HS2 and the environment - Environmental Audit Committee Contents

3  Biodiversity offsetting

The offsetting metric

23. The Environmental Statement contains a detailed metric to "provide a calculation showing what the project has achieved in working towards the goal of seeking no net loss in biodiversity".[50] The metric is based on, but differs from, the methodology defined by Defra in its Biodiversity Offsetting Green Paper. The HS2 Environmental Statement describes this as the "best available basis" to robustly assess biodiversity gains and losses.[51] It states that the Defra metric has been adjusted for use on HS2 "to address feedback that has arisen from use of the methodology within the [Defra] pilot areas, and to ensure that it is suitable for use in support of a landscape-scale project".[52]

24. The Woodland Trust considered it "completely inappropriate to depart from Defra's position, and we are concerned that this will not take account of the advice embedded within Defra's pilots provided by Natural England". They told us that "For HS2 to come up with a metric in advance of all the detailed consultation ... is a little premature".[53] Our Defra witness acknowledged that "the two [metrics] are not perfectly aligned", but that HS2 had "taken the essential parts" of the Defra scheme.[54] The Department of Transport told us that the proposed metric had been developed in consultation with Defra and Natural England,[55] and Natural England told us that "we have certainly been sighted on the changes to metrics".[56]

25. The Biodiversity Offsetting Green Paper was clear that Defra's proposed metric was intended to be suitable for any project, stating that "any offsetting system in England would be underpinned by a standard metric".[57] However, Defra's own guidance for developers using biodiversity offsetting makes it clear that offsetting is designed for dealing with low level biodiversity loss, not in relation to protected sites or species.[58] Sara Eppel of Defra told us that the metric had needed to be amended for use on HS2 because of "the size of HS2".[59] Dave Buttery of the Department of Transport told us

    What we are trying to do is sensibly build on what Defra already has to make sure that we are getting the full ambit of a project, a very long, linear project where you have much more scope for things like [habitat] connectivity than you do if you are dealing with a small individual project.[60]

26. We recently received the Government's Response[61] to our report on Defra's proposal for Biodiversity Offsetting, which accepted our main recommendation not to finalise any offsetting scheme until the pilots had been completed and evaluated.[62] Defra's Sara Eppel acknowledged in evidence to this inquiry that their metric might be further developed, "depending on what comes out of the pilots."[63] She could not, however, speculate whether the HS2 metric might also be revised to take account of the results of Defra's pilots.[64]

27. The HS2 metric assesses the biodiversity value of 'habitat parcels' affected by the proposed route using three factors—'distinctiveness', 'condition' and 'the position in the ecological network'. An area of affected land would be rated under each of these factors, with the results multiplied together to create a 'biodiversity units' score. Replacement (offsetting) habitats are also scored under these three factors, but with additional factors applied to take account of the time taken for new habitats to become established and for the difficulty or risk involved in providing the offset (Figure 1).

28. A Technical Note in the Environmental Statement sets out a detailed description of the HS2 metric, highlighting particular changes from the Defra version. These adjustments (shown in Figure 1 below) included[65]:

i)  adding an additional 'very high' weighting, under habitat distinctiveness (box A in Figure 1), for existing habitats to take account of those "habitats of principal importance … which cannot be adequately re-created if lost";

ii)  ensuring that all existing habitats rated as 'low' 'distinctiveness' automatically score 'poor' condition (box B in Figure 1), recognising that "condition has negligible effect on the overall value of those habitats which are intrinsically of low distinctiveness"; and

iii)  incorporating additional weightings, for both lost and gained habitats, to reflect links to ecological networks (box C in Figure 1) and recognising "the landscape-scale of the project and its impacts".Figure 1: Offsetting metrics for habitats lost (left-hand side) and habitats gained (right-hand side)

Source: Environmental Audit Committee from Volume V of Ecology Technical Note[66]

