as provided by the pilot hosts and LPA ecologists was felt to be
essential to implement the biodiversity offsetting approach.

Natural England’s role was to provide technical advice on strategies and the metric and undertake
accreditation of offset providers and projects. The pilots welcomed the involvement of Natural
England, although they would have appreciated more proactive support particularly with regard
to promoting biodiversity offsetting within specific applications.
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This section focuses on governance, especially the nature and structure of partnerships and
relationships within the pilots, including those between Local Authorities and Natural England
and other stakeholders.
Nature and structure of partnerships
Overall, pilot hosts reported a range of functioning governance systems. There was limited
testing of governance in relation to delivery of actual offset projects.
Six of the eight pilot areas were supported by a pilot group (which acted like a project
steering group) of partner organisations including LPA, NGOs, potential offset providers and
Defra Arms-Length Bodies (ALB). The Nottinghamshire pilot chose not to form a pilot group.
Instead they maintained contact with the partner councils participating in the pilot; in
hindsight they felt that a pilot group might have helped to maintain the profile of the pilot.
Doncaster worked with other stakeholders on specific issues as they arose, but had no
regular pilot group.
Membership of pilot groups was generally stable over the two year period of the pilot and
one pilot reported that additional organisations joined the pilot group. One pilot host
reported that there was a spirit of joint venture and other pilots reported a good degree of
exchange and sharing of good practice within these groups.
The pilot groups were used to discuss and explore emerging issues; they were reported to be
useful and to work well. However, some discussions proved challenging, particularly where
individual members had different views on specific planning applications, modifications to
the metric or conceptual aspects of biodiversity offsetting. The host organisations of two pilot
groups had hoped that the pilot group would identify and discuss potential offset projects
that could be taken forward; however in both cases there appeared to be reluctance on
the part of the pilot group to discuss what were considered to be speculative projects with
no guarantee of funding or delivery.
Most of the pilot groups had relatively simple arrangements. There were exceptions, for
example CSWAPO had a three-tier governance structure with the CSWAPO group of
planning officers providing high level review, with responsibility for developing biodiversity
offsetting (and the Green Infrastructure strategy) delegated to a sub-group. There was also a
separate group of ecological experts who met to discuss specific questions relevant to the
metric. This arrangement worked well with the pilot host coordinating dialogue between tiers
as required. The South Devon pilot also chose to create a smaller working group to deal with
the emerging complexities of their strategy.
Roles and responsibilities
Six of the individual pilot hosts remained in post from the start to the end of the pilot
programme. In one case the lead pilot host’s role changed, with the effect that there was
less time available to promote biodiversity offsetting widely. This was felt to have impacted
on delivery. There were changes in pilot host staff in two pilots (East Devon and Doncaster). In
East Devon this slowed progress until a member of staff was appointed with a time allocation
to take the pilot forward.
Five Natural England staff acted as advisers throughout the pilot programme, with one being
adviser to two pilots. The advisers to the remaining two pilots changed during the course of
the programme; pilot hosts reported that advisers were therefore less familiar with the pilots.
In the early stages of the pilot programme the only new roles that were created to manage
the pilots were the two Environment Bank Ltd (EBL) members of staff. These roles were
employed full time within two of the pilots and funded independently. These posts, although
funded externally, became integrated into the functions of the pilots and their respective
LPAs.
Within other pilots biodiversity offsetting was integrated into the hosts’ day to day roles.
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Role of pilot hosts
All but one of the individuals hosting the pilots were from an ecological background, with the
exception being a landscape architect in the East Devon sub-pilot (who was replaced by an
ecologist in the second year as a result of the former changing jobs). The pilot hosts served a
number of functions including raising awareness and building capacity on biodiversity
offsetting and its implementation within the pilot group and pilot area, and providing
momentum to the pilot. They also dealt with the development of the key materials such as
the strategies and the metric and managed potential offset cases.
Support provided by the Natural England Advisers
Pilot hosts found that Natural England provided a positive input when they engaged with the
pilot. Examples of this input included attending pilot group meetings; commenting on
strategy documents; providing clarification on Defra’s guidance and position; accessing
internal Natural England advice: sharing knowledge from other pilots; and mentoring to
facilitate development of the pilot.
None of the pilots or Natural England advisers felt that the allocated 2.5 days per week of
Natural England support was fully utilised. This was partly because the number of biodiversity
offsetting projects was lower than anticipated and partly due to limited Natural England
adviser capacity being reduced by other priorities. For one pilot, the value of Natural
England’s support was reduced by having four different advisers over time. For another pilot
joint working with the adviser was made difficult because the adviser was not local.
Role of Natural England
Despite the generally positive relationship between advisers and hosts there was a difference
in expectation about the intended role of the Natural England advisers. In practice Natural
England’s role in supporting the pilots was deliberately restricted by Defra to a few specific
tasks, so as not to distort the outcomes from the pilots. These tasks were to provide technical
advice on strategies and the metric and to accredit offset providers and projects. Although
these limited roles were made clear to the pilots, the pilots hoped Natural England would be
able to provide more proactive support.
Natural England advisers were comfortable commenting on whether the metric had been
populated accurately, but were not in a position to state whether management costs were
acceptable or to sign-off other project specific details. Advisers considered this position to be
appropriate for a voluntary pilot, but it was acknowledged that it frustrated the pilots.
Aside from the role of the advisers the pilots had hoped that Natural England would promote
the use of biodiversity offsetting within consultation responses to specific applications.
Although Natural England did amend the wording of standard consultation responses to
raise awareness of the existence of the pilots, the pilots felt that this was insufficient to
incentivise developers to engage with the pilot.
Most of the pilots were frustrated by this reactive approach and Natural England’s policy of
focusing only on high risk cases (those potentially affecting statutorily protected sites), when
biodiversity offsetting was designed to deal with lower levels of biodiversity loss. Some pilot
hosts and Natural England advisers felt that a (part time) role should have been created to
provide dedicated support to the pilots e.g. to deal with planning applications potentially
appropriate for biodiversity offsetting. Such a role could have bridged the gap by enabling
Natural England to respond to applications in relation to non-statutorily protected sites and
at the same time encourage uptake of the offsetting approach.
Natural England did provide some oversight and advice in relation to their wider statutory
responsibilities, for example:

A case arose in Essex where an application impacted on a Local Wildlife Site that was
of potential SSSI quality. Natural England reviewed the site and found that it was not
of SSSI quality and advised applying the metric to determine residual impacts.
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A further case in Devon related to a section 41 (s.41) listed Habitat of Principal
Importance7. Before populating the metric, Natural England wanted the LPA to
consider the significance of losing the s.41 habitat and whether or not this was
acceptable to them under their duty to conserve biodiversity. Natural England
wanted the LPA to make this decision, since if it was considered acceptable to the
LPA then Natural England would have recommended like-for-like replacement of the
habitat.
In addition to the supporting materials produced prior to the pilot programme, Natural
England provided facilitated learning exchange via Huddle8. Beyond the first few months of
the pilot programme the Pilots made limited use of Huddle.
Relationship with Defra
Defra stood back from the pilots and did not provide targeted support or assistance beyond
two initial webinar events. The intention was to allow a range of approaches to be applied
and tested by the pilots. Some of the pilot hosts felt that Defra’s detachment was because
they were not supportive of the work of the pilots; this affected morale. Technical advice
(largely relating to the metric) was provided by Defra or Natural England depending on the
nature of the request and in response to technical issues raised by pilots. Providing
comprehensive advice was not always possible, particularly if the issue related to something
the pilots were set up to explore.
3.4 Process and management
Box 5: Summary of process and management findings

A biodiversity offsetting strategy/document was developed in each of the pilots. These documents
provided a useful forum for the discussion of issues and the provision of advice to the pilot hosts. The
strategies resulted in principles and/or specific areas where offset sites would be targeted.

Contact with other natural environment initiatives (Local Nature Partnerships (LNP), Nature
Improvement Areas (NIAs)) occurred in all instances where initiatives overlapped. The impact of
these relationships was limited to high level support and the sharing of priorities for habitat
restoration and re-creation.

Seven of the eight pilots used the metric in ‘live’ planning applications. Where the metric was used,
most stakeholders felt it to have been largely beneficial: providing a quantified, consistent,
transparent and relatively simple process that accounted for a wider range of biodiversity impacts
than current practice.

Across the pilots, there were numerous examples where stakeholders felt that the use of the metric
had led to improvements in the nature and extent of on-site mitigation and compensation (above
what was likely to have happened within current practice).

Despite broad support for the metric, some stakeholders had concerns. They noted that the metric
omitted certain ecological aspects (e.g. species, habitat function and connectivity), it required
additional processes and information requirements and, in their view, over-estimated biodiversity
loss.

LPAs favoured offset sites that were are as local as possible to the impact, ideally within the same
local authority, whilst being consistent with local ecological priorities.
This section focuses on the process and management of the pilots including the
development of the biodiversity offsetting strategies, relationships with other initiatives, the
extent to which habitat banking was used, the process of using the biodiversity offsetting
metric and the transparency of that process.
7
Section 41 of the Natural Environment and Rural Communities (NERC) Act 2006 - Habitats and Species of Principal
Importance in England
8
Huddle is an online virtual learning environment for storing and managing documents and facilitating online
interaction among its members, and a Huddle site was set up by Natural England for the use of the offsetting pilots.
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The biodiversity offsetting strategies
All of the pilots were asked to “agree and publish a strategy for using [biodiversity] offsetting
in their pilot area with their partners. This should set out the types of habitats the local
authorities would like to see created through offsetting, and target areas for offset projects
(e.g. linking together valuable wildlife sites, buffering watercourses etc.)”9.
All of the pilots developed some form of biodiversity offsetting strategy. These documents
tended to be concise and functional as the pilots felt that this was proportionate to the
voluntary nature of the pilot programme. Details and links to the strategies are given in the
Pilot Reports (Volume 2).
The strategies had the following common aspects:

Description of what biodiversity offsetting is and how it works.

Principles for how biodiversity offsetting would be integrated within spatial planning
and development control within the LPA.

Spatial prioritisation of preferred areas for offset sites by setting either principles
and/or the identification of sites.
The strategies differed in the amount of detail that was provided. For instance, Greater
Norwich set simple principles for spatial prioritisation, whereas Doncaster’s and North Devon’s
strategies provided more structured, hierarchical spatial priorities. Uniquely, CSWAPO’s
strategy was intended to be integrated within planning policy, whereas the others were
more guidance orientated. South Devon’s strategy gave a high degree of detail about the
biodiversity offsetting process and uniquely included species considerations. The other
strategies included a summary of what biodiversity offsetting is and referred to the Defra
materials to provide the majority of the procedural detail.
Variation in the nature of the strategies was expected and encouraged by Defra who
deliberately allowed flexibility around their style and content.
An unexpected finding was the amount of time it took some of the pilots to finalise their
documents. Four of the pilots published their strategies in the summer of 2012 but the three
Devon pilots did not have final versions until late 2013 / early 2014. The reasons given for this
were:

The need to familiarise pilot groups with biodiversity offsetting.

Limits to the capacity and resources of the pilot hosts impeding their ability to
prioritise the strategy as hoped.

The detailed discussions around what a strategy should include.

Specific technical discussions around how to deal with certain aspects of
biodiversity offsetting.
CSWAPO integrated the strategy into the sub-regional green infrastructure (GI) strategy (it is
Annex A of the strategy) and this meant the biodiversity offsetting strategy had to develop at
the pace set by the much broader and more formal process for developing, consulting and
approving the GI strategy as a supplementary planning document (SPD). A draft of the
CSWAPO strategy was consulted on in April 2013, but the final version had not been released
by the end of the pilot programme because the pilot was awaiting a decision on national
biodiversity offsetting policy.
9
The Information Notes for Local Authorities produced by Defra provides a summary of what is expected from the
offsetting strategies (Page 5, para 19-20)
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69529/pb13744-bio-localauthority-info-note.pdf
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There was no single determinant for the amount of time it took the pilots to develop their
strategies, but the learning point from the pilots was: the simpler the strategy, the quicker the
process.
Definition of perpetuity
A number of the strategies made reference to creating or restoring habitat “that lasts in
perpetuity” as set out in the Defra Principles (2011c). The exact definition given to the term
‘perpetuity’ varied between the strategies. Most pilot hosts said that agreeing a definition of
perpetuity within the pilot groups took a significant amount of time and discussion. This was in
part because the pilot programme was limited to two years and the long term policy
framework for biodiversity was considered unclear. Offset providers and developer
representatives noted the impact of uncertainty especially the cost implications of defining
‘perpetuity’ to mean open-ended management.
The definitions of perpetuity included within the pilots’ strategies were:

CSWAPO defined it as 30 years.

South Devon referred to a requirement for a “nominal” 100 year management
plan.

Nottinghamshire described any offset as lasting “at least the life time of the
development to which it relates”.

North Devon referred to perpetuity generally, but does not seek to define it.

