Your Guide to Biodiversity Units

What are Biodiversity Units?

In simple terms, a biodiversity unit is a measure of natural habitat that is used to assess biodiversity net gain (BNG) commitments. When you destroy natural habitats, you lose Biodiversity Units, and when you create natural habitats you create Biodiversity Units. The number you create is always the difference between what you destroyed, a negative number, and what you created, a positive number. These net Biodiversity Units can be bought and sold, if they are legally registered.

Biodiversity Units exist because, from 2024, developers in England must ensure their projects deliver a BNG of 10%. That is, their project must result in more or better-quality natural habitat than existed before the development.

One way to meet this obligation, albeit with lengthy legal liabilities, is to enhance the natural habitat that already exists on the site. Where this isn't possible, the developer can instead purchase Biodiversity Units.

They're not buying the land itself. Nor are they obliged to maintain it. (That’s the job of the business creating and selling the Biodiversity Unit.) But they are putting money into preserving and enhancing our natural environment, by ensuring habitats are protected for the future.

How Biodiversity Units work?

Biodiversity Units are a tradeable commodity. They're created by one business and bought by another. It's possible to buy and sell fractions of a unit.

A Biodiversity Unit is typically set up by a landowner or leaseholder. They identify an area of land with the potential to create one or more Biodiversity Units. They'll usually work with an ecologist who helps identify what needs to be done in order to create a habitat that qualifies as a unit. The value of the land, in terms of units, is calculated using the statutory biodiversity metric.

Once the Biodiversity Unit is created and formally registered, it can be sold on the open market. Only registered units count towards your BNG, so it’s essential that when you buy units, you do so from a reputable source who will only list and sell to you registered units. For example, BNGx, the world's first fully digital marketplace for BNG units, only lists fully registered, compliant Biodiversity Units.

Unlike with on-site enhancements, which carry a 30-year legal obligation to the developer, there is no ongoing obligation on the buyer to manage the natural habitat in a Biodiversity Units bought on the market. That's the responsibility of the landowner or leaseholder who created the Biodiversity Unit, and is handled according to a plan set up by them with the government as part of establishing the Biodiversity Unit. This offloads the liability for maintaining the biodiversity gains from the developer, to the creator of the Biodiversity Unit.

All Biodiversity Units that are allocated as off-site gains to development are recorded on a public register.

How to create Biodiversity Units

Biodiversity Units begin with the current state of the land. This could be meadows, woodland, or even a disused carpark. It includes land that's being farmed.

To create a Biodiversity Unit, whatever is currently on the land must be enhanced or altered to improve biodiversity. For example, the ecological quality of grassland may be improved by reintroducing native species, or a disused carpark taken up and re-wilded to become shrubland.  

The number of Biodiversity Units produced by a piece of land, both before and after any such intervention, is influenced by a number of factors. These are:

• Habitat size - how large is it?
• Type - what kind of habitat is it?
• Condition - how well is it functioning?
• Distinctiveness - how does the habitat rank in terms of ecological significance?
• Location - is it in an area prioritised for habitat creation or enhancements?

The number of Biodiversity Units created is the difference between how many were on the land before the intervention, and how many were on the land after the intervention. This difference, or net gain, is what can be sold as off-site Biodiversity Units to developers.

Work will need to be done to ensure the new habitat meets the standards required by the statutory biodiversity metric, the tool used to assess ecological value. Typically, the metric is used by an ecologist, as they have the skills needed to provide the relevant information.

There are three general types of Biodiversity Unit that can be created: area units, hedgerow units, and watercourse units. Within each type, there are as many as 150 sub-types, called “specific habitats”. Different specific habitats can attract significantly different prices per unit.

In addition to the practical steps needed to create a habitat, a number of legal steps must also be taken. These include:

• Prove title to the land, or the right as a leaseholder to create Biodiversity Units.
• Set up a legal agreement that secures the land for at least 30 years.
• Create a habitat management and monitoring plan.

Creating Biodiversity Units involves working with the relevant local authority to get the appropriate planning permission.

When and how to buy Biodiversity Units

Biodiversity Units are designed to be purchased by developers. They're used to meet the developer's 10% BNG requirement.

Different options for achieving 10% BNG

Some of that requirement can be fulfilled as part of the development itself. Natural habitats in place before the development occurs can be enhanced as part of the site's plan. It’s not enough to simply protect or leave what is there already: the 10% BNG requirement insists there must be a measurable increase in biodiversity of 10%.

When planning to achieve the 10% BNG target, developers should consider their options following the biodiversity net gain hierarchy, which starts with enhancing and restoring biodiversity on-site.

