Credit Schemes and Natural Capital

Credit schemes are fast becoming a part of the UK’s ecosystem. 

Whether for voluntary or regulatory purposes, business are seeking out credit schemes to mitigate the impact of development through schemes designed to drive nutrient neutrality (phosphate and nitrates being of particular current interest, see our previous article) as well as biodiversity net gain (which will become mandatory for most development sites from January 2024), whether for residential or commercial development. 

Ashfords has advised numerous local authorities, utilities, developers and other participants seeking to establish, enable and participate in these mitigation schemes in order to unlock potential development sites, and we are seeing increased activity and interest as private and public sector bodies engage further in the market to solve the issues.

The schemes do raise a number of “watch points” for the participants which can be addressed through appropriate contractual arrangements and planning. Some of these are outlined below.

For landowners:

Broadly speaking, these schemes require land to house the “mitigation scheme”, for instance by creating a new wetland area.

Landowners will be required to bind their property such that it cannot be used for any other purpose for a defined period of time, and they will also need to develop the mitigation schemes (e.g. plant out the wetland) and maintain it going forward. They must be comfortable with the costs of these works, and of course they will need to accept that they will not be able to use their land for any other purpose during the restricted period. 

For Developers:

The developer needs certainty that the credits it is acquiring satisfy the relevant regulatory / planning authority. This will need carefully drafted documents, including checking the associated planning restrictions (which will control the use of the mitigation land). 

As most of these schemes are currently unregulated, but the associated credits can cost significant sums of money, it is important to ensure you have the correct protections in place. 

Please do not hesitate to get in touch should you wish to discuss anything related to credit schemes and biodiversity net gain.

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