Essex, Doncaster and Greater Norwich did not make explicit reference to
perpetuity, but linked to documents that do (such as the Business and Biodiversity
Offsetting Programme (BBOP) and the Defra Technical Guidance).
There appeared to be a growing willingness within some, but not all, of the pilots to set
shorter time scales for management plans, for example Essex and Greater Norwich interviews
referred to 25 years. Planning documentation within CSWAPO and Essex indicated that 30
and 25 year management plans were being developed. This was largely a response to
concerns from developers about the cost of very long term management and push back
from potential offset providers who, according to most of the pilot hosts, were reticent to
enter into open ended or very long term management agreements (e.g. 50 years).
One option that was discussed in CSWAPO was whether for certain features it might be
appropriate to have an even shorter timescale for offsets, say 15 years. It was accepted that
there was insufficient evidence upon which this might be based but that, with appropriate
multipliers, these offsets could be used to reflect the dynamic nature of some semi-natural
habitats at a landscape scale. This was not explored within the pilot programme.
Principles for offset sites
All of the pilots’ strategies called for habitats to be expanded and restored and referred
explicitly to Making Space for Nature. Other landscape scale conservation activities were
referred to including NIAs, Living Landscapes, Futurescapes and ThinkBig10.
The strategies set local priorities for offsets sites within the context of national priorities. This
was largely achieved by joining up national and local ecological priorities by using existing
ecological evidence such as Biodiversity Action Plans (BAP), Living Landscapes, Nature
Improvement Areas (NIA), Biodiversity Opportunity Areas, Special Areas of Conservation and
National Parks. All of the pilots had some form of existing evidence base which they used to
determine the principles and priorities of their biodiversity offsetting strategies.
Living Landscapes is the Wildlife Trust’s landscape scale initiative, Futurescapes is the RSPB’s and ThinkBig is Natural
England’s.
10
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One common principle that emerged as the pilots developed was a preference for offset
sites to be located as close as possible to the impact. A number of pilots indicated a desire
for offset sites to be in the same LPA as the impact. Within the strategies this was expressed as
a preference (see Essex and Doncaster for example). It was also incentivised by the use of
multipliers within the metric – i.e. more biodiversity units were required if the offset site was not
situated in the strategic areas identified by the pilots. Pilot hosts noted that this proximity
preference was very strong and it was felt that elected members were very unlikely to
support biodiversity offsetting if it resulted in the loss of biodiversity (and potential income
from developments) from their LPA. The importance of this issue was supported from
discussions with two non-pilot LPAs (Rushcliffe and Southend) who said that they did not join
the pilot programme because of this concern.
Relationship with other initiatives
Local Nature Partnerships (LNPs) and NIAs were initiated around the same time as the pilot
programme. Relationships formed as and where the LNPs,11 NIAs12 and pilots matured and
overlapped. LNPs and NIAs are partnership based initiatives and the pilot hosts and members
of pilot groups often have positions within the LNPs and NIAs.
The relationship with LNPs was generally about providing high level support. This was
achieved by cross-referencing (for example including biodiversity offsetting within LNP
manifestos), having common ecological priorities and using common structures, such as pilot
groups and websites. The pilot hosts noted that the impact of these interactions was limited
and less than they had expected. The pilots had hoped that working with the LNPs would
lead to the identification of specific projects and offset sites that could be delivered through
the pilot. The reasons for this not happening were consistent with the general barriers
explored in Section 4.
There was limited direct engagement between Local Enterprise Partnerships (LEPs) and the
pilots. Where this occurred the LNPs were a conduit for any discussions but these interactions
were again limited in number and impact.
Some of the pilots (North Devon, Doncaster, Essex and South Devon) used the NIA
boundaries and priorities within their strategies to target any emerging offset sites. This tended
to be the limit of any interactions between the pilots and NIAs. The exception was Essex
where their NIA (Greater Thames Marshes NIA) provided joint funding for the Essex pilot’s
‘test-offset’ (more information is provided in Volume 2: The Pilot Reports).
The interviews with the pilots reported that, in general, the lower than expected level of
projects emerging from the pilots limited the scope for joint working with LEPs, NIAs and LNPs.
Habitat banking
There were no instances of ‘habitat banking’ in the pilots. Doncaster considered pooling two
s.106 contributions, but this did not involve preparation of a site prior to determining planning
applications i.e. creating a habitat bank, and was not advanced by the end of the pilot
programme.
Most of the potential offset delivery projects that were identified in the pilots involved the
Environment Bank Ltd (EBL) via the Essex and CSWAPO pilots. In these instances EBL provided
a brokering role, linking up development payments with potential offset receptors. This was
done on a 1-to-1 basis. The only difference between this and a conventional approach to
compensation was securing a management plan for long term management based on a
measurable impact (informed by the metric).
Some of the potential barriers to habitat banking were reported to be:
11
All bar Essex have an LNP.
12
Coventry, Warwickshire and Solihull, North Devon, Doncaster and Essex have NIAs. Coventry, Warwickshire and
Solihull, is one of the locally determined NIAs.
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
The limit to the number of s.106s (six) that could be linked to a specific site.

The lack of certainty about the timing and exact contribution provided by any
specific application.

Developers wishing to be able to identify their contribution to a specific site –
‘compensation kudos’ (see the Thames Link Programme Complementary Project).

Within a habitat bank, providers would need to provide management plans that
were very flexible and largely blind, in that they would not know what size or nature
of impact they would need to provide for. One response to this was the production
of compartmentalised management plans where a general management plan for
an area could be adapted to make it consistent with the compensation
requirements for a specific development(s), whilst remaining consistent with a
larger scale ecological need.

The lack of demand for biodiversity offsetting provided limited opportunities to
explore habitat banking.
One of the main outcomes of the pilot programme in Greater Norwich was the creation of a
‘Connecting Nature Fund’. This arose from the pilot group’s desire for creating offset projects
that were strategic in size and location. The fund pools money from various sources, including
s.106 agreements, and targets it towards the identified ecological priorities.
From interviews with potential offset providers, there was a feeling that habitat banking may
be required as single offsets were unlikely to provide enough money to justify the transaction
costs. Providers and a pilot host reported that for a private land owner, providing an offset
which brought in less than £5,000 per annum (a total of £150,000 over 30 years without
adjusting for inflation) would not be worthwhile. Available evidence suggests average
compensation from an individual development is likely to be less, for example CSWAPO data
suggest an average agreed compensation figure of around £51,000 total (n=6) and the
average cost of off-site compensation in the cases explored in the supplementary research
was £95,438 (n=8).13
The metric
Defra developed a metric that could be used to quantify the impact of a development in
terms of ‘biodiversity units’. This was a key part of the pilot programme as quantifying the
impact of a development, and calculating any residual impact that might need to be
compensated for, is fundamental to biodiversity offsetting.
All of the pilots, with the exception of Greater Norwich who did not apply the metric to any
applications, used locally adapted versions of the metric within live planning applications.
The metric was used within the pilots as a biodiversity impact assessment tool to quantify the
total impact of a development whilst accounting for any on-site mitigation and
compensation.
Variations of the Defra metric were developed by some of the pilots, for example:

Complexity and automation – at the time of publication, the most recent version of
CSWAPO’s Excel spreadsheet metric (version 17) was highly automated and
supported by a detailed user guide; they also developed their own hedgerow
metric (see Volume 2: The Pilot Reports). In contrast, North Devon’s was closely tied
to the original Defra version.
This is based on an average of compensation cost data only (Appendix B of Defra (2014a)). Cost data which
included mitigation or landscaping costs were not included in this calculation
13
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
Distinctiveness – pilots adjusted some habitat distinctiveness values so that locally
scarce habitats considered more distinctive in their area were given a higher value
than in the Defra metric. CSWAPO increased the distinctiveness scale from a three
point to a five point scale to allow greater nuance.

Principles – South Devon sought to include some species considerations within the
metric so that habitats for greater horse shoe bat and cirl buntings were enhanced.
Other variations included different approaches to dealing with gardens (whether or
not they count as habitats), linear habitats and down-trading.
Box 6: Summary of the metric
The metric is a set of calculations based on three key features of the habitat to be lost:
A.
Area of habitat (hectares).
B.
Condition of the habitat (scores 1, 2, or 3).
C. Distinctiveness of the habitat (scores 1, 2, or 3).
Based on this information the total biodiversity units that are to be lost by the development can be
calculated (A x B x C= total biodiversity units). The total impact will take account of any on-site
mitigation and compensation.
Offset providers use the same system to calculate the number of biodiversity units they can provide,
taking into account three additional factors:

Risk associated with habitat restoration or recreation (scores 1, 2, or 3).

Time it will take to recreate or restore the habitats (look-up table for weighting factor).

Location of the offset (scores 1, 2, or 3).
A fuller description of the metric is available in the Green Paper (Defra, 2013b)
Process for using the metric
Participants in the pilots agreed that ideally the use of the metric should be introduced with
applicants as early as possible in the planning process - preferably at the pre-application
stage. The benefits for biodiversity and developers from doing this are demonstrated in the
Somerset Complementary Project, although extensive spatial biodiversity data are required
to enable such early use of the metric. Early engagement would facilitate the metric being
considered during any initial ecological surveys so that the results of the metric could be
incorporated into site layout and design, including on site habitat creation and
management.
When the metric was used differed depending on the systems that the pilots developed. The
system used in CSWAPO meant that potentially relevant applications were identified by the
LPA ecologists within the weekly lists provided by the planning officers. Initially LPA ecologists
populated the metric for these applications, but over time the applicant’s ecological
consultants were obliged to provide this, with the LPA ecologists reviewing the information.
In other pilot areas, the metric was applied on applications that were identified by the
planning officers of lower tier LPAs often via pre-application (example Doncaster cited a
figure of approximately 30% of applications being subject to pre-application discussions). The
officers would then consult with the pilot hosts via existing consultation processes and if
appropriate the metric would be applied e.g. in Doncaster, Nottinghamshire and East
Devon.
Ecological consultants also reported that for developments requiring Environmental Impact
Assessment (EIA), use of the metric was suggested in the scoping opinions provided by some
of the LPAs. In the other pilots, the metric was only used (by either ecological consultants or
LPA ecologists) on sites that were prioritised by the pilot hosts. These tended to be higher
impact applications. The Pilot Reports (Volume 2) include more detail on the pilots’ processes
for using the metric.
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Proactive versus reactive use of the metric
All of the pilots and many of the LPA ecologists recognised that ideally there should be a
proactive approach to identifying and assessing relevant planning applications at preapplication or submission stage. In all but CSWAPO, resources (staff and time) were
insufficient for this to happen. Instead they were reliant on others, generally officers in lower
tier authorities to identify and refer applications in which the use of the metric and
consideration of biodiversity offsetting might be appropriate. This process was consistent with
normal consultation, but it was essentially a reactive, pragmatic, and risk based approach
where only higher impact applications were considered. The pilot hosts and some LPA
ecologists had concerns that this approach meant that not all of the applications that were
resulting in net-loss were using the metric.
Through the use of these existing processes, the application of the metric, and approach to
biodiversity offsetting, was brought into the ‘day job’ of staff in most pilots.
Agreement and negotiation
Having applied the metric and understood the impact of the development, it was necessary
to identify and agree any on-site or off-site measures. Where the metric had been used there
was still a degree of negotiation: with the following questions needing to be discussed and
resolved:

Is there any residual biodiversity loss?

Is any residual biodiversity loss ‘significant’?

How can the loss be compensated?

What are the costs of any compensation?
What worked well?
Across all stakeholder groups there was a high level of support for the principle of using the
metric as a tool for quantifying biodiversity impacts. Most felt that it was a relatively simple,
easy to use tool that supported a greater understanding of the likely impact of a
development whilst also incentivising on-site mitigation and compensation. Specific benefits
included:

Visualising and quantifying biodiversity impact – The greatest benefit of using the
metric, reported across all of the stakeholder groups, was that it allowed the
impact of a development to be quantified. LPA ecologists, planning officers, NGOs
and consultant ecologists reported that visualising the impact increased the
likelihood of it being considered and addressed. The Doncaster, Thames Link
Programme and Atkins Complementary Projects also identified this benefit.

Increasing the transparency of mitigation and compensation – Across the
stakeholder groups metric users considered that the metric makes the discussion
and agreement of biodiversity impacts and related mitigation and compensation
more transparent as it set out explicitly what was being lost and what was being
replaced.

Providing a consistent but flexible framework – All metric users felt that the use of
the metric brought a greater degree of consistency to the consideration of
biodiversity impacts and possible mitigation / compensation. Metric users noted
that current practice for determining biodiversity impacts was ad-hoc, inconsistent
and reliant on the enthusiasm and expertise of the individuals involved. Pilots
reported that there was still scope for the use of expert knowledge and this meant,
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within the framework set by the metric that local contexts and priorities could be
accounted for.

The metric as an on-site mitigation tool – There were multiple examples of
applications where the metric had resulted in positive changes to the nature and
extent of on-site mitigation and compensation14. The metric quantified residual loss
accounting for on-site measures. On-site measures were considered to be generally
cheaper and simpler than off-site compensation so reducing the on-site impact
was an effective way to reduce the costs of compensation of any residual impact.
There were examples where applicants had changed the design of the scheme,
i.e. physical changes to the development, to avoid impacts on higher value
biodiversity features, but these were few in number and most changes resulting
from the use of the metric were to the nature and extent of on-site mitigation and
compensation.

Raising the profile of ‘low-value habitats’ – Most of the pilots, LPA ecologists, NGOs
and consultant ecologists felt that the metric was very effective in accounting for
the loss of low-value habitats – such as ruderal, semi-improved grassland and scrub.
It was reported that these, non-designated habitats, were often targeted for
development as they are rarely accounted for within planning policy. The metric
identifies these habitats as having some value which increased the likelihood of
them being considered within the application.

Training – There was a consensus that where pilots provided training or capacity
building it was very valuable for metric users. Interviews undertaken with metric
users after this training indicated they became more confident with the metric and
were able to provide the necessary information in a more efficient way.
What worked less well?
Some aspects of the mechanics and implementation of the metric were reported to have
worked less well. These included:
14

The learning curve – All of the metric users reported that it took time to understand
the mechanics and specifics of the metric, including the application of the
condition assessment methodology.

The metric as an additional process – All of the pilots recognised that elements of
the process of using the metric involved additional work – such as the pilots
developing and managing the metric and undertaking capacity building.
Ecological consultants also noted that the metric required habitat condition
information to be collected. This is not currently collected as a matter of course.

Additional costs – Although the metric was used in a number of applications which
would result in residual biodiversity loss, only a fraction of these resulted in any
funded off-site compensation. Developers were generally open to using the metric
on a voluntary basis but across the pilots were very reticent to provide additional
funding unless required to do so; as in the CSWAPO pilot.

Metric outputs – Although the quantification of biodiversity impact was broadly
viewed as positive, it was noted by non-ecological metric users that ‘biodiversity
For example case studies CSWAPO1, 5 and 7, Devon1 and 2 and Notts1.
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units’ was not a very intuitive output and that having populated the metric it was, in
some instances, hard to understand what action was required. Part of this related
to there being no information provided about likely costs or specific actions
needed; i.e. if the metric said that x biodiversity units needed to be compensated
for it was not clear how much this might cost or what habitats were required. This
frustrated metric users but it was a communication issue rather than a failing of the
metric, as compensation costs and exchange rules were informed by the metric
but agreed separately via negotiation.

