Our response to the working paper starts with some overall comments on the proposals in the working paper, followed by specific answers to the questions posed at the end of the paper. As Greenshank’s main focus is delivering nutrient mitigation schemes, most of the responses are based on our experience of delivering schemes for nutrient neutrality (NN).  

General comments on the working paper and the proposed Nature Restoration Fund (NRF)

It is our opinion that the working paper has been proposed largely as a response to the politically difficult and technically challenging problem of NN. As has been pointed out in other responses, there are programmes such as the Thames Basin Heaths Suitable Alternative Natural Greenspace (SANG) model that have been doing something similar to what is proposed here for a long time. These programmes tend to be less technically complex to deliver and have not become a seemingly intractable problem for competent authorities in the way that NN has.

The responses from many other stakeholders involved in the delivery of existing programmes that tackle environmental planning obligations (District Level Licensing (DLL), recreational disturbance etc.) is that these are not problems that need solving. Since the publication of the working paper, there have also been a number of ministers and Secretaries of State (SoS) in the media suggesting the NRF is an opportunity to do more than just mitigate for environmental impacts resulting from new development, delivering a “win-win” for nature and development, and that this will be done through a “strategic approach”.

The NRF proposal is not happening in a vacuum, with other big policy shifts like the Land Use Framework and the Dan Corry Review likely to refine what strategic priorities may underpin the Delivery Plans that the NRF will be reliant on. The consultation documents for the Land Use Framework estimate that land use change is required on one fifth of the utilised agricultural land in England, and of this land area half (around 10% of the England’s utilised agricultural land) may need to change away from agricultural use entirely.

We are aware that NN is probably the first environmental planning obligation that will be subject to a Delivery Plan and subsummation by the NRF. The working paper also makes it clear that delivery of environmental interventions that will be funded by the NRF is likely to rely heavily on the private sector. It is therefore critical that the Government makes it clear, with significant lead time, what strategic prioritisation will underpin a Delivery Plan. This will give organisations time to gear up to provide what the NRF is seeking to support through Delivery Plans.  

Greenshank has focussed our efforts on how to deliver cost-effective NN solutions because of the problems for development viability that have been caused by a reliance on land use change as a key mechanism to deliver nutrient mitigation. This approach has been very well received, and we are rolling out our approach at scale across the areas affected by NN. If there is a shift, driven by wider strategic priorities that see NN as a means to purchase and remove agricultural land from production, this will have considerable impacts on the floor price for nutrient mitigation, which will be pegged to land value. While there are opportunities to potentially stack environmental credits, additionality rules mean this is currently only possible with Biodiversity Net Gain (BNG) and NN. And there may not always be a good BNG market in areas where NN schemes are needed, meaning that the ability to cross-subsidise between nature markets to reduce the price of meeting NN obligations cannot be relied upon to reduce the cost to developers.    

It should also be recognised that the scale of mitigation scheme delivery that can be delivered by NN, or indeed by other measures required to meet environmental planning obligations, is not likely to make a ‘strategic’ level of contribution to land use or land management change. We have recently heard reports that Government is also considering a review of BNG, in part due to perceived delays to planning applications, and in part also because green groups are suggesting BNG is not delivering a significant enough scale of nature restoration. Previous forecasts of likely BNG demand never suggested that a BNG market that balances supply and demand will deliver a massive contribution to the Government’s ‘30x30’ target. Similarly, there is simply not the level of demand from NN to drive landscape scale nature restoration initiatives. It is key that any proposed change to NN and other environmental planning obligations via the NRF recognises this. NN and BNG are hotbeds of innovation in Nature Markets, laying the groundwork for significant future investment in nature restoration. It is imperative that unrealistic strategic ambitions for the NRF do not hamper this innovation and subsequently reduce the appetite for investments in nature restoration that are not driven by the planning system.    

The scenarios in the working paper suggest that, as well as NN, compensation / mitigation for impacts on protected sites / species will be the other main environmental obligations targeted by the NRF. Greenshank is not experienced in protected species licencing / protected site compensation schemes, but reading responses to the working paper from other stakeholders suggests that these issues are rarely, if ever, blockers to development. When they do cause delays, it is often due to a lack of resource in statutory bodies tasked with greenlighting compensation / mitigation plans and species licences. This echoes our experiences with NN, where we and other organisations could have significantly increased the supply of mitigation were it not for delays and / or barriers to mitigation scheme delivery arising from a lack of expertise and resource in statutory bodies.

