4 Justification and timing |
26. We have discussed above the metrics and the
geographical aspects of a possible offsetting system. More fundamentally,
however, the case for offsetting rests on other factors, including:
whether it still allows appropriate local protections for biodiversity
through the 'mitigation hierarchy', whether it could operate in
a market which produced effective offset solutions and whether
the pilots have provided sufficient information to allow the
scheme to be introduced at this time.
27. The National Planning Policy Framework re-stated
the mitigation hierarchy; that if "significant harm to biodiversity
resulting from a development proposal cannot be avoided, adequately
mitigated, or, as a last resort, compensated for, then planning
permission should be refused".
The Lawton report warned in 2010 that "biodiversity offsetting
must not become a 'licence to destroy' or damage existing habitat
of recognised value. ... Offsets must only be used to compensate
for genuinely unavoidable damage".
28. Similarly, the National Trust cautioned that
"the offsetting framework must not encourage a culture of
wildlife being 'disposable, tradable and replaceable'; biodiversity
offsetting should be a last resort, after all attempts to avoid
and reduce possible impacts have been taken".
Friends of the Earth thought offsetting would be "a much
higher-risk strategy than enforcing what is there already".
The Secretary of State assured us, however, that:
emphatically, there will be no change to [the
mitigation hierarchy] at all. This is just adding on. We are trying
to resolve the conundrum at the end, when something cannot be
mitigated. So, absolutely emphatically, all the existing mitigation
arrangements carry on; that does not change at all. What we are
trying to get away from is the rather sterile, lengthy and very
costly legal battles under the current system that cannot be resolved
29. Offsetting provides a means of compensating
environmental loss from development only as a last resort, after
the possibility of alternative development sites or mitigating
the extent of the loss have been exhaustively examined. Any
biodiversity offsetting system must emphasise the continued primacy
of the 'mitigation hierarchy', and the Government should make
clear under such a system that the National Planning Policy Framework
commitment to the hierarchy will not be weakened or bypassed.
An offset market
30. The Green Paper envisages that an offset
market would enable environmental compensation to be provided
more quickly and cheaply than currently.
The Environment Bank saw a "danger" that a market might
drive offset prices down too low to bring projects forward.
The Green paper asserts that "allowing any required compensation
to be bought 'off-the-shelf' from a market removes the need for
negotiation on what will be provided".
The Wildlife Trusts warned that the system would not work until
there was a sufficient range of different potential habitats available
for offsets, reflecting the wide range found across the country.
The Environment Bank told us "If we cannot provide the developer
with the right type of offset in the right place at the right
time, at the right scale, it is no use to him".
31. The Green Paper also anticipates potential
cost savings from creating a market, with "economies of scale
from large-scale habitat restoration and recreation".
But that depends on whether an offsetting scheme were mandatory
or voluntary. The Impact Assessment that accompanied the Green
Paper indicates that a mandatory scheme would have a larger economic
impact, and environmental benefit, but also a higher cost for
Exchange estimated that a compulsory scheme could add around £71
million to the total cost of development each year, or 0.1% of
the value of annual construction in the UK.
The Home Builders Federation warned that anything that increased
the time taken to achieve planning consent, such as a mandatory
offsetting scheme, could add additional costs to business.
The Defra impact assessment calculated that a voluntary scheme
would be largely cost-benefit neutral, whereas a mandatory scheme
would have a net present value benefit of £452m over ten
32. An effective market for offsets would be
more likely if there were a sufficient volume of activity. Witnesses
had mixed views about whether offsetting should be mandatory,
which might generate higher volumes, or voluntary. The Home Builders
Federation wanted a "fully permissive" system for developers
to allow other options to be available.
The Country, Land and Business Association, on the other hand,
To be viable, the system will need to be mandatory,
subject to thresholds ... Unless the system is mandatory we doubt
we will be able to ensure the level of investor confidence required
to produce the number of offset sites required. Landowners will
not think it worth their while looking into offsetting if there
are only a few random developers looking for offsets.
The RSPB also wanted a mandatory system.
Based on its experience of the pilot in Nottinghamshire, the Wildlife
Trusts noted that only three out of 10,500 planning applications
it had screened had come forward as possibly suitable for offsetting,
and in two of those three cases the developers not been interested
in that approach. The Wildlife Trusts saw this as a symptom of
the voluntary nature of the pilot.
Similarly, the Environment Bank believed that no offsetting schemes
being delivered after 18 months in a pilot demonstrated that "very
few developers will ever choose to compensate where they are not
required to do so ... If there is one key lesson to draw from
the Government pilots it is that a fully permissive system will
not work". The
Secretary of State took the same lesson:
The pilots show the conundrum of whether this
system should be obligatory or entirely voluntary. From the pilots
we have seen in this country, there is not an enormous amount
[of offsetting] that has come forward so far.