Ecological omissions – A number of aspects of ecological systems or ecological
values were considered to be either missing or not addressed sufficiently by the
metric or related Defra guidance on biodiversity offsetting:

Connectivity / fragmentation – There was no consensus from metric users
whether the omission of these aspects of ecological systems should be
addressed via policy and ecological advice or whether it should be included
within the metric calculations.

Species and features – Around a quarter of metric users noted the absence of
species considerations and felt this should be addressed. The reason for this is
that, as noted by the Somerset Complementary Project, low value habitats can
be of high value for some species (e.g. some birds and bats) some of which
may not be covered by protected species requirements.

Accounting for mosaics – Mosaic habitats, (habitats with a range of vegetation
community types) could be accounted for if the area of the component
habitats was determined. The low resolution of most surveys meant that this was
not easily done. Metric users tended to identify a dominant habitat type and
classified the mosaic as that – this led to some disagreements between
ecological consultants and LPA ecologists.

Loss of function – Three of the pilots and LPA ecologists felt that the metric did
not account for the possible loss of ecological function resulting from the
development. For example, within a residential development hedgerows or
grassland might remain on-site but could lose their value for nesting birds due to
cat predation. The metric was not able to account for this.

Over-accounting – A few ecological consultants, one of the pilot hosts and the
developer representatives felt that in some instances the metric over-estimated the
importance of low-value habitats – in particular land used for arable cropping.

Lacks of subtlety – The numerical values and weightings of some components of
the metric were considered to be too crude in some instances. CSWAPO
developed a 1 – 5, rather than 1 – 3, scale for distinctiveness. Ecological consultants
and pilots reported that the spatial multipliers for offset sites (currently 1, 2 and 3)
were too strong, although it was conceded that these strong multipliers did
incentivise the use of strategic areas for offsets as identified in the pilot strategies.

Lack of guidance – Across the stakeholder groups, there was a view that insufficient
information or guidance was provided on condition assessment and restoration /
re-creation. Condition assessment is a core part of the metric and guidance on the
field assessment of condition was provided to the pilots in the form of the Farm
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Environment Plan (FEP) Handbook. The limitations of the FEP methodology were
recognised in the Defra guidance, where it was considered that in the absence of
a clear alternative it would be adequate for use in a pilot. It was clear from the
interviews that in practice this methodology was not viewed as fit for purpose, as
there were significant gaps concerning habitats and it was too focused on
agricultural environments.

Lack of evidence – There was a lack of evidence and guidance on timescales,
costs and the practicality of habitat restoration and re-creation. Existing technical
guidance (Defra, 2013a) was felt to be too vague (with very large ranges of
timescales) and with insufficient coverage of habitats.

Scope for manipulation – One of the pilot hosts and one LPA ecologist referred to
the metric being manipulated, for example the condition of habitats was
deliberately under-recorded to reduce their apparent value in order to reduce
costs for the developer. There was one recorded instance where this happened in
the pilots; the LPA had the original data so they were able to identify and correct
the calculation. It should be noted that most pilot hosts and LPA ecologists were
confident with the quality of the information they received, noting that within
current practice LPA ecologists rely on information provided by ecological
consultants.
The range of metric users’ opinions showed that there was some dissonance in their
expectations of the metric. Examples of this are presented in Table 5, for example, some users
wanted the metric to be simpler, but they also wanted it to account for other aspects of
ecological systems.
Table 5: Dissonance in users’ expectations for improvements to the metric
Metric users want the metric to be…
Simple
Flexible
Incentivising strategic offsets
Accounting for low value habitats
but also
Comprehensive
Consistent
Reducing offset costs
Not over-estimating low value habitats
Potential improvements
At the final evaluation workshop, held in May 2014, pilot hosts and Natural England advisers
identified a number of improvements that could be made to the metric, including
(presented ranked in order of priority by votes cast):
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Mandatory use of the metric.
Improve methodology and guidance on condition assessment.
Have a national metric with local variation (e.g. distinctiveness).
Increase the number of category distinctiveness scale from 1-3 to 1-5.
Use simplified version of the metric at pre-application.
Include non-regulatory species in metric when accounting for impact.
Improve guidance on the i) establishment, ii) restoration and iii) recreation of habitats.
Include ecological function and connectivity in the metric.
Better definition of irreplaceable habitats.
Revised hedgerow metric.
As noted in Table 5 there was limited consensus on the substance of such potential
improvements and a view that consultation / discussion, involving relevant professions, would
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be necessary before any improvements were made. At the same event participants noted
that one of the strengths of the current metric was its relative simplicity and that this should
be retained.
Transparency of the metric
The vast majority of the metric users felt that, compared to current practice, the metric was
more transparent. The only negative opinions about the transparency of the metric came
from developer representatives who felt that it was not clear how the costs were determined
(that was not a metric issue).
3.5 Legal and development planning
Box 7: Summary of legal and development planning findings

Pilot hosts had mixed views on whether existing national policy was sufficient to support the
requirement of no-net-loss of habitat from development, especially for ‘lower value habitats’. Their
definition and implementation of ‘significant harm as referred to by the NPPF was the key variation.

A number of emerging draft local development plans in the pilot areas include explicit reference
to biodiversity offsetting as a mechanism to achieve no-net-loss/net-gain in biodiversity, but due to
the timing of the pilots and the time required to produce plans few of these (with explicit reference
to biodiversity offsetting) have been adopted at the time of writing of this report.

Even where biodiversity offsetting is not explicitly referred to, most plans within the pilot areas
include policy requirements which reflect the NPPF. These include seeking a no-net-loss and/or netgain in biodiversity, requiring compensation for unavoidable loss, and enhancement of green
infrastructure networks and ecosystems.

Early engagement between applicants and planning authorities in the planning application
process was regarded by most participants as key to ensuring that the metric was used and where
appropriate biodiversity offsetting was considered as an option to compensate for unavoidable
losses. In most pilot areas a proactive approach to promoting the use of the metric and the
consideration of biodiversity offsetting was hindered by a lack of resources.

Consistent with current practice, section 106 legal agreements (s.106) were used to require off-site
compensation and long term management. Planning conditions were being used for on-site
enhancements. During the pilot programme no s.106 agreements were implemented, largely
because of the time taken to determine applications, agree s.106s and commence development.
This section focuses on the legal and development planning aspects of the pilots including
the role of national and local planning policy and regulations, any project specific legal
agreements and planning mechanisms.
National planning policy and biodiversity offsetting
In England’s plan-led system, applications for planning permission must be determined in
accordance with the local development plan, unless material considerations indicate
otherwise.
The National Planning Policy Framework (NPPF) is the key national planning policy document
for England and is a material consideration in determining planning applications. While it
does not refer explicitly to biodiversity ‘offsetting’, a number of paragraphs provide the
framework for operation of the mitigation hierarchy and the requirements that could enable
biodiversity offsetting.15
The most significant of these is paragraph 118, which specifically addresses the mitigation
hierarchy requiring that “When determining planning applications, local planning authorities
15
These include references to “moving from a net-loss of biodiversity to achieving net-gains for nature” (para 9), the
planning system “providing net-gains in biodiversity where possible” (para 109); requirement for a “strategic
approach in their Local Plans, planning positively for the creation, protection, enhancement and management of
networks of biodiversity and green infrastructure” (para 114); “promot[ing] the preservation, restoration and recreation of priority habitats, ecological networks” (para 117)
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should aim to conserve and enhance biodiversity by applying the following principles: if
significant harm resulting from a development cannot be avoided (through locating on an
alternative site with less harmful impacts), adequately mitigated, or, as a last resort,
compensated for, then planning permission should be refused”.
The National Planning Practice Guidance (NPPG) provides further explanation of how policy
should be applied. The NPPG makes specific reference to biodiversity offsetting as an option
for delivering compensation: “Where compensation is required a number of avenues have
been available. The applicant might offer a scheme tailored to the specific context, or
consider the potential for biodiversity offsetting with the local planning authority” (DCLG,
2013).
Local interpretation of national policy
The pilots relied on the NPPF’s references to no-net-loss and the implementation of the
mitigation hierarchy to push biodiversity offsetting. Based on their experience, the pilot hosts,
planning officers and LPA ecologists were divided on whether existing national policy was
sufficient to incentivise the use of the metric and of biodiversity compensation for nondesignated habitats.
Stakeholders from all but one of the pilots (CSWAPO) took the view that existing policy was
insufficient, and that planning policy would support the use of the metric and biodiversity
offsetting only in instances of ‘significant harm’ which was interpreted to mean harm to BAP
habitats or County Wildlife Sites. Pilot hosts felt that, under a voluntary system based on
existing planning policy, refusing an application on the grounds of failure to provide off-site
compensation for habitats on non-designated sites would be very difficult to justify in
planning terms, particularly given government aspirations around the need for development
to proceed.
The exception to this was the CSWAPO pilot. In this pilot, if the application of the metric
indicated that there was expected to be negative impact of more than one unit this was
considered significant (as a rule of thumb). Where ‘significant’ loss was identified, the pilot
required no-net-loss to be achieved by off-site compensation where on-site measures were
insufficient. In CSWAPO the pilot hosts, planning officers and LPA ecologists felt this was
warranted in planning terms. However, some agents (developer representatives) and
consultant ecologists felt that there was no clear planning rationale for these requirements. In
particular there was a concern that this was not a voluntary system as they could not optout. The pilot hosts countered that they were simply implementing existing planning policy
and that there was precedent as a Planning Inspector had supported their interpretation of
national policy and the use of biodiversity offsetting (see case study CSWAPO2).
Sufficiency of local policy
In all but one of the pilot areas, LPAs sought to include biodiversity offsetting within local
planning policy and processes. The Nottinghamshire pilot host felt that there was too much
uncertainty about future biodiversity offsetting policy and decided not to integrate it into
emerging Local Plans. Appendix 4 includes a review of adopted or emerging development
plans in the pilot areas with references to biodiversity offsetting or related policy.
By the end of the pilot programme, 18 draft Local Plans in the pilot areas, including adopted
plans and those at a relatively advanced (submission) stage, included explicit reference to
biodiversity offsetting in policy or supporting text (Table 6). Of these, only one recently
adopted Local Plan included a reference to biodiversity offsetting within policy (Solihull
Adopted Local Plan), with a further three recently adopted plans making reference in
supporting text (Dartmoor Development Management Development Plan Document (DPD),
Teignbridge Local Plan, and South Hams Development Policies DPD).
The lack of explicit reference in adopted plans may be due to timing, and the lengthy
process of plan preparation (through consultation stages to examination and adoption) and
the short time in which the concept of biodiversity offsetting has been trialled through the
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pilots. During this time few plans had been through the plan-making process to adoption (at
which point they have greatest weight in decision making).
Most of the Local Plans referred to have not yet been tested at Examination and so it is not
known whether they will be found sound and therefore if the policies and text relating to
biodiversity offsetting will be included within final adopted plans.
Table 6: Emerging plans in the pilot areas with explicit reference to biodiversity offsetting (at
the time of writing)
Emerging plans with reference to biodiversity
offsetting in policy








Rochford (Development Management DPD
Submission)
Uttlesford (Local Plan Pre-Submission)
Torbay (Local Plan Submission)
Devon
County
Council
(Waste
Plan
Submission)
Coventry (Core Strategy Submission)
North Warwickshire (Core Strategy Submission)
Nuneaton and Bedworth (Borough Plan
Preferred Options)
Norwich
(Local
Plan
Development
Management Policies Submission)
Emerging plans with explicit reference to
biodiversity offsetting in the supporting text to
policies









Doncaster (Sites and Policies DPD Submission)
Essex CC (Minerals Local Plan Pre Submission)
Castle Point (Local Plan Draft)
East Devon (Local Plan Submission)
Exeter (Draft Development Delivery DPD)
North Devon and Torridge (Draft Local Plan)
Stratford on Avon (draft Core Strategy)
Warwick (Local Plan Publication)
Norwich
(Local
Plan
Development
Management Submission)
Where reference to biodiversity offsetting is not explicitly included in adopted or emerging
Local Plans, most refer to relevant concepts that are in the NPPF. These include net-gain and
no-net-loss in biodiversity; compensation for unavoidable losses (that may be referred to
erroneously as ‘mitigation’); delivery of Biodiversity Action Plan targets; reference to
Biodiversity Opportunity Areas and delivery of green infrastructure and ecological networks.
Within a plan-led system, such requirements were considered by the pilot hosts to be
important to justify the use of the metric and biodiversity offsetting – where appropriate.
Participants in the pilots generally felt that the inclusion of biodiversity offsetting in policies
and development plan text would provide a basis for discussions with developers; including
at an early stage to ensure that the metric is applied and the option of biodiversity offsetting
is understood and planned for early on.
Validation checklists
In two authorities (CSWAPO and Essex16) the metric was included in validation checklists. The
pilot hosts considered this to be important as it meant applicants would be made aware of
and have to apply the metric at an early stage.
Delivery mechanisms
Most of the pilot hosts and LPA ecologists had experience of using conditions to on-site
secure mitigation and compensation, and s.106 agreements for off-site compensation
measures. Within the pilots, the use of conditions was consistent with current practice, with
conditions formulated to require the avoidance, restoration, creation, translocation and
management of habitats within the boundaries of the site.
S.106 legal agreements have been used to secure funding for off-site measures, with the
amount of funding for biodiversity informed by application of the metric combined with
negotiation between LPA ecologists and developers representatives (agents and ecological
consultants). Payment of funds required by s.106 agreements generally does not occur until
development commences and there is often a delay between permission being granted
16
South Devon indicated that they planned to include it if possible.
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and development commencing. This has resulted in there being no examples where the
s.106 money has been paid and used to date, due to the slow progress of applications within
the pilots.
In one pilot, the Wildlife Trust was anticipated to be the main provider, but costs associated
with preparing management plans and the risk of developers choosing not to use biodiversity
offsetting the Trust decided not to provide any offsets.
The LPA in this pilot used the metric to calculate impact and secured funding through s.106
agreements from two applications. These funds are to be used for habitat restoration and
management on the council’s own land. This model of the LPA securing compensation funds
via s.106 and then looking for schemes was common to all of the pilots and was considered
by interviewees to be a pragmatic solution given the lack of worked-up and accredited
offset schemes.
Although this approach was pragmatic, there were some identified risks:


The funds may not be sufficient to secure the necessary compensation – The funds
delivered via s.106 were based on estimates of how much it might cost to secure the
compensatory biodiversity units rather than a costed proposal for a specific offset
site. The s.106 agreements were also subject to negotiation between developers and
the planning authorities; this tended to reduce the amount of funding finally agreed.
The Essex and CSWAPO pilot hosts reported that the current state of understanding of
habitat restoration and re-creation costs was insufficient and it was possible that their
best-guesses were underestimates. This process either places delivery risks upon the
LPA / ultimate offset provider (who have committed to deliver x amount of units for
£y) and/or it reduces the likelihood of no-net-loss or net-gain because less biodiversity
enhancement than anticipated might result.
The offset is not developed in a timely or efficient manner – Interviewees with
experience of off-site compensation noted concerns with the capacity and
capability of LPAs to spend the s.106 funds. A number of examples emerged where
funding had not been spent for significant periods of time because LPA officers did
not have the time to develop management schemes. One example of this lag time
was the ‘test-offset’ project in Essex where there was a gap of 19 years between the
funding being received and spent. Interviewees also noted that developing
restoration schemes is rarely part of the role of LPA ecologists and they may not
necessarily have the experience and skills to do this. In addition, the payment of s.106
funds on commencement means that delivery of compensatory measures will only
occur after rather than before habitat loss has occurred.
This approach was very similar to current practice, and remains prevalent because of the
practical challenges of aligning a development with a specific offset. The practical
challenges include:


Speculative nature of management plans – There was no guarantee that the
development will commence once planning permission has been secured and
therefore it is not guaranteed that funding for the offset will be forthcoming. If a
specific management plan were linked to an application, the offset provider would
be obliged to hold that land (without funding) until the development commenced.
This could be years or not at all.
Absence of a functioning market of offset schemes – Few offset providers came
forward during the pilot programme and there is a resultant lack of offset sites on
which to spend s.106 funding. The lack of offset sites creates a difficulty of linking a
specific offset to a development. Identification of compensatory measures is more
opportunistic and occurs after the development has commenced, as is normal with
s.106 agreements. This was considered by a number of developer representatives
and pilot hosts to be the single biggest challenge to linking applications to specific
schemes. Interviewees suggested that a market, i.e. a large collection of prepared
management plans, was necessary. Such a market would provide a range of sites
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and options and help make costs known to applicants and LPA officers. As previously
noted, one key reason this market does not currently exist is provider reticence to
spend resource on speculative management plans and the lack of a clear
requirement for biodiversity offsetting to be considered and implemented within a
voluntary system. Within CSWAPO and Essex the EBL officers did use the Environment
Market Exchange17 to identify potential offset sites. Although the Exchange includes a
large number of registered sites for CSWAPO, Essex and non-pilot areas most of these
are ‘bronze’ sites - meaning that very little information has been provided. This is a
very low level of commitment from the offset providers and is, in effect, of very limited
utility on its own. Within CSWAPO and Essex the Exchange was considered a useful
starting point, but during the pilot programme it did not act as a functioning market
for offsets.
3.6 Costs
Box 8: Summary of cost findings

It was not possible to fully assess costs due to variation and gaps in cost recording.

Time and costs to develop the biodiversity offsetting strategy varied depending on its complexity.
Very simple, informal strategies only required a few days of time to be prepared whereas strategies
that were complex or part of wider planning processes used significantly more resources, up to
£13,000.

Despite inconsistencies across stakeholders, the general view was that biodiversity offsetting and
specifically the use of the metric has the potential to lead to a marginal reduction in time for
planning decisions, but there was an initial learning period during which it takes more time.

Compared to current practice, the use of the metric and biodiversity offsetting tended to lead to
increased biodiversity compensation requirements and costs.

In a voluntary system any costs will be subject to significant negotiation between applicants and
LPAs, with applicants refusing to meet costs and not pursuing biodiversity offsetting in many
instances.

Existing cost evidence was insufficient to allow for the accurate prediction of the costs of specific
offsets since site specific factors are significant.

Searching for appropriate offset sites can have significant costs within the early stages of market
maturity – these costs were sensitive to the exchange rules and spatial boundaries set for any
search.
This section explores time inputs and other expenditure of local authorities, developers, and
other stakeholders as appropriate. Where data allow, these time inputs and costs are
compared with current practice (including any efficiencies of the process).
Total estimated pilot costs
The overall costs of the pilots for the LPA pilot hosts, members of the pilot groups and Natural
England suggest that inputs to the pilot were extremely variable across the pilots.
Two staff in the Essex and the CSWAPO pilots were full time and funded by EBL; both of these
pilots also used LPA resources. Staff resources dedicated to biodiversity offsetting amongst
the other local authorities were much lower, and/or overlapped with similar duties. For
example, in Doncaster, it was estimated that over the course of the pilot the hosts spent a
maximum time of 500 hours / 70 days (with an approximate cost of £10,000). Most others
reported that they spent about ½ to 1 day per week on the biodiversity offsetting work (over
two years this comes to approximately 50 – 100 days). Inputs also varied greatly according to
requirements (especially after the initial setting up period).
The main cost elements identified for the pilots were:
1. Setting up pilot groups.
17
http://www.environmentbank.com/environmental-markets-exchange.php
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2. Development of biodiversity offsetting strategies.
3. Building capacity and awareness.
4. Individual offsets
a. Development side – use of the metric and negotiation.
b. Offset side – finding suitable offsets and developing management plans.
It should be noted that all pilots provided evidence on the first three of these cost elements,
while seven of the eight engaged within individual offsets (on the development side) and
only two proceeded to considering actual offsets.
Setting up pilot groups
The pilot hosts had to invest time and resources in forming and coordinating the pilot groups
and completing the EoI for being an offsetting pilot project. It was difficult to calculate this
time as activities were often relatively small and/or already part of existing duties (e.g.
relating to working within existing groups). Due to a lack of recorded information, it was not
possible to determine non-host costs associated with the establishment of the pilot groups.
Despite this lack of information it is apparent that the establishment of the groups and
submission of the EoIs took the hosting groups a substantial amount of time especially for
those pilots based on new groups. Essex County Council estimated at least 75 hours of time
by County Council Officers, plus about 100 hours of time by EBL in support of the EoI alone.
Doncaster County Council estimated 120 hours of time covering the development of the bid
and subsequent guidance, plus another 120 hours of time for local stakeholders. Others were
not able to estimate time inputs, but most indicated that it was weeks of work in total, whilst
Warwickshire Country Council stated that it was a substantial amount of effort with a cost in
the thousands.
With the limited comparable information on costs, it was not possible to draw reliable
conclusions on the costs of the different approaches to setting up the pilot groups. However,
the size of the group appeared to be an important factor in determining costs; the largest
group (Essex with 22 organisations) taking at least 175 hours to set up. Considerable time was
required to set up the pilot groups. This is unsurprising and can be seen in other recent
environmental partnership initiatives notably the Catchment Based Approach (Cascade,
2012) and NIAs (CEP, 2013). These are primarily one-off establishment costs.
Costs related to developing the biodiversity offsetting strategies
It proved difficult to quantify the costs accurately for developing the biodiversity offsetting
strategies as time inputs to the work were not clearly discernible or recorded and had to be
estimated by the pilots. These estimates provide only an indication of the order of magnitude
of such costs, rather than precise values, though clearly the development of the strategies
required considerable time and effort for all of the pilots and many of the Natural England
advisers. Table 7 shows there was significant variability in self-reported costs for strategy
development.
Table 7: Self-reported costs related to developing the biodiversity offsetting strategies
Costs related to developing the biodiversity
offsetting strategies
£13,000 for Coventry, Warwickshire and Solihull
(including setting up the pilot group)
£6,000 – 8,000 for East Devon
£5,000 – 8,000 for south Devon
4 weeks of officer time in Doncaster
10 days of officer time in Essex
£750-£1000 for Nottinghamshire
Most of the pilots were unable to estimate how much time was spent on developing the
strategies by non-host partners, one pilot estimated around £3,500 and another suggested
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‘only a couple of days’ across all members of the pilot groups.
Those pilots who developed detailed offsetting strategies tended to have higher selfreported costs. It also appears that the decision of most of the pilots to avoid formal decision
making processes avoided costs associated with public / stakeholder consultation and signoff by councillors.
Building capacity and awareness
The pilot hosts spent a great deal of time undertaking capacity building and awarenessraising within their pilot areas. For example, the Essex officer indicated they had set up and
attended over 75 events, meetings and discussions with LPA officers, potential offset
providers and developer representatives. The CSWAPO officer, with their LPA host, also
developed and undertook a significant amount of training on the use of the metric with
metric users. In total 115 attendees from 65 consultancies participated with these training
activities.
For most of the pilots, capacity building work was undertaken as part of their normal role and
it was not possible to identify specific resource use beyond the time spent setting up of the
pilot groups.
Natural England costs
The Natural England advisers were resourced to provide a maximum of 2.5 days per week
support to each of the pilots over the length of the pilot programme (two years). Only a small
fraction of this time was actually used.
Advisers said they had spent between two to ten full days providing support to the
development of the offsetting strategies, with most providing estimates of around five days.
This was the biggest single resource contribution by the advisers. The main reason for this
under-utilisation of resources was the general lack of projects emerging from the pilots
coupled with Natural England’s limited role.
Compensation costs and viability
Evidence from the pilot programme indicated that using the metric to quantify biodiversity
loss increased mitigation and compensation requirements and, therefore, related costs. This
led to either negotiation and/or a refusal by the developer to meet these costs. In a number
of the cases where the applicants agreed to meet the costs, issues emerged about the scale
of these costs and how they impacted on the viability of the application.
Developer representatives, LPA ecologists and planning officers referred to specific instances
where higher than expected costs for biodiversity (due to the use of the metric) meant that
other developer contributions (such as affordable housing, Sustainable Urban Drainage and
traffic infrastructure) had to be reduced. The pilot hosts and LPA ecologists noted that, in
effect, developers are willing to provide a certain amount of money and that the allocation
of this ‘pot’ was based on the decisions of the planning case officer, informed by other
officers such as the LPA ecologist. One developer representative in particular felt that the
increased costs for biodiversity were potentially very significant and that the current process
of introducing these costs during the planning process reduced the viability of the
development. The planning officers felt that, in comparison with the other developer
contributions and the total budget for the development, these costs tended to be quite
small. However, it was accepted that the earlier the costs were introduced the more able
the developers were to manage them.
Within CSWAPO, the financial sum and number of biodiversity units were both included within
the s.106 agreement and the applicant had the choice of paying the LPA or delivering an
approved offset scheme for the number of units. Within the pilot the funds were based on a
‘worst-case scenario’ where it was assumed that the offset site was in a non-strategic area
(as per the biodiversity offsetting strategy). This was done to reduce the risk of non-delivery,
but also to incentivise the developer to find their own scheme.
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One of the impacts of using the worst case scenario was that if the viability assessment and
planning contributions are assessed using a biodiversity offsetting sum, and a specific
scheme is then secured for a lower price (rather than paying this financial option to the LPA),
the remaining money is not reallocated back into the developer contributions ‘pot’. In effect
the LPA would lose out on developer contributions.
The pilot hosts hoped the costs of any biodiversity mitigation or compensation could be
factored into land acquisition costs as the system develops. Due to the relatively short
duration of the pilot programme this was not observed during the pilot phase. The other
option would be to factor any compensation costs into the viability assessment. This is not
straightforward as off-site compensation costs cannot be set until the mitigation hierarchy
has been followed. Within the pilot programme there was insufficient evidence about the
costs of offsets. Crucially, the pilot programme was also relatively new and some of the
applications that experienced this problem had undergone pre-application discussions and /
or been designed prior to the pilot programme. This meant it was not possible to introduce
these requirements at a sufficiently early stage for them to be built into viability ‘studies’.
These issues around viability only occurred in the CSWAPO pilot, which was semi-mandatory.
Within the voluntary pilots, developers were more able to negotiate down costs for off-site
compensation.
Costs related to offset sites
It was not possible to provide information on the actual costs of biodiversity offsetting under
any of the pilots.
CSWAPO prepared some estimates of the capital costs of habitat creation and restoration
and on-going management for their project planning (see Appendix 5). These suggest that
typical costs for habitat creation/ restoration and maintenance would range from £3,000 –
£18,000 per ha over 30 years (assuming 3.18% inflation rate18) depending on habitat type
(averaging over 30 years £13,000 per ha for grasslands, £10,000 for woodlands and £5,000 for
wetlands). Future costs depend greatly on the inflation rate over the period.
The pilot hosts noted that these estimates were subject to a number of limitations. Firstly, they
are based on agri-environment and BAP costs. Agri-environment payments to landowners
are based on income foregone calculations according to EU Common Agricultural Policy
rules, and should therefore be treated with caution when applied to offset cost estimates.
Most notably, agri-environment contracts are normally only for 10 years, and many
landowners may require greater incentives to enter into the longer-term agreements
required to secure offsets.
Secondly, costs will vary greatly depending on the total area created and/or managed, as
per hectare costs decrease considerably with increased area as a result of efficiency savings
(Armsworth et al., 2011). The CSWAPO pilot hosts and potential LPA providers feel that habitat
banks that pool offsets are likely to be much more-cost effective than single offsets.
The estimated offset costs do not include the costs of finding suitable offset sites (and
possible brokerage fees), site surveys and the production of management plans and legal
agreements for them. Typically the cost of site location and management planning would
be expected to be in the order of a few thousand pounds. Evidence from the Essex testoffset, suggested that a large amount of time and effort could be required to find
appropriate sites and develop management plans. In the case of the test-offset, 57 days of
staff time, with an approximate cost of £27,000, were required to find a suitable site (against
very tight search parameters) and develop the final management plan.
As the market for offsets matures, the time spent searching for suitable offset sites may
decrease. Within the pilots there are some indications this is already happening. In addition,
the exchange rules and spatial boundaries of any search will also affect the number of
potentially suitable sites and search times.
18
3.18% is selected because it was the average over the last 30 years.
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Streamlining
Opinions on whether the use of the metric, or use of biodiversity offsetting, helped to
streamline (i.e. simplifying the process and reduce the total resource use and time spend) the
development process varied. There was little evidence or consensus that the metric had
helped to speed up the application and decision making process, or that it had reduced
costs to applicants/developers and planning authorities.
When asked whether biodiversity offsetting was more efficient than current practice four of
the nine pilot hosts said it was, with one stating it was less efficient and one feeling it was as
efficient. Three others felt that they didn’t know. Of the Natural England advisers, one felt it
was more efficient, one that it was less efficient, one that it was as efficient and three did not
know.
Those who thought it was more efficient referred to the increased standardisation and
transparency under the programme, especially in relation to the metric outputs. This result
was consistent with responses elicited from pilot hosts when specifically talking about the
metric.
One pilot host pointed out that it was difficult to judge changes in efficiency because the
issues associated with biodiversity offsetting were variable and very context-specific (in
relation to the significance and complexity of impacts on biodiversity). The efficiency of the
process also varied according to developer attitudes and the engagement and enthusiasm
of others involved in the process.
The respondents who felt that the pilot scheme was less efficient than current practice
indicated that this was due to the additional work that was required to populate the metric
and to find offsets. This additional work included consultant ecologists, acting on behalf of
the applicant, undertaking habitat surveys and applying the metric calculation, followed by
checking the application of the metric. This involved supporting with evidence the
judgments made, particularly regarding condition of the habitats. This resulted in a marginal
increase in up-front costs to developers, over and above Phase 1 habitat surveys or
ecological impact assessments. Using the metric and requiring the offsetting of any residual
biodiversity loss almost certainly resulted in additional issues having to be considered by
those involved in the planning and permitting process.
Implementing an approach that was new and emerging increased the time and costs for all
parties. However, pilot leads reported that applying the metric was becoming quicker and
easier as experience grew, particularly with consultant ecologists gaining experience and
capability together with training being provided for planners and ecologists.
Participants felt that applying the metric may have had little impact on the time required to
determine applications. This was because in most cases there were many other issues that
needed to be addressed when preparing and determining planning applications, of which
biodiversity was one that was dealt with concurrently with other issues. Biodiversity (excluding
protected species and sites) is often one of a number of issues requiring resolution, and is
generally not the major factor in causing delays to or increasing costs of development
(Defra, 2012a). While developers are sensitive to any costs, experience from the pilots
suggested that the use of the metric had helped to resolve biodiversity issues and that that
applicants were reasonably content with its use.
Total costs
With the limited available data it was not possible to calculate the overall costs of the pilot
schemes or individual offset projects. Total costs would not be comparable and of limited
value due to the great variation in the approaches taken by the pilots. It is possible to
conclude that the development of the biodiversity offsetting pilots involved substantial costs,
especially for those that were ambitious and invested time in the development of their pilot
group, biodiversity offsetting strategies, awareness raising and capacity building. The two
pilots that progressed to identifying offset sites both had a full-time offset officer (supplied by
EBL), in addition to other host staff, which might suggest that such a level of staff investment is
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needed to implement schemes and achieve voluntary biodiversity offsetting in practice.
Some of the actions necessary to establish and operate biodiversity offsetting resulted in oneoff establishment costs, but others would be expected to be on-going dependent on
demand for offsets. Some actions that incur costs would be expected to occur in the
absence of biodiversity offsetting (e.g. ecological assessments for EIA and planning
applications) whilst others might be new (e.g. finding suitable offset locations and providers).
Additional costs and processes related to the metric are likely to be largely one-off, as the
metric becomes established into current processes and user capacity increases. Assuming
offsets are required for a larger number of applications than current compensation
arrangements, costs related to the offset are essentially new and additional.
3.7 Ecological implementation and monitoring
Box 9: Summary of ecological implementation and monitoring findings

