The environmental focus is shifting from preserving to
enhancing. Some of Trowers & Hamlins’ natural capital team
sat down to discuss what has changed, what to look out for
and why it’s a dynamic and exciting area.
How has the response to natural capital changed in the last five years?
Amanda Stubbs, Partner: Natural capital, or environment resources, have not traditionally been protected in law per se.
The rights of landowners who have control over natural capital on their estate are protected in law because it’s their property.
But increasingly society is moving towards placing a capital value on these environmental elements, whether water resources or biodiversity.
And that’s what we’ve seen over the last five years, the shift to put into law mechanisms to safeguard those elements effectively, through amendments to planning and environmental law and policy.
Rory Stracey, Partner: Biodiversity net gain has gone from being a fringe issue of interest mainly to ecologists and environmental groups, to something that’s become much more mainstream.
That is because of government intervention, starting with amendments to the national planning policy framework to introduce policies about biodiversity net gain.
Then, more recently, government legislation has made the provision of biodiversity net gain mandatory by law through the planning system.
Nicola Janus-Harris, Partner: On the agricultural side, there’s been a big shift to incentivisation for enhancing the environment on farms.
The basic payment scheme has been phased out, and the environmental land management scheme has been introduced. One of the main elements of this is the sustainable farming incentive.
For example, farmers are paid per hectare for having wild birds feed on their land or preserving hedgerows to encourage nesting birds or biodiversity more generally.
What are the key changes in legislation and regulations around natural capital to look out for?
Jack Frier, Partner: From a housebuilder’s perspective, the next challenge to manage is the move towards water management and conservation.
This is being driven by extreme weather, whether it is the very dry summers or very wet winters we’ve had.
The focus might be managing upstream water collection and conservation, both to prevent flooding, and reduce leakage at one end of the spectrum and water conservation within new build homes at the other with things like rainwater harvesting and water efficient appliances.
Jasmine Andrews, Associate: Biodiversity net gain regulations were introduced in February, which stipulate that all planning applications, with very few exceptions, have to provide 10% biodiversity net gain. This is mandatory – local planning authorities do not have discretion to waive the requirement.
We’re now starting to see mandatory biodiversity net gain play out in practice; how it works and how the market will operate for the sale of credits, is something that is evolving rapidly.
What do developers and landowners tend to overlook with natural capital requirements?
N J-H: To measure the environmental improvements you’ve made, there must be baseline of data.
In the agricultural setting, businesses are falling behind in recording and collecting the data that will form that baseline.
AS: There are relatively easy and cost-effective ways to build a baseline of data – typically the baseline will be the date of the application, but it can be backdated to 30 January 2020 where the planning authority can see that a habitat has degraded since that time.
One of our environmental consultant contacts has joined forces with a university and a global positioning system company, to create an aerial view of the country’s habitats using satellites to map their condition down to about 5 metre polygons.
This technology means you can see the quality and condition of each habitat in terms of its biodiversity and enhancement, tracked back to 2020 if necessary.
JF: Delivering biodiversity net gain can easily be seen as merely a cost to a housing project. However, that nature enhancement can be a boon to your development, a means of differentiating it or part of a placemaking strategy and something for the community.
What do you enjoy about working in the area of natural capital?
AS: It’s an evolving landscape. The planning and development system has always walked a tightrope between delivering schemes while doing the responsible thing for the environment.
The new law will help protect the environment, but there is also an opportunity to do things differently and make enhancement part of your income.
There are a number of interesting strands being stitched together under the banner of ‘natural capital’.
N J-H: Natural capital and agriculture go hand in hand because a lot of the solutions and opportunities are on farmland or open land.
It is exciting to see those opportunities coming through, the impact on land values and the potential for a new income stream while being part of the bigger sustainability and climate change picture.
What is the most exciting advance in the area of natural capital?
AS: The law is driving change and innovation and it’s always exciting to be in a newly developing area.
We’re seeing a lot of collaboration across different types of consultants, including ecologists and agricultural consultants.
Everybody’s pooling what they know about their bit of the industry and trying to bring it together to work out some new mechanisms for applying sticks and carrots effectively.
N J-H: We are now seeing smaller landowners collaborating to deliver much larger landscape recovery projects.
A number of pilot projects have led to full-scale launches. These collaborations are exciting because they could significantly impact the race to net zero and climate change conversations.
JA: It will be interesting to see how stacking credits from different markets plays out legally.
For example, if you want to maximise land value, you could tie in biodiversity unit agreements and nutrient neutrality agreements for the same area. It opens the opportunity for collaboration.
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