33. The offset market could also play a role
in the continuing management of offsets after they have been set
up. The Green Paper notes that planning permissions generally
assume that a development will be permanent, so there will be
a need to ensure any compensatory biodiversity gains are also
permanent. If there
were conservation covenants attached to offsets, the obligation
and liability for their management would pass from one owner to
the next. It is conceivable
that offsets could be offset again themselves if the offset site
were subsequently itself developed. The National Farmers Union
told us that the long-term liability implicit in an offset would
ultimately need to be reflected in its price, so "only those
with long-term interest in land can actually participate in this
market, which means landowners as opposed to agricultural tenants".
Lafarge believed, however, that asking landowners to commit to
managing offsets in perpetuity could make them hesitate.
34. A market could encourage offset providers
to offer projects of a size that facilitated 'ecosystem networks',
in part prompted by potentially lower costs from the greater economies
of scale that these would allow. A danger is that the market could
produce many offsets of a similar, lowest-cost, type rather than
a mixed range of types. The Government should task Natural
England to monitor any offsetting scheme introduced to ensure
a balance of habitat types are covered in the offsets, so that
overall they are broadly similar to the habitats that are lost,
and provide Natural England with the resources that such monitoring
would need. If necessary, the weighting factors applied in the
offset metrics should be adjusted to ensure that such a balance
35. A mandatory, rather than voluntary, offsetting
system could help a market to develop, which would in turn allow
more environmentally and economically viable offset projects to
be brought forward. Poor uptake in the pilots suggests that compulsion
is needed, but the case for a mandatory system has not yet been
made. More analysis of the pilots (as we discuss below)
should be undertaken once they have been concluded, specifically
to test how uptake might be expected to vary according to the
design of the schemes.
The justification and timing of
the offsetting proposals
36. The Government set out its case for offsetting
in its Green Paper consultation in September 2013, stating "Biodiversity
offsetting has the potential to help the planning system deliver
more for the economy and the environment." It put forward
two main advantages:
It ensures that there is 'no net loss' of biodiversity
as offsets demonstrably compensate for the residual losses and
are secured for the long term, and provides scope to achieve an
overall net gain for biodiversity through locating the right offsets
in the right place to improve ecological networks.
It can make compliance with biodiversity protection
provisions quicker and more transparent, certain and consistent.
37. It is clear that the current system is not
doing enough to protect and enhance biodiversity. The Wildlife
Trusts told us that the majority of local planning authorities
have no system for securing off-site biodiversity compensation.
The Environment Bank highlighted Defra research which demonstrated
that biodiversity was considered as material in only 1% of planning
applications, and where it was considered material it was rarely
a reason for refusal. Where mitigation or compensation was considered
appropriate it was rarely delivered effectively.
Policy Exchange similarly concluded that the key weaknesses of
the current planning system for biodiversity protection are the
lack of transparency, poor monitoring and little or no enforcement
of compensation agreements.
The Woodland Trust told us that the current system was not working
because ancient woods were still under threat.
And RSPB believed that the planning system did not adequately
guard against biodiversity loss, with the mitigation hierarchy
inconsistently applied and compensation often inadequate and short-lived.
38. Some of our witnesses, despite identifying
weaknesses in the offsetting model proposed by the Government
(paragraph 10), saw it as an improvement on the current system.
The Environment Bank, for example, highlighted a current risk
of "massive environmental degradation" and argued that
offsetting "could help planners take into account the environmental
value of relatively low value sites, which we are losing by the
hundreds each year".
The National Home Builders Federation were content in principle
to look at biodiversity as a way that could improve sometimes
"not ideal" processes and outcomes.
39. On the other hand, some witnesses did not
think that offsetting was the best way of addressing these weaknesses.
RSPB thought the biggest problem was not about environmental compensation
but a failure to address harm in the first instance under the
mitigation hierarchy (paragraph 27).
Friends of the Earth saw offsetting as allowing for the "tradable
destruction of habitats".
They wanted to see better implementation of the National Planning
Policy Framework "before introducing a new and much more
risky system of offsetting."
40. There were also more fundamental concerns
about how well any system could meaningfully equate environmental
losses and gains. The Institute of Environmental Management and
Assessment noted the particular challenge of "demonstrating
equivalence" in offsetting,
which Professor Colin Reid of Dundee University saw as an ethical
as well as practical question:
Any offsetting scheme based on balancing biodiversity
units is making major assumptions over the equivalence of 'units,
which is not without question on ethical grounds, and our ability
to measure their value, which is not without question on scientific
grounds. This is not to say that an offsetting scheme should not
proceed, but it should do so with an explicit recognition of the
ethical choices made and of the limitations in assessing value
41. Nevertheless, several witnesses saw in an
offsetting regime an opportunity to improve on current frequently
inadequate consideration of biodiversity loss in development projects.
RSPB thought the concept is "a very valuable starting point,
because it makes people understand that there is a benefit and
a value to some of this habitat that you are losing".
The Woodland Trust highlighted the wide range of assessments under
the current system of what compensation is appropriate for ancient
woodland loss, and suggested that offsetting "would provide
a clear framework for everybody to follow".