Pilot hosts noted that in several cases use of the metric had resulted in expected gains for
biodiversity compared to current practice. Calculation of a biodiversity score made it easier for
LPAs to make the case for mitigation and compensation and to structure and present objective
arguments about biodiversity loss to developers.

Biodiversity offsetting and the application of the metric were considered useful by pilot hosts in
more clearly demonstrating the application of the mitigation hierarchy. Some concerns remained
about the potential for biodiversity offsetting to undermine the mitigation hierarchy but were not
viewed as substantial by the pilots.

In the absence of guidance on the definition of ‘in perpetuity’ for offset sites, pilots were working
with offset providers to prepare management plans for around 25-30 years.

The accreditation process for offset providers was considered to be straightforward by both offset
providers and Natural England, while the project viability assessment was seen as more
complicated, although in practice each was tested in only one case.
This section considers any ecological delivery and (non-cost) outcomes. It also presents
findings related to the accreditation and review of biodiversity offsetting projects by Natural
England
Improved biodiversity outcomes from the use of the metric
The pilot hosts noted that use of the metric in planning applications resulted in better
expected outcomes for biodiversity. This was particularly apparent in the CSWAPO pilot
where, due to the semi-mandatory nature of the pilot, it was more likely that residual losses
would be compensated. The metric calculations encouraged developers to consider
avoidance and mitigation measures, as far as possible, due to the potential costs of
offsetting residual losses. This meant that some developers reviewed their planning proposals
in light of the metric calculations. Consequently, there was improved application of the
mitigation hierarchy and demonstration of reduced total impact of development proposals.
LPAs ecologists and planning officers felt that the metric made it easier to communicate the
need for biodiversity outcomes within an application. There were several examples within the
CSWAPO and Essex pilot where use of the metric was anticipated to enable a substantial
gain for biodiversity19.
In particular, there was considerable value in the metric flagging the loss of high value but
non-designated habitats. The pilot hosts considered that under current practice it would
have been very difficult to secure compensation for non-designated, high value biodiversity
sites.
There were also examples of the metric leading to improvements to on-site biodiversity
19
For example case studies CSWAPO3, 7 and 8 and Essex3.
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management in CSWAPO, North Devon, Nottinghamshire and Doncaster20. These gains were
smaller in scale as there were fewer instances where substantial off-site compensation was
agreed. The metric was used to pitch the price of any offsets, but in every case the sum was
always negotiated down.
The pilot hosts and Natural England advisers were asked whether, in their opinion, they
thought biodiversity offsetting as experienced in the pilots would result in better, worse, or the
same biodiversity outcomes. Most of the pilot hosts (six out of nine) and Natural England
advisers (four out of seven) considered the biodiversity offsetting approach as tested in the
pilots to be likely to result in better outcomes for biodiversity compared to current practice.
Others (two pilot hosts and two advisers) felt that they had not had the opportunity to test
this sufficiently to form an opinion. One pilot host and one Natural England adviser felt the
outcomes were no different (although they had not had the opportunity to test the metric).
Consideration of ecosystem services
One of the aims of the North Devon pilot was to apply biodiversity offsetting in relation to
losses of ecosystem services. By the end of the pilot programme an approach was being
developed, but had not been implemented. Using land cover maps, the pilot was in the
process of assigning ecosystem services to different habitats (informed by the National
Ecosystem Assessment). The pilot anticipated that any losses of ecosystem services resulting
from development would be replaced on a like-for-like basis (e.g. for carbon sequestration or
flood attenuation).
Other pilot hosts mentioned that public access (which could be defined in terms of
ecosystem services) was a key factor when considering the loss of any green space. They felt
that in most instances the LPA had a requirement to deliver access to green space, and that
this could be addressed by existing policy, rather than by aligning this with biodiversity
offsetting in any way.
Local authority offset providers indicated that any offsets would be expected to incorporate
some recreation and amenity considerations. The potential NGO offset provider and most of
the pilot hosts felt that biodiversity was the priority and it was necessary to keep the system
simple and not complicate it by considering ecosystem services.
Assessment of biodiversity impacts
Monitoring biodiversity impacts
One of the unexpected benefits of the metric quantifying biodiversity impact was that it
provided useful monitoring data for biodiversity (habitat) losses across an authority during the
pilot programme. CSWAPO applied the metric to a large number of applications (63 by the
end of the pilot programme) and, at the same time, recorded the impact scores on each of
these applications. These data provided a summary of potential biodiversity (habitat) impact
during the pilot programme. Although there are caveats about the use of the data (which
are presented in Volume 2: The Pilot Reports), the monitoring undertaken by CSWAPO
demonstrated the potential for the metric to be used as a simple tool for monitoring
cumulative biodiversity losses arising from development across a local authority area.
Application of the mitigation hierarchy
Pilot hosts found using the metric helped to demonstrate the mitigation hierarchy more
clearly to developers. However, while pilot hosts and LPA ecologists were clear on the
application of the mitigation hierarchy, such that compensation should be taken after
appropriate avoidance and mitigation measures, they reported examples of this approach
not being followed in all applications.
There were two identified applications where stakeholders reported that a development was
20
For example case studies CSWAPO1, 5 and 7, Devon1 and 2 and Notts1.
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going ahead despite there being a substantial impact on biodiversity (case studies
CSWAPO1 and Essex2). In the first of these cases the site was allocated for development
within the Local Plan and the value of habitats on site was below that of County Wildlife Site
standard. In the other case the application went to appeal and it was argued that the offset
would result in net-gain.
In both cases the LPA ecologists objected to the applications on the grounds of significant
loss. But the decision was made respectively by Committee and on appeal to grant
permission subject to off-site compensation. Pilot hosts suggested that additional guidance
was required on the application of the mitigation hierarchy and the place of biodiversity
offsetting to avoid these situations occurring in future.
It was also reported that some developers were misinterpreting biodiversity offsetting and
viewing it as an excuse to remove habitats on site and then pay a financial sum for
compensation. Pilot hosts and LPA ecologists said that they had addressed this where it
occurred; however, they expressed concerns that in LPAs with limited or no ecological
expertise this issue was a real risk and that the mitigation hierarchy needed to be applied to
all applications.
On the basis of these discussions pilot hosts and Natural England advisers felt there was
potentially a rationale for the value of habitats (as defined in the metric) to be accounted
for within planning policy formation, particularly site allocation plans. This was something that
had been trialled in the Somerset Complementary Project and that had been explored in
the Essex pilot. The Essex hosts recognised there was potential value to this but, within the
pilot programme, the time and data requirements meant it had not been attempted.
Offset providers
Discussions were held with four organisations interested in providing offset sites on their land 21.
The primary reason these groups engaged with biodiversity offsetting was the opportunity to
secure additional funding.
Two of the potential providers were local authorities who felt that funds secured via
biodiversity offsetting would enable them to change management regimes and increase the
biodiversity value of land for which they were responsible (including amenity grassland, parks
and nature areas). Both of these interviewees referred to their on-going ‘change agendas’
due to cuts in local authority funding and the need to find new funding sources to maintain
and ideally improve existing management. In particular the interviewees hoped to improve
the biodiversity management of sites that were currently unmanaged. Both the interviewees
felt that any offset site would have to provide multiple benefits, including opportunities for
education, volunteering and recreation. This was felt to be necessary considering the wide
remit of their organisation and the need to demonstrate as much value for money as
possible.
One of the other potential providers was a nature NGO who hoped to improve existing
reserves or ideally to acquire new reserves. The NGO expressed a number of concerns
around biodiversity offsetting and in particular the need to ensure that offsets were not being
secured from developments that had very high impacts. They stated that they would only
offset impacts for certain applications (low impact and when all on-site opportunities had
been exhausted). They considered this to be necessary to ensure the coherence of the
mitigation hierarchy and the reputation of their work when commenting upon development
applications.
A commercial business working with landowners and farmers within the agricultural supply
chain had recently started developing a role brokering relationships between landowners
and EBL. Their view was that farmers and other land managers might be interested in using
less productive land as offset sites; assuming the economics worked out for the land
managers (Table 8).
21
This included one land agent, two local authority estate managers and the reserve manager for a nature NGO.
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Table 8: Opportunities and threats presented by biodiversity offsetting to potential offset
providers
Opportunities
 New and additional funding for improved biodiversity management
 Greater flexibility, specificity and lower administration costs than for example Heritage
funding, HLS / ELS funding or traditional s.106 (which often require the money to be
spent in a tighter spatial areas than those proposed within the pilots)
 Funding secured via biodiversity offsetting is not a subsidy
 Guarantee a long term income from unproductive land
Threats
 Signing up to a long term management plans with fixed costs might present risks over
time (opportunity cost)
 Time and effort required to develop management plans
 No guarantee that funding will be provided (as application may be refused or may
not commence post determination)
 Often required to develop management plans to short time scales
 Offsets with low annual turnover (less than £5,000 p/y) not felt to warrant transaction
costs for private landowners
 Private land owners lose long term flexibility to manage their land, particularly if there
is a risk that offset site becomes designated in the future
Long term management
The long term nature of offset projects distinguished them from other forms of habitat
management funding schemes. One of the local authority providers expressed a hope to
designate any offset sites as a Local Wildlife Site. They were also interested in working with
local communities to support the offset so that in 30 years’ time the site would be protected
by the community as well as by any designation it may have achieved.
The commercial business working with landowners and farmers also recognised that it was
important to think long term. For example when a farmer or land manager was considering
using their land for an offset they needed to be aware that at the end of the 30 years the
offset may have changed the nature of their land – i.e. it should now be of high biodiversity
value and have reduced their management options, effectively forever. Discussing these
issues upfront was felt to be imperative to ensure the land managers were aware of the
implications of becoming an offset provider. Despite these issues they were increasingly
confident that land managers would come forward if the demand for offsets was there.
Accreditation process
One of Natural England’s roles in the pilots was to provide support to the LPA on the
capability of offset providers, and the viability of the biodiversity offsetting management plan
that they may have submitted. This was to have been through the application of a trial
‘accreditation’ process, which would test the provider and project against a set of bestpractice questions, summarised as a recommendation to the LPA (broadly as ‘acceptable’,
‘needs more work’ or not acceptable’). Ultimately the decision was for the authority issuing
planning permission.
No explicit guidance was provided by Defra on the style or format of offset project
management plans as it was hoped that best practice would emerge from the pilots.
In practice, only one offset provider requested accreditation by Natural England, and only
one project management plan was submitted by them. In this instance, both the provider
and their project plan were ‘approved’. This provider (a nature NGO) had been involved in
discussions early on in the pilot application process about the possibility of acting as a
provider. The accreditation process involved completing an application proforma. The
information required included:

Experience of similar projects.
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
Governance arrangements.

