Farming Passive Income using Biodiversity Banks
Farming Passive Income
With significant changes taking place in the UK’s farming landscape, many farmers are now encountering reduced financial assistance alongside rising expenses. This situation intensifies the need to devise strategies for land to yield profitable outcomes and reach financial goals.
Farming passive income typically refers to a strategy where a farming business invests their resources, such as money, asset classes, or time, in a way that generates a consistent and ongoing income stream with minimal ongoing effort or active involvement.
When considering passive investments in terms of farm operations, you may think of real estate, or some other means of farmland investment as a way of generating long term cash flow.
Habitat banking is a fairly new concept which allows farmers to use their land as a means of creating passive income streams.
Habitat Banking and Biodiversity Net Gain
Habitat banking is a concept related to environmental conservation and sustainable development. It involves creating, restoring, or enhancing habitats in one location to compensate for habitat loss or degradation that occurs in another location due to development or other human activities.
The overall goal of habitat banking is to achieve a net positive impact on biodiversity by ensuring that the overall ecological value of an area is maintained or increased despite development taking place.
The concept of biodiversity net gain (BNG) is closely related to habitat banking. Biodiversity net gain is a policy approach that requires developers to enhance biodiversity by a certain percentage when undertaking new construction or development projects.
The concept aims to ensure that the natural environment does not just remain static but actually improves as a result of development activities.
Habitat banking for farming passive income
Habitat banking can offer farmers an opportunity to generate passive income by participating in conservation efforts and providing ecosystem services on their land. Farmers can generate biodiversity offset credits by enhancing habitats on their land. These credits can be sold to developers or other entities required to achieve biodiversity net gain targets.
When a farmer agrees to dedicate their land to biodiversity banking, they receive an initial capital receipt and ongoing annual rental payments for the agreement’s duration.
Another notable advantage is that farmers retain ownership of the land. A tailored management plan, entrusted to and executed by the landowner, is adapted to align with their existing land management practices and funding sources. This approach also ensures the adoption of the most tax-efficient strategy.
Incorporating habitat banking as a passive income stream diversifies a farmer’s revenue sources, reducing dependence on traditional agricultural commodities that may be subject to market fluctuations.
Habitat bank management
The way in which 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 used for grazing. Due to this, 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. As soon as 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.
How can Collington Winter assist?
Collington Winter Environmental have a team of biodiversity net gain consultants who assist developers in locating biodiversity banks. In addition to this, we can also assist in securing farming passive income through biodiversity banking.
Our ecologists have experience working in both a large and small farming environment. 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.