The Home Builders Federation told us that in the current situation
there can be several habitat assessments produced by different
parties which can make the process slow and opaque, so having
a clear national metric "would be very helpful for the industry
as well as for planners".
42. There are both advantages and disadvantages
in offsetting. It might be possible to devise a better metric
(paragraph 16) and more robust systems for assessing individual
offset projects (paragraph 19), and ensure that they are only
used as a last resort under the mitigation hierarchy (paragraph
29). But a weakness of the Green Paper is that it does not provide
a clear and evidenced analysis of how, in its words, offsetting
would deliver "biodiversity gain" and be "quicker
and more transparent, certain and consistent". The offsetting
pilots might provide that information, but they are still underway.
More fundamentally, however, before any offsetting scheme is taken
forward there needs to be recognition that unless like-for-like
habitat replacement is required, any process will have to make
ultimately subjective 'equivalence' judgements about the value
of nature. That concern should prompt the Government to
develop a system where offsetting 'risk factors' (paragraph 8)
are initially given very high weightings which can only be reduced
when experience of offsetting in practice provides confidence
that the environment has not been harmed overall.
43. In December 2011, the then Defra minister
Richard Benyon told the House that "the biodiversity offsets
pilots ... will run for two years and there will be an independent
evaluation of the process. A decision will then be made on whether,
and if so how, to support greater use of offsetting across England".
Defra's consultation timetable, we were told, would allow it to
take into account "the full assessment that is planned for
when the pilots finish".
The pilots are not due to be completed until April 2014. CIWEM
questioned whether the two-year timeframe of the pilots would
be sufficient "given the time it takes for any natural habitat
to become properly established and colonised".
The Aldersgate Group stressed that "time is needed to design
an effective system".
When we asked about arrangements for an independent evaluation
of the pilots, the Secretary of State told that "we will
do that within Defra. ... We have a whole range of people who
we can bring in, but ultimately this is a Defra responsibility
and we will have to persuade Government colleagues that it deserves
44. In the meantime, the Secretary of State emphasised
that he had visited Australia to examine their offsetting system
(the Green Paper notes that more than 20 countries have such
programmes, including also Germany and the United States).
(Friends of the Earth questioned the achievements of those other
Secretary of State told us that "there is quite a lot of
commonality between our metric and the metrics that are being
What was striking, where we were in Australia,
was that it was all very similar countryside; it was wide open
country with gum trees, it was all very similar. Things are a
lot more complicated ... in Northamptonshire. But I still think
there are lessons to be learnt, and the benefits could still be
45. The two-year offsetting pilots have not
yet run their course, nor have their results been independently
evaluated in line with commitments made by environment ministers
in 2011. It is too soon to reach a decision on offsetting while
the pilots have yet to be completed and independently evaluated.
In the meantime the Government proposals appear to place as much,
if not more, store on experience with offsetting in other countries,
notably Australia which has little in common with the environmental
landscape and development pressures of England. The Government
should allow the offsetting pilots to run their course and then
be evaluated in a genuinely independent way. If that evaluation
indicates clear advantages in introducing an offsetting scheme,
at that point the Government should bring forward revised proposals
that reflect the concerns that we have raised in this Report
61 Biodiversity Offsetting in England Green Paper,
op cit, p24 Back
Defra, Making Space for Nature (September 2010), p87 Back
National Trust (BIO 080) para 17 Back
Biodiversity Offsetting in England Green Paper, op cit, para 31 Back
Biodiversity Offsetting in England Green Paper, op cit, para 11 Back
Biodiversity Offsetting in England Green Paper, op cit, p14 Back
Defra, Biodiversity Offsetting in England Green Paper: Impact Assessment
(September 2013) Back
Policy Exchange (BIO 010 ) para 19 Back
Biodiversity Offsetting in England Green Paper: Impact Assessment
, op cit Back
Home Builder’s Federation (BIO 021) para 11 Back
Country Land and Business Association (BIO 019) response to Q8 Back
Qq35, 41 Back
Environment Bank (BIO 012) para 13 Back
Biodiversity Offsetting in England Green Paper, op cit, para 36 Back
Larfarge Tarmac (BIO 007) para 11 Back
Biodiversity Offsetting in England Green Paper, op cit, p3 Back
Woodland Trust (BIO 016) p1 Back
Environment Bank (BIO 012) para 7 Back
Policy Exchange (BIO 010 ) para 9. Back
RSPB (BIO 014) para 1 Back
Friends of the Earth (BIO 003) Back
IEMA (BIO 015) para 10 Back
Prof Colin Reid (BIO 024) Back
HC Deb, 1 Dec 2011, col 1051 Back
CIWEM (BIO 001) para4 Back
Aldersgate Group (BIO 023) Back
Biodiversity Offsetting in England Green Paper, op cit, p3. Defra provided the Committee with links to international studies: Compensating for damage to biodiversity, Biodiversity offsets in theory and practice, and State of biodiversity markets.