Organisational structure.

Risk management.
June 2014
In the one accreditation during the pilot phase the organisation worked on numerous similar
projects and all information was readily available. Additional information was required for the
biodiversity offsetting management plan. The project viability assessment was found to be
more complicated than the provider accreditation process, although in part this was
because, in the absence of guidance from Defra on ‘in perpetuity’, it was necessary to
discuss and agree a period for the management plan (a 25 year plan was agreed).
In this instance Natural England reported that they spent approximately three days
completing the accreditation process. However, this had been the first time that the
assessment framework had been tested and involved substantial internal consultation.
Difficulties were encountered in that insufficient information was initially available to satisfy
the risk assessment and project management sections of the assessment. An audit trail was
produced to justify decision making and provide reassurance to the LPA who had requested
the provider be accredited. Confirmation of accreditation took about three weeks following
submission. The whole process was considered to be relatively simple (compared to HLS and
ELS).
Compared to HLS it was noted that few resources appear to be allocated to monitoring
outcomes of biodiversity offsetting. The intention is that with biodiversity offsetting, up front
checks were undertaken to ensure that the provider is capable and trustworthy. It was
considered by those involved that if biodiversity offsetting became mandatory a more formal
and robust accreditation process might be required. It was noted that Natural England’s role
was a temporary arrangement for the pilot programme and that under a fully functioning
scheme there would need to be different arrangements for approving offsets and providers.
Transparency of offset delivery
Most of the pilots were unable to test the transparency of offset delivery. Where this was
tested to some extent (CSWAPO and Essex) pilot hosts, LPA ecologists and potential offset
providers felt that the processes used within biodiversity offsetting were more transparent
than current practice as it set out (via management plans) what biodiversity was being lost
and how it was being compensated for. Despite these views the lack of delivered offsets
makes it difficult to evaluate these opinions and in particular whether, due to commercial
concerns, completed and costed management plans will be made publicly available.
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4. Analysis and Discussion
This section includes a cross-thematic and cross-pilot analysis including a discussion based on
the evaluation criteria.
4.1 Analysis results
Figure 3 summarises schematically the overall perceptions of stakeholders involved in the
pilot programme against four major aspects. It suggests that compared to current practice
biodiversity offsetting is generally perceived as being able to deliver potentially better
biodiversity outcomes, in a more transparent and marginally more streamlined way, but at
higher overall cost. Evidence from the evaluation suggests that current practice is not
meeting the targets of existing policy.
Less streamlined
More streamlined
Lower cost
Higher cost
More transparent
Less transparent
Better
biodiversity outcomes
Poorer
biodiversity outcomes
Key:
Current practice
Total range of opinion
Majority of opinion
Figure 3: Schematic representation of stakeholder perceptions on key aspects of voluntary
biodiversity as tested by the pilot programme
The rest of this section elaborates on this summary and pulls together learning points about
barriers to voluntary biodiversity offsetting as tested in the pilot programme and considers the
requirements for a biodiversity offsetting system, whether voluntary or mandatory – within the
scope of the evidence collected across the evaluation.
4.2 The consideration of biodiversity within a voluntary system
Mixed evidence on the mitigation hierarchy
The evidence relating to the application of the mitigation hierarchy is mixed. Evidence from
multiple examples suggests that using the metric reinforced the mitigation hierarchy through
two primary mechanisms; prioritising on-site measures, and providing greater clarity on
biodiversity impacts and how these are, or are not, addressed. There were also specific cases
where biodiversity offsetting was presented as a way of achieving no-net-loss in a way that
may be considered inconsistent with the mitigation hierarchy; which is defined in relevant
national policy.
Using the metric to clarify biodiversity impacts and related mitigation / compensation had a
number of benefits. The UK supplementary project looked at current practice and found that
current application of the mitigation hierarchy is often ‘fuzzy’ (Defra, 2014a): mitigation,
compensation and enhancement are often bundled together with no indication of which
habitats are being mitigated or compensated for, as illustrated in Figure 4. As a result, it is
unclear how the mitigation hierarchy has, or has not, been applied and also whether the
overall package of measures would address the impacts of the development.
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Figure 4: Mitigation hierarchy in practice: fuzzy boundaries. Taken from Defra (2014a)
The metric addresses this by quantifying: the baseline condition of a site; the impact of the
development; mitigation measures; enhancement measures; and, any residual impacts
(which may require off-site compensation). The result is greater clarity about the application
of the mitigation hierarchy. The metric is not the only mechanism for achieving this, for
example British Standard BS42020:2013 suggests that all ecological reports should include a
summary of net-losses and net-gain and provides a template to support this (BSI, 2013)22.
The pilot programme also identified examples where on-site measures had been improved
through the use of the metric. Most of the pilot hosts felt that biodiversity offsetting
strengthened the mitigation hierarchy, but there were some specific cases which indicated
that this did not always occur.
For example, it was noted by one of the pilot hosts and a small number of stakeholders who
engaged with specific applications that biodiversity offsetting provided a ‘validated process
for off-site compensation’. Their concern was that within specific applications, biodiversity
offsetting could undermine arguments about the primacy of avoidance or appropriate onsite enhancements as biodiversity offsetting was presented as an effective and easier option
for addressing biodiversity impacts.
Most of the pilot hosts felt that this was unlikely to be a problem, but case study Essex2
indicated that it could be. In this instance, the ecologist’s recommendation to refuse the
application on the grounds of biodiversity loss and insufficient on-site measures was overruled
because it was argued and the appeal Inspector agreed that the offset site would have
greater biodiversity value than the impact site and as such the development would not result
in significant biodiversity impacts.
It was also reported by two of the pilot hosts that developers had misunderstood biodiversity
offsetting and, initially, saw it as an opportunity to secure a development via payment
without the need to undertake any mitigation or on-site compensation.
LPA ecologists within the pilots were aware of these risks and they were clear that in
instances where permission was granted despite some residual loss, biodiversity offsetting
should be noted as a last resort within the planning decision. The LPA ecologists also felt that
the increased costs of off-site compensation and paragraph 118 of the NPPF meant there
remained effective deterrents to the mitigation hierarchy being undermined. One of the pilot
hosts noted that these sorts of examples exist within current practice and that in fact the use
of the metric increased the amount of compensation that was achieved in these instances.
Although some applications may see improvements to on-site measures there will be
instances where developments are approved because biodiversity offsetting ‘validates’ offsite compensation. The evidence from the pilots suggested that the metric will reinforce the
mitigation hierarchy in more instances than it is undermined, but it is not clear how this trend
Available from:
http://www.biodiversityplanningtoolkit.com/stylesheet.asp?file=281_summary_of_net_loss_and_gain_form
22
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will vary should biodiversity offsetting become more widespread.
The specific cases where these risks emerged were all subject to planning reasons supporting
the case for the development – either the site being allocated or the LPA failing to meet their
five year housing supply. In these instances it was very likely that permission would be
granted as LPA ecologists and planning officers had limited options to refuse development,
even where there were Local Wildlife Sites. In the absence of biodiversity offsetting
compensation only happens in relation to high biodiversity value sites (Defra, 2014a). Many
of the cases that came forward were Local Wildlife Sites suggesting that the threshold for
compensation may be lowered by biodiversity offsetting. However, this also raises a question
as to the degree of protection offered by Local Wildlife Site designation.
Provision of ecological expertise
The pilots were atypical in all having ecologists; approximately two thirds of LPAs do not have
in-house ecological expertise (Policy Exchange, 2012). In the absence of ecologists, planners,
or other LPA staff, are required to manage the application with support from consultant
ecologists. This includes determining any mitigation and compensation that may be required.
ALGE (2013) noted that planners and councillors have a limited understanding of the
mitigation hierarchy, so should biodiversity offsetting become more widespread there is a
greater likelihood that the mitigation hierarchy could be undermined. This emphasises the
importance of ensuring sufficient ecological expertise is available to local authorities if
biodiversity offsetting is to be delivered in accordance with the Defra principles.
Options for improving the enforcement of the mitigation hierarchy
As well as ensuring ecological expertise is provided within each LPA the pilots noted two
options for reducing the risks associated with the potential for undermining the mitigation
hierarchy.
The first of these was to use the metric when preparing local planning policy. Pilot hosts felt
that this would allow developers to better understand the biodiversity value of their sites and
prospective sites and could lead to development proposals avoiding areas of higher
biodiversity value due to the related higher costs. This approach has been undertaken within
Somerset (see Appendix 1), but attempts to test it within the pilots were suspended due to
lack of data and resources.
The second option, supported by pilot hosts and Natural England advisers, was to test
planning applications in terms of: ‘no alternative’, ‘mitigation applied’, and ‘compensation
as a last resort’. It was thought that such tests would provide assurances about the
application of the mitigation hierarchy. There is precedent for this; GHK (2013) noted that the
BBOP ‘Standard on Biodiversity Offsets’ highlights the role of ’Biodiversity Offset Management
Plans’ in documenting how the mitigation hierarchy has been applied23. Coupled with
evidence supplied by the metric this could demonstrate compliance with the mitigation
hierarchy. A similar exercise was undertaken in France when they set up their biodiversity
offsetting system24.
Managing multiple, related compensation requirements
The pilots identified managing multiple compensation processes as a challenge. For example
the South Devon pilot’s biodiversity offsetting strategy focused on improving conditions for
two protected species. Achieving this meant integrating existing and new processes –
including those relating to SSSIs, Habitat Regulations, existing compensation for species 25 and
biodiversity offsetting. The challenge within applications was delineating what was required
by the different compensation processes. This is important as biodiversity offsetting is not
23
Page (x) of Executive Summary (GHK, 2013).
24
European Commission (2014), p.164 of the appendices.
South Devon and Teignbridge Local Authority have an existing system for impacts on cirl bunting breeding
grounds where compensation of £62,000 is required for each hectare that is lost.
25
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appropriate for SSSIs or Habitat Regulation species and it is also necessary to prove that any
offset is additional to what would have happened anyway. As demonstrated in the case
study Devon4, the challenge was due to multiple, but non-aligned, processes in place to limit
biodiversity impacts. Should biodiversity offsetting become widespread it is likely this sort of
complex compensation context will occur again.
In this case the pilot hosts resolved the issue by using their biodiversity offsetting strategy to set
out the statutory requirements for various species and habitats and to specify how ‘habitat
offsetting’ should go beyond this by being designed to meet the needs of other affected
protected species. The time taken to achieve this ‘alignment’ was one reason South Devon
did not publish their strategy until autumn 2013.
Other applications with species managed this by separating the consideration of impacts on
habitats and species (see case studies CSWAPO3 and 5). Some integration did occur in a
few instances but this was limited to ensuring that on-site improvements accounted for
species interest where possible.
Ensuring the additionality of any offsets
The principle of additionality – that any off-site habitat enhancements would not have
happened anyway – is central to ensuring no-net-loss within biodiversity offsetting. Across the
pilots, demonstrating additionality was undertaken by EBL (in Essex and CSWAPO) or the LPA
ecologists. Experience suggested that this was a relatively simple bureaucratic exercise
whereby at an early stage of developing the management plan, a short investigation was
made into what, if any, existing management was being undertaken. Within the pilots, few
projects came forward so checking on additionality was not considered a problem, but
some challenges did emerge.
One challenge relates to where land is owned, but not necessarily managed by, a local
authority; in this instance would management related to an offset be considered additional?
Within one of the pilots, a search for potential offset sites showed that in a given year
authorities may only manage a certain percentage of the sites for which they are responsible
(10% a year in this instance). The pilots and key stakeholders discussed whether these sites
could be included as potential offset sites or whether the principle of additionality precluded
this. Ultimately it was felt that these sites could be included, the reason being that there were
no formal requirements or obligations to manage this land for biodiversity.
These types of cases are likely to be quite common. Potential local authority offset providers
reported that on-going budget cuts threaten their ability to manage existing sites and they
are keen to secure biodiversity offsetting, where appropriate, to make up for this shortfall.
The need to ensure additionality also limited the potential supply of offset sites as potential
providers had concerns about the opportunity costs of signing their land exclusively to an
offset agreement. As the costs of offsets become more apparent it is possible that concerns
related to opportunity cost will clarify and land managers will be able to make more
informed decisions about what funding options are suitable for them.
Averted risk offsets
Two of the pilots suggested that in instances where the condition of a site was expected to
degrade and there was no planned management it might it might be appropriate to
consider whether maintaining the condition might be an exception to the principle to
additionality. Their view was that these sites would be low risk options for restoration.
International experience suggests that so called ‘averted risk offsets’ might be appropriate
for sites where continued degradation is felt to be likely 26. Biodiversity offsetting, as tested
within the pilots, would not allow this to be classed as an offset and none of the pilots took
forward any sites of this type. It is possible that concerns about degradation, budget cuts
26
GHK (2013 ) defines averted risk offsets as “biodiversity offset interventions which prevent future risks of harm to
biodiversity from occurring” (p.xvii)
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and the challenges of identifying suitable sites may cause some LPAs to explore this.
Pragmatic perpetuity
A number of the biodiversity offsetting strategies made reference to creating or restoring
habitat that lasts in perpetuity, but in practice those few management plans emerging from
the pilot programme were for 25-30 years. It is questionable whether this meets an objective
definition of perpetuity.
The majority of the pilots and Natural England advisers reflected that agreeing a sufficiently
robust but achievable definition of perpetuity was a significant challenge. Although all
recognised the importance of ensuring impacts were compensated for over a sufficiently
long time period, potential offset providers and developers were reticent about entering into
open ended or very long term management agreements. This was particularly so given that
the offsets were emerging from a two year pilot project with a policy framework that was felt
to be unclear.
The length of the management plans was a pragmatic response based partly on a need to
reduce total costs given the reluctance of developers to engage with the pilots. The fate of
those sites at the end of the 25-30 year management plan cannot be tested. It is impossible
to know whether they might acquire some sort of designation; what level of protection, if
any, they may acquire or whether they will be legitimate sites for development in the future
unless owned by a dedicated land owner. The experience set out in the case study Essex2