Where it's not realistically possible to deliver the required BNG on-site, for example due to lack of space or the impracticality of long-term maintenance, developers can achieve their BNG target by making off-site gains. This can be on their own land outside the location of the development (though this will still carry the 30-year legal obligation), or they can buy Biodiversity Units on the market.

When to buy Biodiversity Units

Developers should have a clear route mapped out for achieving their BNG target before applying for planning permission. The units don't need to be purchased at that point, but the plan needs to indicate what off-site units would be required, and it can be a good idea to show that you have thought about how you would go about purchasing those units if the plan is approved..

Work on the development can't start until the biodiversity gain plan has been approved by the local planning authority and any off-site units required by the plan have been purchased and allocated.

Prices, payment terms and other contract details are worked out between the seller of the Biodiversity Units and the developer. This can be an expensive legal exercise, and a benefit for buyers and sellers of using end-to-end exchanges is that the standardised, fair and balanced legal documentation of the exchange can be used, avoiding further legal costs.

Developments that are exempt from BNG requirements

Some developments are not required to meet the 10% BNG target. These include:

• Planning applications submitted before 12 February 2024.
• Small domestic developments, like extensions or loft conversions.
• Small self-build and custom-build developments.

There are other potential exemptions, such as making a variation to a previously agreed planning permission. Developers should always take advice on whether a project is exempt. 

Use our BNG Exemption Checker to find out if an application is exempt from BNG.

Don't confuse Biodiversity Credits with Biodiversity Units

On the face of it, Biodiversity Credits can look similar to Biodiversity Units. Both can be used by developers to meet their BNG goal.

However, Biodiversity Credits are only to be used as a last resort, when it's not possible to buy units that meet the biodiversity requirement of a site. Credits are intended as a short-term measure and are likely to be phased out by the government as the market in Biodiversity Units becomes more established. Credits are bought directly from the government and, unlike units, cannot be traded in any way.

How Joe's Blooms helps you with Biodiversity Units

Because we're committed to protecting biodiversity, and big believers in the mitigation hierarchy, we want to support developers in finding the best option for achieving their BNG goals.

We recommend that, wherever possible, developments avoid or minimise their impact on existing natural ecosystems and priority habitats. We're also keen that developers should have the option to use Biodiversity Units rather than resort to Biodiversity Credits.

To help with this we provide a variety of BNG tools. There are:

• BNG exemption checker - does BNG apply to a specific development?
• BNG tool - providing end-to-end compliance for small sites

Using our tools helps you take positive steps towards achieving your BNG objectives in a way that helps with the long-term sustainability of species-rich and resilient ecosystems.

Biodiversity Unit Q&A

How much does a Biodiversity Unit cost?

As it's a market, prices reflect supply and demand, as well as the nature and location of the units. The average gross price is around £30,000 per unit, but the net price can be up to twice this, depending on factors such as the Spatial Risk Modifier. However, many small developments will only require some fraction of a unit - and in some cases, very small fractions - so don’t be put off by the per-unit price. To put this in context, a one-unit equivalent of government Biodiversity Credits starts at a minimum of £84,000 and goes up to a whopping £1.3m! So Biodiversity Units are cheap by comparison.

What’s the difference between Biodiversity Credits and Biodiversity Units?

Biodiversity Credits are a tool of last resort for achieving BNG requirements. The Government hopes to phase these out once a market in Biodiversity Units has developed. Credits are non-transferable and non-refundable.

What's the right time to buy Biodiversity Units?

Before any development work can take place, the Biodiversity Units required by the development’s Biodiversity Gain Plan must be purchased and allocated. The Biodiversity Gain Plan is submitted as part of the planning process, and identifies any need for off-site Biodiversity Units. Once the plan has been agreed, the units must be purchased and allocated before work begins. 

Who is responsible for the 30-year management of a Biodiversity Unit?

The landowner, or leaseholder of the land, on which an off-site Biodiversity Unit is created is legally responsible for ensuring the natural habitat remains viable for at least 30 years. When a developer buys a Biodiversity Unit, they are paying the owner or leaseholder to take on that legal responsibility, and are insulated from any failure of the unit. By contrast, if the Biodiversity Unit is produced on-site or off-site by the developer, the liability remains with them.

Is it possible to farm on land registered as part of a Biodiversity Unit?

Yes, arable and livestock farming are permitted, but only where approved as part of the Biodiversity Units’  habitat management plan. This helps to ensure the use of farming methods that complement the maintenance of the natural environment. The creation of natural habitats and farming are not mutually exclusive.

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