Alternative Farm Income: BNG Credits and Habitat Banking

Alternative farm income

With significant transformations taking place in the UK’s farming landscape in recent times, numerous farmers are now encountering reduced financial assistance alongside rising expenses. This situation intensifies the need to devise strategies for land to yield profitable outcomes.

Many farmers are confronting the harsh truth of decreasing subsidies. Therefore, it has never been more urgent for farmers and landowners to explore long term methods of creating varied and sustainable sources of additional income streams. These endeavours are crucial to ensure the longevity of their livelihoods.

One of the more recent alternative farm income ideas, habitat banking, has been established through the introduction of madatory biodiversity net gain.

In 2021, biodiversity net gain (BNG) became a mandatory legal requirement under the Environment Act. BNG refers to the process whereby a development (or project) considers the environmental impact in terms of biodiversity.

It aims to ensure the biodiversity is left in a better state than before the development was completed. As a result, the introduction of biodiversity net gain has provided a new and exciting opportunity for farmers to pursue alternative farm income and earn money from their land.

What is biodiversity banking?

Biodiversity banking, also known as habitat banking, was created to accommodate the demand of delivering high biodiversity net gain. Developers can use biodiversity banking to generate “conservation credits”. These credits can be purchased by a developer to ensure that their project complies with biodiversity net gain requirements.

Habitat or biodiversity banks are areas of land upon which habitats can be created to significantly improve biodiversity. These areas are usually around 10 to 100 hectares in size. However, there is no maximum size for the habitats, and they often incorporate a number of small areas of land across one site. Whilst developers will purchase these credits, farmers and landowners will maintain full ownership of the land.

The type of habitats that can be created depends on the land operations and the location. However, marginal or low yielding land is often selected. Our consultants work closely with developers on projects to decide which types of habitats will create the best outcome for nature on the land.

Biodiversity banking and alternative farm income

Landowners or farmers can generate alternative income by preserving or restoring biodiversity on their lands. This practice involves creating and managing habitats that support diverse plant and animal species, which can then be used to compensate for biodiversity impacts in other areas due to development or other human activities.

When a farmer agrees to provide their land for biodiversity banking, they will be provided a capital receipt, as well as further annual rental payments for the duration of the agreement. Another essential advantage is that farmers maintain ownership of the land. A customised management plan entrusted to and executed by the landowner is adapted to align with the current land management approach and funding sources. This approach also guarantees the implementation of the most tax-advantageous resolution.

Through the sale of biodiversity credits, you can generate income. The value of these credits will depend on the rarity and significance of the species and habitats you’ve conserved.

Biodiversity banking is a long-term commitment. Your income will depend on the maintenance and success of the habitats over time.

How are habitat banks managed?

How the land is managed depends on the management plan agreed with the landowner and the integration of the habitat bank into existing farming activities. Ecologists conduct regular monitoring, and any progress is annually reported to the local planning authority or relevant entity in accordance with their biodiversity net gain obligations.

In the context of grassland, for example, each year involves the temporary closure of fields during the flowering season. After wildflowers have blossomed, the land custodian can undertake a hay cut. In the autumn, the land can be utilised for grazing. Subsequently, livestock are temporarily removed from the land in March, allowing flora and fauna to flourish once more, thereby attracting uncommon bird and insect species.

Around the grasslands’ edges, indigenous shrubs are frequently planted, with livestock excluded from this zone to facilitate the growth of new shrubs. Once these shrubs are established, fencing is removed, granting livestock access to the open habitats. If necessary, ecologists might introduce ponds and wet scrapes to attract endangered bird species like curlew and lapwing for breeding, fostering greater diversity in wildlife.

Over a minimum span of 30 years, the land is managed in this fashion by the landowner or successive generations of landowners. This extended period allows for the establishment of a fully biodiverse habitat.

What is the importance of biodiversity net gain?

Biodiversity net gain is significant for a variety of reasons and can help to positively affect the environment almost anywhere. Some of the key benefits that biodiversity net gain provides include:

  • Enables the production of raw materials
  • Supplies water and oxygen to surrounding ecosystems
  • Enhances the environment’s visual appearance
  • Provides jobs for local farm businesses and other agricultural occupations surrounding farm produce
  • Facilitates a scientific understanding of the natural environment
  • Offers recreational activities such as fishing, camping and hiking

The idea of mandatory BNG is a structured and regulated method of prioritising and ensuring that all of the factors listed above are supported and encouraged in the years ahead. As BNG applies to all development projects, it causes a universal approach from governing bodies. Therefore, as BNG is a government policy, it prevents any potential issues with key stakeholders.

How can Collington Winter assist?

At Collington Winter, we are a team of ecologists and biodiversity net gain experts who can assist both developers seeking biodiversity credits and farmers looking use their land as a form of alternative farm income. We can provide guidance to farmers and small business landowners regarding the use of their land and how to apply for habitat banking.

Our ecologists have experience working in both a large and small farming environment. Habitat banking and biodiversity credits are something that we are qualified in. We can also complete an informal initial assessment of agricultural land and sites of interest. This helps our clients to understand any probable implications and costings of habitat banking from the outset.

Please get in touch if you would like further information about BNG. We can also develop cost effective land management plans. 

If you would like to find out more about the services we provide, feel free to contact us using the details below.

Contact Us

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23 Bark Street East, 1st Floor, Bolton, BL1 2BQ

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Future Business Centre, Cambridge Campus, Kings Hedges Road, Cambridge, CB4 2HY


Head Office: 01204 939 608

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