suggests that current practice means that off-site compensation has little, if any, protection
and that there is significant potential to improve this. Conservation covenants are one
option, but the policy is still to be determined.
Compensation consistency
Even with the more pragmatic definition of perpetuity for off-site compensation there is a
significant discrepancy between the standards for on-site measures and any offsets. Drayson
and Thompson (2013) showed that on-site measures are often poorly set out, rarely enforced
and management is required for relatively short time periods. The metric can improve on-site
measures, but in the absence of improved enforcement and target setting it is possible any
gains will be on paper. It may be necessary to consider bringing some of the quality
assurance processes used for offsets to on-site measures in order to bolster the mitigation
hierarchy overall.
4.3 Costs and efficiency of biodiversity offsetting
There were two key aspects to voluntary biodiversity offsetting as tested in the pilots: the use
of the metric and off-site compensation. The pilots found that the costs and efficiency of
these two aspects differed - this is explored within this sub-section.
Simplicity and streamlining
The statement that it would take ‘20 minutes’ to populate the metric was found to be
apocryphal (EAC, 2013). The metric relies on Phase 1 habitat surveys, which are currently
required, with an additional condition assessment. Ecological consultants that had used the
metric noted that although it was relatively simple to use, it did involve some additional work
translating the results of the survey into the metric.
Current practice relies on negotiations relating to biodiversity impacts. Interviewees felt these
were often subjective and reliant upon the strength of argument and feeling of individuals.
Most metric users felt that the metric made these discussions simpler by providing a consistent
framework around which all parties could engage. This benefit was noted in all the pilots who
used the metric, its impact was largely marginal because related costs were minor, and
there was no evidence that determination periods were being reduced by more efficient
negotiation. In most instances, other factors were more significant determinants of the time
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taken to arrive at a decision.
Some pilots also refined the Defra metric. This complicated the process of negotiating and
agreeing biodiversity impacts in specific applications as metric scores changed over time.
Costs to developers
All the pilots who used the metric provided evidence suggesting that compared to current
practice total costs for biodiversity offsetting were higher. This was because the scale of
compensation required to match residual impacts was significantly higher when the metric
was used compared to current practice. This is partly as the metric accounts for delivery risks
and time delays and partly as current practice is poorly applied. In most instances either the
impact of these costs was reduced through negotiations, or the developer chose not to use
biodiversity offsetting.
The increase in total costs resulting from the use of the metric is consistent with predictions in
Defra (2009) where it was suggested that there are “hidden costs” to development and that
biodiversity offsetting would highlight and capture these. The evidence from the pilots
supports this as, according to the applications which applied the metric, most developments
are likely to result in net-loss unless they provide off-site compensation. Current compensation
practice does not make this point with the clarity or confidence that the metric provides.
Research into the pattern of biodiversity compensation costs across the planning system
(Defra, 2011b; 2012b; 2014a and Policy Exchange, 2012) suggests that current practice
secures funded off-site compensation very rarely and that this tends to occur for applications
with impact on high value sites (county value or higher). The experience of the pilot
programme supports this broad finding.
The EMTF (2012) and others predicted the increase in total costs, but suggested that the
increase would be ‘offset’ by the efficiency and streamlining improvements of biodiversity
offsetting. The evidence from the pilots suggests that although there are marginal
improvements to the process of agreeing compensation, developing and finalising off-site
compensation was not simple. In fact stakeholders felt it was creating additional processes
and requirements making the system more complex and more costly (although not
substantially when compared to other costs).
It is possible that the lack of process benefits observed within the pilot programme is the result
of the relative immaturity of the offset market and the lack of experience of those involved
and that therefore these challenges might abate over time. The trend across the pilots, in
particular CSWAPO, was for continuing and accelerating improvements in efficiency as
understanding and experience developed. Within the pilot programme there was insufficient
experience of offset delivery to determine what benefits, if any, can be delivered.
4.4 National and local planning policy
Planning policy and compensation for residual loss
The strength with which ‘significant harm’ (as set out in the NPPF) was interpreted was central
to the extent to which biodiversity offsetting was required within the pilots. Assuming that, as
with the pilots, most LPAs will interpret this as the loss of higher value habitats, it will be for
Local Plans to incentivise biodiversity offsetting in any future system. Where plans are
including biodiversity offsetting or other related concepts (see Appendix 4) there is the
possibility that planning policy as it stands would support the wider use of biodiversity
offsetting. In the absence of changes to national planning policy, the development of local
policy with regard to no-net-loss and ’significance’ is likely to be key in shaping the potential
future implementation of any form of biodiversity offsetting.
It was noted by the pilot hosts of CSWAPO and Essex that relying on interpretation of national
policy and the development of local policy to support voluntary biodiversity offsetting may
lead to inconsistent take up of ‘locally determined mandatory biodiversity offsetting’. Their
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view was that this situation would risk missing out on the benefits of a consistently applied
national system.
Local priorities within a national framework
All of the pilot hosts appreciated the opportunity to develop the pilot as they, and their
stakeholders, saw fit. This meant allowing for local variation in terms of governance
arrangements and strategy development.
There was no clear lesson from the pilots on what geographical scale (i.e. county, district or
metropolitan) is most appropriate for the management of biodiversity offsetting.
One key local priority that emerged was for offset sites to be located as close as possible to
the impact, with a number of pilots indicating a desire for offset sites to be in the same LPA as
the impact.
Within the biodiversity offsetting strategies this is expressed as a preference (see Essex and
Doncaster for example) which is incentivised by the use of a spatial multiplier with the metric
– i.e. fewer biodiversity units are required if the offset site is situated in the areas identified by
the pilots. From discussions with pilots and LPA officers it appears that some LPAs have
indicated that they will not support biodiversity offsetting if it results in the loss of biodiversity or
developer contributions from their LPA. This could happen in instances where there is
asymmetry of supply and demand for offset sites within specific LPA boundaries. This is an
important issue; Rushcliffe and Southend LPAs identified this as one of the reasons they did
not join the pilot programme.
Reducing the search area in such a way reduces the potential number of sites which have
appropriate ecology. The result is a reduction in the potential size of the market for offsets
and therefore potentially higher transaction and offset costs. On the other hand, LPAs have
to balance the needs of their constituents for other local open space benefits, such as
amenity and recreation.
The test-offset in Essex took longer to finalise than anticipated because of the challenge of
finding a site that met the practical, political and ecological requirements. This experience
was echoed in other instances in Essex as well as CSWAPO. Needing to meet all three
requirements substantially reduced the potential number of appropriate sites, as summarised
in Figure 5.
Figure 5: Emerging criteria used by the pilots for offset site selection
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The need to meet these three criteria also restricts the potential for market forces to reduce
total costs for offsets as suggested in other research (EMTF, 2012; GHK, 2011). Supplementary
research undertaken as part of this evaluation indicated that the political restriction of offset
markets was common to the German system with most offsets being provided within very
local areas and by local authorities (Defra, 2014b). As a result there was little evidence of
market forces at play in the German biodiversity offsetting system.
Despite these concerns, it is apparent from the pilots that local provision of offsets sites will be
preferred in any future biodiversity offsetting system. This is based on community (local
political) preference and is a pragmatic response to local constituency concerns rather than
necessarily having strong ecological basis. It is an indication of the value of other ecosystem
services provided by green space to the local community in addition to biodiversity.
Contribution to ecological networks
Where projects have emerged, the strategies shaped the search for potential offset sites.
From the limited information available, it appears that any offsets would potentially have
contributed to ecological networks such as NIAs and local biodiversity opportunity mapping.
The pilots referred to the bigger, better, more connected concept across the pilot
programme and within their strategies (Defra, 2011b). Some pilots felt that the pilots’ main
impact, in the absence of a significant number of projects, was to provide a forum to
elaborate and expand upon their thinking in this area.
Community involvement
At the strategic level the pilots did not engage with communities, with the exception of
CSWAPO whose strategy was subject to public consultation as part of their GI strategy
process. The pilots felt this was proportionate for a voluntary pilot as the time and resource
requirements for any effective community consultation were estimated to be significant and
not feasible within the capacities of the pilots. Pilots were also not clear what the objectives
of strategic engagement with communities might be in a time-limited pilot.
Within specific applications there was limited evidence of any community involvement
beyond existing options to respond to planning applications. There were some instances
where community interests were being considered within the criteria and searches for
potential offset sites. For example the test-offset in Essex worked with a local biodiversity
community group to identify possible sites. Potential offset providers also referred to the
importance of delivering community benefits, such as access and recreation, in any offset
delivery sites. Experience from Essex and North Devon suggests that the most appropriate
entry point for community involvement is the development of principles or criteria for offset
site selection, i.e. during the development of biodiversity offsetting strategies.
LPAs, and planning committees in particular, are likely to value amenity of green space
highly and feel that communities should have a role in deciding where offset sites should go.
Notwithstanding this four of the pilots referred to the importance of ensuring that biodiversity
retained primacy over any ‘cultural ecosystem service’ considerations especially as
increased access might negatively impact on biodiversity outcomes.
4.5 Future biodiversity offsetting system
Certain pre-requisites for biodiversity offsetting emerged from the pilots; these increased the
likelihood of offset projects being developed, and indicate the features required for a
national system of biodiversity offsetting, whether it be voluntary or mandatory. These are
summarised in Figure 6.
LPAs need access to ecological advice. The effective and efficient use of the metric and the
development of appropriate off-site compensation depend on a high level of ecological
expertise. This will help reduce both the likelihood of some of the risks highlighted in relation to
the mitigation hierarchy and the possibility of missing some of the potential benefits.
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Figure 6: Pre-requisites for a biodiversity offsetting system (from pilots’ experience)
Interviewees felt that Natural England would need to provide additional resource and that
ideally this capacity would be able to engage with biodiversity offsetting in general, rather
than only where biodiversity offsetting affects existing (statutory) policy priorities.
All of the pilots felt that within the pilot programme the balance of local flexibility and
national consistency as set though the metric / guidance on biodiversity offsetting strategies
worked well. This meant that authorities could play to their particular strengths and
weaknesses.
Mandatory biodiversity offsetting
The pilots and Natural England advisers were asked to reflect on their experiences and to
consider the implications of a mandatory system. A mandatory system could take many
forms, and while it might address some of the deficiencies identified in a voluntary system, it is
as likely to throw up additional issues not identified or considered in this evaluation, which
was of a voluntary system.
All of the pilot hosts and Natural England advisers felt a mandatory system would be more
likely to lead to no-net-loss being achieved. The hosts felt current practice did not address
residual biodiversity loss and that using the metric would be likely to result in positive benefits,
with biodiversity gains likely to exceed those delivered within the short term of the pilot
programme.
Implications
All of the pilot hosts and Natural England advisers cautioned that, to be effectively
managed, a mandatory system would require substantially more resources; for example a
dedicated resource within LPAs to focus on biodiversity offsetting. Such a role might include
strategy preparation, promotion, identification of providers, and implementation of an
advocacy role to secure the necessary mechanisms for offset provision.
Natural England and pilot hosts noted that a mandatory offsetting system would require a
greater input from Natural England (although this would depend on the role defined for
Natural England). As Natural England currently deals with high risk cases affecting
designated sites, which are not appropriate for biodiversity offsetting, another role would be
required to support a mandatory system that took account of lower risk sites. A summary of
the potential roles and responsibilities identified is presented in Appendix 6.
Pilot hosts and Natural England advisers noted that in a mandatory system all LPAs would
need in-house ecologists to secure the process (or District Authorities would need to have
resources to buy in more ecological time) and that this could be achieved through service
level agreements. Access to ecological expertise was viewed by respondents as the primary
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determinant of effective biodiversity offsetting and this was considered to be especially true
for any mandatory system. New expertise would also be required, particularly in
understanding habitat condition and how to develop and accredit restoration and recreation schemes.
One pilot host felt that the voluntary approach to biodiversity offsetting actually resulted in
more work for LPAs as dealing with biodiversity offsetting became case specific, rather than
a consistent approach being applied for all applicants. The pilot hosts and Natural England
advisers had mixed opinions on potential efficiency gains, with some hoping the process
would improve over time and others cautioning that any biodiversity offsetting system would
be complicated and that there would remain significant challenges.
It was also considered important that an effective national monitoring scheme was
developed to check implementation of the offset including the efficacy of on-site mitigation.
4.6 Barriers to voluntary biodiversity offsetting
Experience from the pilots indicates that a voluntary system will deliver few instances of
biodiversity offsetting unless LPAs take a strong interpretation of national planning policy. The
evaluation sought to understand the emerging barriers to voluntary biodiversity offsetting.
Every ‘barrier’ identified during the interviews was mapped27 by the project team to
understand the potential interactions and relative importance of the barriers and how these
emerging issues related to the evaluation’s objectives. The results of the mapping exercise
can be seen in Figure 7, and the barriers are further discussed in this section. Barriers in bold
text reflect broadly the key barriers identified in the mapping exercise, structured by the
numbered clusters of interactions (1-4) that emerged in Figure 7.
1. Increased costs to developers and historical failure to achieve no-net-loss
Use of the metric in the pilots has tended to show a higher level of biodiversity impact from
development than current practice. This was seen across the pilots but also within research
that applied the metric retrospectively (Defra (2012b) and within the Atkins and Doncaster
Complementary Projects. The implication of this historical under-accounting for biodiversity
impacts was that the use of the metric gave a more complete view of the requirements, and
thereby the costs, of biodiversity mitigation and compensation in most instances, when
compared to conventional practice. When faced with increased upfront costs, which were
in many cases subject to significant uncertainty, most applicants chose not to pursue
biodiversity offsetting. This is possible within a voluntary system. Where the use of the metric