This links to a question around whether such a large policy shift is needed, when it is likely that many of the issues currently hampering delivery of environmental obligations are actually due to resource problems in local government and government agencies? These problems will not disappear through centralisation and the buck will stop squarely with Defra / MHCLG if implementation of the NRF is held up because some arm of government is slow to approve environmental schemes that will feed into the NRF. As noted above, senior cabinet ministers have recently used the NRF proposal to defend their current stance on development and the environment. While we contend that many of the problems associated with environmental planning obligations could be addressed by formalising systems in the case of NN, and better resourcing other existing formal systems, it seems highly unlikely that the NRF proposals will be scrapped.

It is therefore imperative that the NRF does not impinge upon the current development of nature markets. The commitment to not involve BNG in the NRF is welcome, as are statements in the working paper reiterating the Government’s commitment to nature markets. Both this and previous Governments have recognised that there is a requirement for private investment to meet the scale of the nature recovery challenge. The compliance-driven, nascent NN and BNG markets have shown how private finance can be routed to nature recovery projects. If the NRF seeks to interfere too much with the market mechanisms that have driven progress in these nature markets to date, there is a risk that investor confidence will be undermined, pushing more of the delivery responsibility onto Government. Given the difficulties Natural England and Local Planning Authorities have had on scaling delivery of NN schemes, this creates an inherent risk for timely delivery of the NRF, and for the wider investment that is needed into nature markets more generally. Greenshank sees embedding market principles in the NRF as critical to its success, as well as providing a fantastic opportunity to guide development of governance and standards that contribute to high integrity markets for natural capital.

The following sections provide specific responses to the questions posed in the working paper.  

a) Do you consider this approach would be likely to provide tangible improvements to the developer experience while supporting nature recovery?

• In principle, yes. The current NN system generally places quite a large burden on developers to source mitigation.  

• Sourcing is normally done via protracted contractual agreements to purchase from a mitigation scheme or delivery of entire mitigation schemes, the latter being a technically complex and time-consuming process.

• We believe the NRF should act as a trading platform for NN / other natural capital schemes, becoming a trusted supplier of the environmental interventions required to remove the impact of development. This would simplify the process of procuring natural capital that is required to facilitate sustainable development.  

• Feedback from developers consistently shows they would rather go to a single supplier of, e.g., BNG units and nutrient credits, rather than have to negotiate purchases from multiple schemes.  

• However, we note that there is currently no intention to bring BNG into the NRF. This is a position we support because BNG is beginning to function as a market and fundamentally changing the procurement process for BNG is likely to be both practically very difficult while also undermining confidence in this growing nature market.

• Where there are other requirements, such as SANG, District Level Licensing (DLL) etc., that may be needed as part of obtaining planning, a ‘one-stop-shop’ in the form of the NRF would likely be a preference for developers, but this does not mean it is practically the best solution. One of the key bits of feedback developers we hear about dealing with almost any issue as part of the process of getting planning is just that they want transparency on cost and knowledge that a solution will be available to purchase when they need it. DLL, SANG etc. provide this already, so while developers may have to pay multiple fees, its straightforward for them to do this and account for it. There needs to be serious consideration around whether the NRF needs to fold in programmes that currently work well and what risk there may in developing Delivery Plans that can account for all these obligations more effectively than the current systems.  

• The present system of delivery for NN is not necessarily supporting nature recovery as the requirement is neutrality, not restoration. Therefore, the NRF offers an opportunity to work in a contribution that goes beyond mitigation and neutrality to achieve betterment.

• Contributions to nature recovery, especially for NN, could be perceived as politically difficult – one of the key developer criticisms of NN is ‘why should we pay to clean up rivers.’ This is inaccurate, as they are currently paying to not make them worse, but incorporating betterment and restoration with NN would make this criticism more legitimate.

• There is precedent with developers swallowing the need to contribute to nature restoration though BNG, which seems to have been accepted because a) they all knew it was coming; b) there is a growing market to supply the requirement meaning cost will drop to acceptable levels.

• This points to the need to incorporate market principles and support innovation, especially for NN, that will ultimately drop the price of mitigation to the point where developers will not perceive a contribution to nature recovery as being too onerous.    

b) Which environmental obligations do you feel are most suited to this proposed model, and at what geographic scale?

• NN is the environmental obligation that is most dysfunctional and would benefit from a system overhaul, albeit as noted above, simply providing more resources to local government and government agencies may be able to largely remove the dysfunction in the NN system.  