29. The detailed descriptions of how the metric will operate also include important stipulations for distinctiveness and condition:

a)  Unavoidable losses of 'very high' distinctiveness habitats will be compensated through the provision of larger areas of 'high' distinctiveness habitat.[67] For 'high' distinctiveness habitats, the offset will usually be like for like, i.e. aiming to create or restore the same type of habitat.[68] For 'medium' distinctiveness habitats, the offset will largely be made up of habitat from the same distinctiveness band or higher; that is habitat from the 'medium' or 'high' distinctiveness band). 'Low' distinctiveness habitats will be 'traded up', and be largely made up of habitat from the medium or high distinctiveness band[69] (box A in Figure 1).

b)  The target condition that can be predicted for the creation of high distinctiveness habitats is a maximum of 'moderate'.[70] However, it also states "where habitat restoration or enhancement is proposed then a habitat condition of 'high' can be targeted for habitats of 'high', 'moderate' or 'low' distinctiveness".[71] The assumption that "all habitats that are to be created for the primary purpose of ecological mitigation will aim to achieve the maximum target condition available (i.e. a score of 3 for habitats of moderate distinctiveness and 2 for habitats of high distinctiveness)." Replacement habitats will therefore not be provided if they would score as being in 'poor' condition[72] (box B in Figure 1).

30. In our report on biodiversity offsetting, we recommended:

    If biodiversity offsetting is introduced, its metric for calculating environmental losses and gains must reflect the full complexity of habitats, including particular species, local habitat significance, ecosystem services provided and 'ecosystem network' connectivity.[73]

The proposed HS2 metric includes a multiplier for assessing the connectivity of the ecosystem (box C in Figure 1), but does not explicitly include any consideration of species within the metric. RSPB believed that "the [HS2] Technical Note should acknowledge the known weaknesses in the Defra offsetting metrics in dealing with impacts on species in general and specialist species in particular", and concluded that the metric therefore "under-estimated the impacts on species of conservation concern".[74]

31. Rob Cooke of Natural England thought that it was difficult to judge whether the weightings attached to the different factors were correct.[75] The CLA were concerned that the HS2 metric might result in a larger area of land being required for compensation than under the Defra scheme.[76] Environment Bank, on the other hand, believed that the metric would lead to "deliberate or otherwise under-valuation of existing habitats" and "...over-valuation of proposed habitat mitigation".[77] They criticised the assumptions made in the HS2 metric where habitats had not been surveyed, which suggested that only habitats managed for conservation purposes could be scored as in 'good' condition:

    Classifying all remaining [unsurveyed existing] habitat as 'moderate' 'condition' is not following the precautionary principle, which would suggest a 'good' 'condition' score for habitats [instead].[78]

Environment Bank also questioned the implicit assumption in the proposed HS2 metric about the potential achievable 'condition' of new (offset) habitats, which did not appear to follow the precautionary principle:

    Should grassland be recreated on previous arable land, it is doubtful without a robust management plan that it will attain high distinctiveness or good condition. If a woodland or pond is created for landscape/drainage purposes there is no information to support its good management and again it may not attain high distinctiveness or good condition. A precautionary principle would be not to allocate any [offset] habitats as good condition at this early planning stage.[79]

32. The Environmental Statement identifies a need for the "beneficial effect" of offsetting to compensate for

    the "adverse effect" on "habitat types which are considered irreplaceable (e.g. ancient woodland)... In this instance the 'beneficial' effect will be included to demonstrate the positive value of the proposed compensation, while acknowledging that the new habitat cannot replace ancient woodland."[80]

But a number of our witnesses believed that ancient woodland should not be included in the offsetting metric at all. The Ecology Technical Group recommended that such "irreplaceable habitats … are considered separately",[81] as did the Woodland Trust[82] and Buckinghamshire Council.[83] RSPB believed that

    no matter what multiplier is applied in the case of irreplaceable habitats, new habitat creation cannot overcome our basic inability to compensate for the loss of such habitats. Such net losses should be clearly acknowledged, not concealed by false accounting.[84]

33. In our report on Biodiversity Offsetting, we recommended that "for developments not of national significance, offsetting would not be appropriate where environmental loss is irreplaceable within a reasonable timeframe, such as with ancient woodlands."[85] We recognised that nationally important infrastructure projects, such as HS2, might be unable to avoid some damage to ancient woodlands and raise a question about how best to compensate for that. The report was clear that compensation should only be a last resort, and there needed to be sufficient safeguards in place to ensure that harm is minimised and that compensation is adequate.