and off-site compensation was undertaken there was still significant negotiation around the
extent of the off-site compensation required. This was partially based on concerns around
viability and other priorities for s.106 funding such as education or affordable housing.
The use of the metric and its information requirements were viewed as an additional process
even in instances where additional mitigation and/or compensation (and costs) were not
required. The pilots were keen to use the metric and require compensation for residual
impacts, but in most instances existing national planning policy was considered insufficient to
require biodiversity compensation for the loss of lower value habitats and it was felt to be
disproportionate to refuse applications which were causing the loss of lower value habitats.
Cases which arose in most of the pilots reflected this trend, and biodiversity offsetting tended
to be applied to planning applications that impacted designated sites. Interviewees also
cited the on-going political imperative for ‘sustainable development’ and in particular
housing, which meant that LPAs and officers were under pressure to facilitate development.
27
Using VenSim under licence
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Natural England's
risk-based policy
Metric too
simple
Inadequacy of the FEP
handbook for condition
assessment
Lack of integration of the pilots
and with other natural
environment initiatives
Lack of capacity and buy-in for
biodiversity offsetting from NGOs
and environmental stakeholders
Lack of clarity / evidence
around difficulty and timing of
restoration / recreation
Practical, ecological and political
limitations reducing potential
amount of offset sites
4
Lack of LPA
resource
Ongoing changes to
planning system
3
Lack of clarity / evidence
around the costs of offset
sites
Immaturity of
offset market
Metric requiring
additional processes
Lack of capacity and buy-in
for biodiversity offsetting from
planners
Lack of status and
profile of the pilots
Lack of policy support for
biodiversity offsetting at local
plan level
Challenges of linking specific
developments to specific offset
schemes prior to commencement
2
Gaps and limits in
ecological data
Lack of support for
biodiversity offsetting within
the NPPF
The lack of worked through
real life examples of offset
delivery
Inexperience of
ecological
consultancies
Difficulty of linking a specific
offset scheme to a
development
Figure 7: Mapping of barriers to voluntary biodiversity offsetting
60
Biodiversity offsetting
regarded as an additional
requirement
Need for upfront costs
from offset providers
Higher costs to
developers
1
Other priorities and
requirements for
planning-gain
Historical underpayment
for biodiversity impacts
Biodiversity offsetting
seen as a nice to have
Uncertainty over future
biodiversity offsetting policy and
the pilots themselves
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2. Lack of policy support in local planning policy
Linked to (1), local planning policy reflected the insufficiency of national planning policy to
require biodiversity compensation and the uncertainty over national biodiversity offsetting
policy, with few Local Plans containing a specific biodiversity offsetting policy. More robust or
clearer national planning policy in this area was seen by the pilots as being needed to
bolster LPAs’ position in negotiating with developers over the use of biodiversity offsetting.
3. Immaturity of biodiversity offsetting and lack of offset sites
The pilots identified ‘teething problems’ which were felt to be primarily relevant to the early
stages of introducing biodiversity offsetting. These problems generally relate to a lack of
capacity, experience and expertise in biodiversity offsetting.
For example, most consultant ecologists (and LPA ecologists) were not familiar with the
mechanics or requirements of the metric and as a result there was a learning curve for those
involved. This was relevant to the additional information requirements (for example habitat
condition assessments are required for the metric but not normally included within habitat
surveys) and dealing with specific issues as they emerged (such as whether gardens could
be included as mitigation; what distinctiveness scores are appropriate for locally important
habitats etc.). These issues were new to all of those involved and it took time and resources
to address them. This learning curve led to concerns from developers in particular that
biodiversity offsetting was creating additional processes and costs, as in (1).
There was an insufficiently developed market for offsets – i.e. there were no ‘off the shelf’
costs and accredited offset providers and offset sites for developers to pick from. Linking
developments and offset schemes was therefore made more difficult. This meant that there
was a lack of evidence for the costs of habitat restoration and re-creation so that the costs
for offsets had to be developed on a case by case basis.
The lack of a market meant that substantial amounts of time had to be spent searching for
possible offset sites, which diverted available resources. Most potential offset providers were
reticent to develop management plans where there was no guarantee that they would be
delivered. Providers were also concerned that even if the offset was required there were
often significant time lags between permission and commencement, during which the
providers would have to hold their sites in abeyance, with a potential opportunity cost.
Developers were not willing to commit to offsetting delivery in the absence of clear costs or,
for example, if their development did not go ahead or circumstances changed. This
‘chicken-and-egg’ issue was significant in the pilots. Providers also wanted to see ‘proof of
concept’, or worked up examples which set out in detail the costs, legal agreements and
accreditation processes for offset sites. This was felt to be important in part to enable them to
compare potential revenues from biodiversity offsetting against other options such as HLS or
productive farming. These detailed examples did not emerge during the pilot programme.
4. Lack of capacity/resources and buy-in among key stakeholders and LPAs
There was a substantial amount of concern about biodiversity offsetting as a concept in
particular from nature NGOs. These groups were expected to come forward as potential
offset providers, but they proved to be reticent to proffer their sites or to support the use of
biodiversity offsetting within specific projects. A related issue was Natural England’s ‘riskbased approach’ (i.e. prioritisation of applications that impact on designated sites) and their
policy of not promoting biodiversity offsetting within specific applications.
Both pilot hosts and Natural England advisers noted difficulties in getting a sufficient breadth
and depth of understanding and support for biodiversity offsetting within the participating
LPAs. In some instances, there was a feeling that support for biodiversity offsetting was limited
to the pilot hosts and a small number of individuals. Planning officers and LPA ecologists were
not sufficiently aware or incentivised to require the use of the metric and there was
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insufficient understanding of the metric. Thus, the resource pressures on LPAs and lack of
support for biodiversity offsetting meant that testing a voluntary system was not a priority. This
was exacerbated by the short term status of the pilots and uncertainty over the future of
biodiversity offsetting. The consequences were that developers and providers were reluctant
to sign up to long term agreements, and that policy planners had to be persuaded to
include biodiversity offsetting in emerging strategic plans.
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5. Conclusions
This section presents an assessment against the evaluation objectives, the conclusions and
suggested next steps.
5.1 Summary assessment against evaluation objectives
Evidence from the pilot programme suggests that whilst biodiversity offsetting has the
potential to deliver improvements in biodiversity outcomes it will require additional resources
and ecological expertise in local authorities to deliver it, and will increase costs overall for
developers. It is likely that it would, at best, deliver only marginal benefits in terms of
streamlining the planning process for agreeing compensation for biodiversity loss.
5.2 Assessment of the evaluation objectives
The evaluation had two objectives, to provide an assessment against whether biodiversity
offsetting can:
A. Help to use resources more effectively to deliver greater benefits for biodiversity.
B. Streamline the process of agreeing compensation for biodiversity loss as required
by planning policy, in a cost effective way.
Within the voluntary pilot programme the evidence suggested that the process of agreeing
compensation for biodiversity loss is likely to be marginally streamlined. The market for offsets
was immature and this led to some additional processes and complexity. In addition, the
evaluation and supplementary research indicated that non-statutory biodiversity is a
marginal element in most planning applications. Any benefits for biodiversity and
development that might be achieved through streamlining compensation arrangements will
have marginal impact on the overall time scales and decision-making processes for planning
permission, since many factors other than biodiversity influence the time scale for decisions.
It is likely that, compared to current practice, biodiversity offsetting could deliver potentially
greater benefits for biodiversity, assuming ecological expertise is provided within LPAs. Where
planning policy is in place and implemented, the use of the metric was valuable in
supporting the mitigation hierarchy and supported on-site measures as well as securing
additional resources for off-site compensation. It was found that the metric improved the
implementation of no-net-loss policy. Despite this, there were signs that biodiversity offsetting
may also undermine the mitigation hierarchy in some cases.
Figure 8: Identified cost elements and comparative scale
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By addressing some of the failures in current practice, overall costs are likely to be higher
under a biodiversity offsetting regime. Evidence from the pilots suggests that these increased
costs are likely to outweigh any marginal cost benefits that might occur from any speeding
up of biodiversity compensation arrangements. Increased costs accrue from the cost
elements presented in Figure 88.
The evaluation identified barriers (Section 4.6) to voluntary biodiversity offsetting. Based on
the experience of the pilots, a voluntary system would be likely to focus on a relatively small
number of higher impact developments.
The metric was found to be an effective, efficient and transparent tool to quantify and
communicate the impact of a development on habitats. Evidence also suggested that in
most instances the use of the metric, informed by ecological expertise, tended to support
the application of the mitigation hierarchy. However, within the pilot programme there were
some applications where biodiversity offsetting was presented as a validated route for
compensation and this may have undermined the hierarchy.
Based on the experience of the pilots, developers can refuse to meet the increased
biodiversity compensation requirements identified by the metric (due to the increased cost)
unless required to by an interpretation of national planning policy and/or the inclusion of
biodiversity offsetting, no-net-loss or the use of the metric into local policy. Biodiversity
offsetting appears to lower the threshold of biodiversity loss at which compensation becomes
negotiable, so that the focus for compensation may shift towards lower level, non-statutory
sites.
The application of the metric, and other findings of the evaluation, highlights the current and
on-going failure of planning applications to support net-gain and to halt biodiversity loss (as
targeted in England’s Biodiversity Strategy). The interpretation and implementation of current
policy within the planning system needs to be improved if these aims are to be met.
5.3 Limitations to the conclusions
The pilots were atypical in that the authorities and organisations involved volunteered to
participate in the pilot programme; they had access to ecological expertise and exhibited a
high level of enthusiasm for exploring biodiversity offsetting. This should be remembered
when attempting to extrapolate or scale up findings from the pilot programme to any form
of national system. For example at present approximately only a third of LPAs across England
have access to a local authority ecologist. Evidence from the pilots suggests that ecological
expertise is likely to be critical to the implementation of any biodiversity offsetting scheme
(voluntary or mandatory).
The level of biodiversity offsetting activity within the pilots was lower than expected so some
aspects of biodiversity offsetting remain untested and considerable evidence gaps remain,
particularly regarding long term impacts. The use of the metric and the governance and
strategy arrangements were reasonably well tested, but there was a general lack of
experience and evidence related to offset delivery and management, although some
evidence began to emerge towards the end of the pilot programme.
5.3 Suggested next steps
Discussions with the pilots and others who engaged with the pilot programme through
interviews and workshops identified the following suggested options to improve the process
and efficacy of biodiversity compensation:
1. The use of a Defra habitat metric could be made mandatory within planning
applications to support the implementation and monitoring of current biodiversity
policy.
2. Defra and Natural England could consider making improvements to the metric based
on the evidence from the pilot programme.
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3. Defra and Natural England could produce updated technical guidance on
biodiversity offsetting including:
a. A minimum definition of ‘in perpetuity’.
b. An updated list of habitats that are defined as ‘irreplaceable’ (i.e. not subject
to biodiversity offsetting).
c. Improved guidance on the mitigation hierarchy and a definition of
compensation as a last resort.
d. Improved evidence and guidance on habitat restoration difficulty and time to
target condition including the identification of key determinants (such as type
of management / characteristics of the site) to achieving target condition.
4. LPAs could continue to develop local policy for no-net-loss and compensation for
residual loss, reflecting existing national planning policy.
5. If, in addition to the metric, a mandatory biodiversity offsetting system were to be
introduced, a transition period would be needed to allow the market for offsets and
delivery, accreditation and monitoring mechanisms to develop. In the view of the
authors this transition ought to be at least one year.
6. Natural England, Defra and NERC could review and prioritise emerging evidence
needs based on the experiences of the pilots.
7. A targeted evaluation of a number of the pilots’ projects that were close to
completion at the end of the pilot programme could be undertaken to maximise
learning from the pilots, particularly around offset delivery.
8. A scoping study could be undertaken on the feasibility of LPAs undertaking habitat
assessments within local planning policy, in particular within site allocation plans.
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6. References
Armsworth, P., Cantú-Salazar, L., Parnell, M., Davies, Z. G. and Stoneman, R. (2011)
Management costs for small protected areas and economies of scale in habitat
conservation. Biological Conservation, No 144, pp423-429.
ALGE (2013) Ecological capacity and competence in English planning authorities: What is
needed to deliver statutory obligations for biodiversity?
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CEP (2013) Monitoring and Evaluation of Nature Improvement Areas: Year 1 (2012-13)
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Defra (2009) Scoping study for the design and use of biodiversity offsets in an English Context
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pleted=0&ProjectID=17509
Defra (2011c) The Guiding Principles we have used in our approach to biodiversity offsetting
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0714offsetting-guiding-principles.pdf
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pleted=0&ProjectID=17831
Defra (2013a) Biodiversity Offsetting - Guidance and information on biodiversity offsetting for
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Defra (2013b) ‘Biodiversity Offsetting in England’ [Online] Available from:
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Defra (2014a) Indicative Costs of Current Compensation Arrangements for Biodiversity Loss:
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Defra (2014b) A review of recent biodiversity offsetting practice in Germany [Online]
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pleted=0&ProjectID=18229
Drayson and Thompson (2013) Ecological Mitigation Measures In English Environmental
Impact Assessments. Journal Of Environmental Management. 15 (119) p.103-110
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from: http://ec.europa.eu/environment/nature/biodiversity/nnl/pdf/Policy%20Options.pdf
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7. Bibliography
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8. Appendices
Appendix 1 – Complementary projects
See separate document – “Appendix 1 – Complementary projects.pdf”
Appendix 2 – Collated evaluation questions
See separate document – “Appendix 2 – Evaluation questions.pdf”
Appendix 3 – Summary of evidence
See separate document – “Appendix 3 – Summary of evidence.pdf”
Appendix 4 – Review of pilot Local Planning Authority (LPA)
development plans
See separate document – “Appendix 4 – Review of LPA development plans and
policies.pdf”
Appendix 5 – Offset costs
See separate document – “Appendix 5 – Offset costs.pdf”
Appendix 6 – Roles and responsibilities
See separate document – “Appendix 6 – Roles and responsibilities.pdf”
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