• Obligations that currently have systems and guidance in place to support delivery of the required mitigation / compensation schemes, e.g., SANG, DLL, recreational mitigation schemes for coastal protected sites, are likely to be easier to bring into the NRF. However, as discussed above, we question whether this could actually negatively impact delivery of schemes required for these obligations, at least in the short-term.  

• It is critical that there are approaches already available to support a Delivery Plan (if these are deemed necessary, see below). Without having the requisite certainty behind the ability to actually deliver offsetting projects, there is a risk the Delivery Plan will fail and leave developers operating under the status quo but with more uncertainty surrounding the delivery of their own schemes owing to the existence of the NRF.

• Scenario B in the Working Paper could result in this outcome, i.e., there are some unspecified impacts on the designated features of a Habitats Site and some compensatory measures are needed. At present the developer would have to procure that the compensation meets Habitat Regulations tests. If the NRF is responsible for this, it would be needing to probably do some kind of bespoke compensation scheme which would be inefficient, unless it just happens that an existing project can also deliver the required compensation.

• Standardisation of approaches to meet environmental obligations will mean there is the ability to have the required offset schemes available via the NRF and, crucially, to be able to cost it and charge developers an appropriate tariff.

• For NN there will be a need for the NRF to operate at the scale of affected catchments. Only operating in part of a catchment would cause major problems for the current system of mitigation delivery.

• There could also be an opportunity to address the spatial NN principle (Principle 3) which requires mitigation to take affect upstream of the point of impact of a development in order to target schemes at areas of river catchments that are more heavily impacted by a combination of nutrient sources.

c) How if at all could the process of developing a Delivery Plan be improved to ensure confidence that they will deliver the necessary outcomes for nature?

• Delivery Plans present a significant point of failure in the proposals detailed in the Working Paper.

• Considering this from the perspective of delivering on NN, where it has been stated that the Delivery Plan will effectively provide the certainty required for a development to comply with the nutrient parts of an HRA, the Plan will need to have practical and scientific certainty that the required mitigation can be delivered.

• This is a high bar, as noted by NE in their 2022 advice to Competent Authorities which stated that the reason NMPs and DWPPs can’t be relied upon for NN is due to the uncertainties in actually delivering the actions to reduce nutrient inputs to a Habitats Site and contribute to restoring it.

• For an NN Delivery Plan to work will require a) good forecasting of short- to medium-term demand; b) a consistent supply of mitigation schemes that meet the practical and scientific certainty requirements of the Habitat Regulations.      

• We suggest that Delivery Plans should either be quite general, simply providing statements to the effect that a Plan underwrites all the mitigation purchased from the NRF and can be referenced in an HRA to remove the need to consider nutrients, or it will require sufficient lead in time to ID a set of schemes within the Plan that should meet the forecast requirements with some contingency to allow for further schemes to come online and be added to the Plan.

• In terms of delivering for nature, Delivery Plans should have a preference of the use of nature-based solutions to meet the required environmental obligations.

• The baselining process should ID the relevant sources of impacts and the solutions favoured by the Delivery Plans should be chosen based on addressing these sources of impact.

• As suggested above, in the NN context there could be a relaxation of the spatial constraint on delivering mitigation schemes that may result in better overall impacts on Habitats Sites, and a Delivery Plan could be the means of specifying geographical considerations related to mitigation scheme delivery.

d) Are there any additional specific safeguards you would want to see to ensure environmental protections and / or a streamlined developer experience?

• Standards for mitigation approaches will help to ensure that schemes offered to the NRF have the best chance of delivering the required environmental protections. It is noted that the BSI are currently developing a series of standards for nature markets and this process should be delivered as quickly as possible to aid the delivery of mitigation / restoration schemes.

• We need more framework methodologies / guidance on specific mitigation methods to support NN. There are currently frameworks for constructed wetlands, riparian buffers and drainage ditch management. These frameworks provide the ability for mitigation scheme developers to propose mitigation schemes using these methods with consistency. It would be useful if similar guidance was made available for land use change schemes (noting this could be a relatively simple guidance document) and septic tank upgrades as the other two widely used nutrient mitigation approaches.

• There should also be a drive to develop framework methodologies that facilitates river restoration and agroforestry as nutrient mitigation methods. Combined with the mitigation approaches that are already in use, these two approaches should complete the suite of mitigation methods that will enable a consistent supply of mitigation / restoration projects to be brought forward while also delivering significant environmental benefits.

• It is noted that the Land Use Framework consultation documents lean heavily on agroforestry as a means for delivering a range of environmental benefits that can contribute towards broad nature recovery goals. The NRF model could therefore be a vehicle for funding these projects which may help to facilitate a wider rollout of this land management approach.  