34. Natural England told us that:

    … biodiversity offsetting should be given further consideration in the context of providing compensation for unavoidable loss of ancient woodland. The compensation ratio should reflect the distinctiveness of this habitat type and recognise that for ancient woodland this is an irreplaceable habitat.[86]

Environment Bank questioned whether a 'distinctiveness' weighting of eight (box A in Figure 1) "adequately reflect[ed] their biodiversity value".[87] Robert Goodwill MP told us that such a weighting would mean that eight times the area of ancient woodland lost would have to be provided through offsetting land.[88] In fact the distinctiveness score of eight for 'very high' distinctiveness habitats would be only double the score (four) for 'medium' distinctiveness habitats. The area of offsetting required would depend on other factors (condition or ecological network links), as well as the difficulty of restoration and how long it would take (boxes D and E in Figure 1).

35. The HS2 biodiversity offsetting metric includes some features which provide additional protections to those envisaged in last year's Defra Offsetting Green Paper, but unlike the Defra approach it also allows offsetting to be assessed and scored for irreplaceable habitats such as ancient woodlands. The HS2 metric for new habitats rightfully aims to create habitats that would be regarded as achieving 'good' condition. However, given the uncertainties surrounding the effectiveness of offsetting on HS2, along with the scale of the land to be taken by the project, the metric should be adjusted wherever possible to encompass the precautionary principle. It should for example only allow offset land to be categorised as 'good' condition if there is a fully costed long-term plan for the site's management and independent monitoring. As Defra are still finalising the standard metric for offsetting, HS2 should look to incorporate any additional learning from these pilots into the metric for this project, to ensure it is robust and reflects best available information.

36. If the offsetting metric is used to determine compensation for ancient woodlands on the HS2 route, these habitats should receive the maximum score possible on all criteria (distinctiveness, condition and position within ecological networks) to recognise their irreplaceability and to maximise the extent of the offsetting provided. But ancient woodlands should be treated separately from the overall biodiversity 'no net loss' calculation.

The time delay factor

37. The HS2 metric makes assumptions about how long different types of offsetting habitats would need to reach 'target condition' (box E in Figure 1), including for example five years for ponds, 10 years for landscaping woodlands and 32 years for mature heathland.[89] The March 2014 second progress report by the Natural Capital Committee, The State of Natural Capital: restoring our Natural Assets, concluded that:

    Restoration is almost never complete; even after 100 years restored habitats can still be distinguished from their natural un-impacted counterparts. However, there may be significant gains in terms of the benefits provided (when compared to the degraded state).[90]

Accordingly, the Environment Bank believed that some of the estimates of the time taken for replacement habitats to reach the condition anticipated in the HS2 offsetting metric were too low:

    Woodland (for ecological purposes) is recorded as 32 years+ which is probably appropriate, but 'landscape' woodland is said to reach target condition in only 10 years. At this age, however, such woodland will not be ecologically functional. … Full habitat establishment of grassland is claimed within 5-10 years; we suggest it is unlikely that 5 years is sufficient and the use of this figure does not adhere to the precautionary principle.[91]

38. Natural England pointed out that:

    the length of time a habitat will take to establish is dependent both on the habitat type and also where it is put, and then how it is managed. The offset metrics are intended to enable a rapid assessment of that by a ratio, which I would imagine is something of an average.[92]

The Woodland Trust also pointed out that if there is an interval between one habitat being removed and another reaching a comparable stage of maturity, the damage to the species dependent on that habitat may be long-lasting and potentially terminal.[93] The Environment Bank believed that "modifications to temporal risk in the metric should be deployed to reflect this".[94]

39. The Environmental Statement proposes applying the standard Green Book discount rate (3.5% pa) to adjust for the time it will take to restore habitats. A recent report from the Commission on Wellbeing and Policy noted, however, (though in the context of 'social capital' rather than 'natural capital') that such an 'economic capital' discount rate might not be appropriate, as this value reflects both general uncertainty about the future and also an element based on people's expectations of their future income.[95] However, for the natural environment there may be significant environmental harm to wildlife and ecosystems if there is any delay in new biodiversity offset sites being established to provide compensation for land taken by the HS2 route.

