Habitat Banking Factsheet Habitat Banking is the process of establishing habitat enhancements to generate verifiable biodiversity credits which can be sold to meet the needs of developers or other offset seekers.
Stage 1 Estate/Farm Review • To identify land which is less attractive for farming / has little development potential • Is well located for habitat creation / natural capital delivery • Complete high level habitat assessment to identify opportunities for habitat creation/ enhancement
Stage 2 More detailed habitat assessment of specific land parcels • I nstruct ecologist on areas which have been identified by the landowner as preferable for habitat creation •U se DEFRA Biodiversity Metric to establish a baseline habitat value •E cologist and landowner identify optimum habitat type for the site taking account of habitat values and wider farm management •E cologist assesses potential habitat value that can be created •E cologists drafts a management plan to deliver the habitat enhancement
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Stage 3 Landowner work out costs to determine the price of credits • Landowner assesses how much the chosen habitat will cost to establish and manage for the term of the agreement with the aim of ascertaining a price per unit • It is critical that the price reflects the true cost of delivering the habitat units over 30 years as the landowner will be legally liable to deliver the habitat management plan for the full term • Price will need to factor in the following costs: • Capital devaluation of the land • Income foregone • Cost of establishment • Cost of management / maintenance as required by the management plan • Landowner profit margin • Ongoing monitoring and reporting costs • Professional fees to include legal, agent and ecologist
Stage 4 Draft template legal contract for provision and sale of habitat units
Stage 5 Local Authority/ Independent verification of the units
• Draft terms of how the habitat is going to be created, delivered and enforced for a 30 year term
The local authority will be wanting to see that:
• We would expect agreements to standardise as more projects come forward • A legal mechanism is required to ensure the habitat is delivered for the 30 year term regardless of ownership. This may require a conservation covenant to be established or a charge to be registered against the land
• In determining price payable, landowners should consider income from alternative uses and that the habitat is likely to be established in perpetuity
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A. T he habitat assessment has been undertaken correctly and accurately to determine the habitat values B. T he management plan is sufficiently robust and detailed to deliver the biodiversity improvement for 30 years
Habitat Banking - PROS & CONS Pros
Cons
• Landowner maintains full control
• Requires upfront investment from the landowner at risk
• Landowner can set the price and has full appreciation of costs associated with the work
• Requires time in assessing and creating the opportunity
• Landowner can proactively develop habitat they want to see on their land rather than waiting for developer approach • Increase likelihood of realising income from biodiversity offsetting, in a shorter timescale, as a saleable product has been created for the developer
• Risk that habitat credits created might never be sold either due to lack of demand in the area or cost per unit is not competitive • Necessitates local authority involvement which not all are prepared for currently • Landowner is taking on risk and liability for delivery
• More opportunity to set preferential terms and payment structure to enable improved strategic financial planning • Maintain control over habitat units created so Landonwer can choose who they are sold to or whether you retain some for your own use • By creating in advance of demand the habitat value is potentially increased between the date of establishment and date of credit sale
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