• The systems that have been put in place to support BNG, such as the BNG sites register, templates for reporting etc. could be replicated to support a consistent approach to delivering schemes for other environmental obligations. This would also assist in good governance of the NRF.  

• Providing guidance and potentially contractual obligations for landowners / organisations selling schemes to the NRF on how to ringfence money to pay for long-term maintenance and monitoring would be useful.

• For NN, there are huge disparities in the size of nutrient mitigation requirements for different residential developments. These disparities are driven by differences in the geography of affected NN catchments and, particularly, by the wastewater treatment works new developments may connect to.

• The pricing model for nutrient mitigation delivered by the NRF will have to account for this. As detailed below, we believe that maintaining the current per kg pricing model for nutrient mitigation is necessary for the NRF to be successful. However, this maintains a situation in which the cost for mitigating developments in small rural settlements may be disproportionately high.

• As a means to both maintain environmental protections and improve the developer experience, it is suggested that the legislation / regulations that underpin the NRF include provisions to compel all mitigation schemes, whether traded through the NRF or outside the NRF, to leave a percentage of the total mitigation generated by a scheme unallocated. This unallocated mitigation will be ceded to NRF, creating a credit bank that can be used to offer mitigation to developments with high per unit mitigation requitements at a capped cost. The percentage of mitigation required to remain unallocated from a scheme should be set for an initial period and then reviewed to determine whether an over- or undersupply of mitigation is available to support development that would otherwise bare disproportionate costs.

• For this mechanism to be workable, there would be a requirement on LPAs or Responsible Bodies, as the enforcers of legal agreements to secure mitigation scheme delivery, to report and allocate this percentage of mitigation from each scheme to the NRF.  

e) Do you support a continued role for third parties such as habitat banks and land managers in supplying nature services as part of Delivery Plans?

• Yes. For NN, almost all of the available mitigation schemes have been delivered by third parties. It should also be noted that eNGOs are largely absent from delivering nutrient mitigation schemes.

• We welcome para 26 in the Working Paper that states that private providers and land managers will be used ‘wherever possible’ to deliver mitigation schemes. If schemes are going to be delivered cost-effectively, there must be a role for the private sector working within a system that supports innovation and competition.  

f) How could we use new tools like Environmental Outcomes Reports to support this model?

• EORs could be a vehicle ensuring SuDS best practice is followed from an NN perspective, where a development is subject to an EOR.

g) Are there any other matters that you think we should be aware of if these proposals were to be taken forward, in particular to ensure they provide benefits for development and the environment as early as possible?

• It is critical that pricing mitigation is done with a market-based approach that allows for the price of mitigation to drop over time in response to innovation and competition. If there is an attempt to set prices too low, this will hugely disincentivise participation by landowners, which in turn will undermine the ability for the proposed changes to be effective, while at the same time reducing confidence in the private market.

• For NN, mitigation should be priced per kg, not on a per roof basis. This will help to promote the most efficient mitigation schemes and reduce the risk of developers seeking to do private deals where they can secure mitigation that is cheaper than per roof tariff, which in turn could undermine the NRF.

• Per kg nutrient mitigation pricing will also help to promote onsite mitigation using SuDS to reduce offsite mitigation requirements, which will therefore support continued innovation in SuDS design for water quality management. The working paper notes that there is desire to address pollution at source. For NN, this means a focus on SuDS as a key means of delivering reductions in nutrient and other pollutant transport from developments where source control is difficult because a lot of sources come from domestic activities.

• While the overall ambition stated in the Working Paper to deliver strategic schemes for nature restoration is welcomed, for NN there needs to be a recognition that targeted solutions are required to bring forward mitigation schemes that are cost-effective and therefore will not be too expensive for developers. Para 21 suggests that such targeted interventions will be supported. There needs to be a realistic consideration of what, in terms of large-scale restoration projects, can be delivered with NN as a driver.  

• Linked to the above point, there is still a lack of efficient mitigation solutions for NN catchments that are dominated by free draining soils. In these catchments, there is a need for an approach that can use river restoration techniques to target key pathways of nutrient transfer and deliver significant environmental improvements to watercourses at the same time.  

• There will be a need to address the current institutional issues that are largely to blame for the slow pace at nutrient mitigation schemes are coming forward, namely LPAs taking too long to provide legal agreements to secure schemes and Natural England not having the resources to quickly sign off mitigation schemes from a technical perspective. This will speed up scheme delivery to be benefit of nature and developers.

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