40. It is right that the HS2 offsetting metric includes a discount factor for time, but the rate proposed does not fully represent the extent of the environmental harm from the potential delays. Some species may become endangered by the hiatus. This is a difficult area to measure because the discount factors usually applied in economic appraisal to recognise the value of time are unlikely to capture the impact of delays for the wildlife affected. The Government should commission research on alternative discount factors for the HS2 offsetting metric, to take into account the damage caused by any delays in compensatory habitats reaching maturity.

Location of replacement habitats

41. The Government's plan for HS2 is to include all necessary ecological mitigation and compensation measures within the land identified in the Hybrid Bill. The Department of Transport maintains that "this is superior to seeking arrangements at medium and long distances from the proposed scheme."[96] Others disagreed. The Chilterns Conservation Board told us:

    Much of the proposed offsetting for loss of woodland is tree planting nearby. At best, this is a crudely presented proposal ... There are many examples of proposed planting of productive agricultural land; where the agreement of the landowner is required and may not be forthcoming; which require long-term agreements to avoid its subsequent removal; and where it is appropriate given the existing landscape and ecological networks. At present the impression given is that it is a numbers game.[97]

42. The CLA saw "no justification for where environmental habitat has been [re]located".[98] Henry Robinson from the CLA told us that he particularly opposed land being used for biodiversity compensation where it would be "compulsorily purchased off valuable agricultural land".[99] The National Farmers' Union noted that 250 hectares of forestry land might be permanently removed and offset by planting 650 hectares of woodland, and believed that "it cannot be correct to be planting an extra 400 hectares of woodland on top of the 250 hectares lost on prime agricultural land".[100] The NFU wanted any replanting to be only on farmland "already out of production or of low inherent fertility".[101]

43. Environment Bank expressed concern about the failure to contemplate off-site offsetting, rather than on-site compensation, believing that 'no net biodiversity loss' (paragraph 9) would not be possible without the former, which it considered to be "a serious flaw of the Environmental Statement".[102] The Government's approach also takes no account of the emerging work of the Natural Capital Committee which examined woodland planting as a case study and emphasised that the value of the ecosystem benefits derived from such planting would be significantly influenced by their location, in particular by 'non-market values' such as people's ability to take recreational enjoyment from those woodlands.[103] The Natural Capital Committee's analysis formed a foundation for its recent recommendation for a 25 year plan to embed natural capital considerations into Government policy-making. [104]

44. The offsetting metric takes no account of the well-being aspects of the habitats and biodiversity lost and gained. That means that on current plans such factors will not be taken into account in deciding on the location of any offsetting. In our report on Defra's Offsetting Green Paper, we emphasised how important it is that offsetting sites are accessible to those affected by a development.[105] In our HS2 inquiry, Robert Goodwill MP highlighted "the natural aspirations of the general public to enjoy some of this land" but noted that there was a need for this to be balanced with reducing the habitat disruption that might come from public access.[106]

45. There is a rationale for providing biodiversity compensation along the HS2 route, to facilitate the relocation of the wildlife affected and to provide some compensatory well-being benefits to local people disrupted by the railway and its damage to local landscapes. Nevertheless, the requirement for biodiversity compensation to be provided directly alongside the HS2 route may lead to missed opportunities for better offsetting measures. The Government should re-examine the scope for such off-site biodiversity compensation, taking on board the emerging results from the Natural Capital Committee's work to strike an appropriate balance between what is best for nature and for the people affected.

50   HS2 Ltd, Environmental Statement, Volume 5, Ecology Technical Note - Methodology for demonstrating no net loss in biodiversity (November 2013), para 5.1.2 Back

51   ibid, para 1.5.1. Back

52   ibid, para 1.5.1. Back

53   Q32 Back

54   Q153 Back

55   Department for Transport (HS2 028), para 5.2 Back

56   Q84 Back

57   Defra, Biodiversity Offsetting in England Green Paper (September 2013), para 13 Back

58   Defra, Biodiversity Offsetting Pilots Guidance for Developers, March 2012, paras 5; 23  Back

59   Q153 Back

60   Q156 Back

61   Environment Audit Committee, Ninth Special Report of Session 2013-14, Biodiversity Offsetting: Government Response to the Committee's Sixth Report of Session 2013-14, HC 1195, para 15 Back

62   Environmental Audit Committee, Sixth Report of Session 2013-2014, Biodiversity Offsetting, HC 750, para 45. Back

63   Q153 Back

64   Q155 Back

65   HS2 Ltd, Environmental Statement, Volume 5, Ecology Technical Note - Methodology for demonstrating no net loss in biodiversity (November 2013), para 1.5.2. Back

66   HS2 Ltd, Environmental Statement, Volume 5, Ecology Technical Note - Methodology for demonstrating no net loss in biodiversity (November 2013) Back

67   ibid, para 4.2.3 Back

68   ibid, para 4.2.4 Back

69   ibid, para 4.2.5 Back

70   HS2 Ltd, Environmental Statement, Volume 5, Ecology Technical Note - Methodology for demonstrating no net loss in biodiversity (November 2013), para 4.3.1 Back

71   ibid, para 4.3.2 Back

72   ibid, para 4.3.3 Back

73   Environmental Audit Committee, Sixth Report of Session 2013-2014, Biodiversity Offsetting, HC 750, para 16 Back

74   RSPB (HS2 025), para 13 Back

75   Q84 Back

76   Q38 [Mr Robinson] Back

77   Environment Bank (HS2 023), para 5 Back

78   ibid, para 20 Back

79   Environment Bank (HS2 023), para 21 Back

80   HS2 Ltd, Environmental Statement, Volume 5, Ecology Technical Note - Methodology for demonstrating no net loss in biodiversity (November 2013), para 6.1.2. Back

81   ibid, para 8.2  Back

82   Q38 Back

83   Buckinghamshire County Council (HS2 024), para 5.4.1 Back

84   RSPB (HS2 025), para 15 Back

85   Environmental Audit Committee, Sixth Report of Session 2013-2014, Biodiversity Offsetting, HC 750, para 16 Back

86   Natural England (HS2 051), para 2.32 Back

87   Environment Bank (HS2 023), para 17 Back

88   Q162 Back

89   HS2 Ltd, Environmental Statement, Volume 5, Technical Appendices: Scope and methodology report addendum (CT-001-000/2): Annex D Ecology Technical note - Methodology for demonstrating no net loss in biodiversity: para 4.8.3, Table 9 Back

90   Natural Capital Committee , The state of natural capital: Restoring our natural assets (March 2014), Box 2.3, p29 Back

91   Environment Bank (HS2 023), para 24 Back

92   Q88 Back

93   Woodland Trust (HS2 021), para 2.7 Back

94   Environment Bank (HS2 023), para 12 Back

95   Commission on Wellbeing and Policy, Legatum Institute, Wellbeing and Policy, March 2014, p53 Back

96   Department for Transport (HS2 028), para 5.1 Back

97   Chilterns Conservation Board (HS2 047), para 27 Back

98   CLA (HS2 036) para 1 Back

99   Q38 Back

100   National Farmers' Union (HS2 032), para 5 Back

101   ibid, para 7 Back

102   Environment Bank (HS2 023), para 26  Back

103   Natural Capital Committee , The state of natural capital: Restoring our natural assets (March 2014), pp12, 49-53  Back

104   ibid, para 7.3 Back

105   Environmental Audit Committee, Sixth Report of Session 2013-2014, Biodiversity Offsetting, HC 750, para 25 Back

106   Q145 Back

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Prepared 7 April 2014