Biodiversity Net Gain and this scheme
An important regulatory update from December 2024 affects whether land inside the scheme boundary can be used to generate BNG income.
DEFRA clarification — December 2024
Land enrolled in a project cannot also be used to generate Biodiversity Net Gain (BNG) units for sale.
This is a hard prohibition, not just a question. For land within the scheme boundary, BNG income is not available while LRS is running.
DEFRA issued this clarification in December 2024. Previously, landowners and their advisers had anticipated being able to generate BNG units alongside LRS payments on the same land — combining public scheme income with private market income from the same habitat improvements. This guidance closes that route for land within the scheme boundary.
What this means for you
Within the scheme boundary
BNG income from that land is not available while LRS runs. Plan around LRS payments and carbon credits (subject to confirmation) instead.
Outside the scheme boundary
BNG is fully available on that land. The prohibition applies only to the parcels enrolled in LRS.
Considering whether to enter
This is a material financial factor in your decision. Weigh BNG potential income against LRS payment projections for the same land.
What BNG actually is (brief background)
Since February 2024, new planning developments in England must achieve a minimum 10% net gain in biodiversity — measured using DEFRA’s Biodiversity Metric. Most developers cannot create this gain on their development sites, so they buy biodiversity units from landowners who create or enhance habitat elsewhere.
Landowners can sell these units by creating habitats — new woodland, wetland, species-rich grassland — that generate measurable biodiversity value. A typical BNG agreement runs for 30 years. Payment to the landowner is upfront or spread over the agreement period.
For land with strong habitat potential, BNG can be more financially attractive than public scheme payments in the short to medium term — which is why the December 2024 prohibition is significant.
The limited exception
There are some limited circumstances where LRS and BNG activities can interact. Specifically, LRS funding may contribute to ancillary works within a BNG project in certain configurations. However, this is not a route to broadly stacking the two schemes on the same parcel of land. If you believe your situation may fall within an exception, this is a specialist legal and planning question — take advice from a qualified land agent or environmental solicitor.
Source: SHMA analysis, December 2024.
What about after the scheme?
The LRS runs for 20+ years. If BNG is a significant income opportunity for your land, you may wish to factor its availability post-scheme into your 20-year financial modelling. Land could transition to BNG at scheme end, subject to re-baselining. However, a 20-year timescale means this is long-term planning context, not an immediate income alternative.
BNG and nutrient neutrality credits — a different question
BNG units and nutrient neutrality credits are separate instruments and can be stacked with each other (on the same land, you can sell both). However, for land within the LRS boundary, the same additionality questions apply to nutrient credits. See the Nutrient Neutrality page for detail.
References
- DEFRA: Biodiversity net gain — GOV.UK guidance
- DEFRA: Combining environmental payments — BNG and nutrient mitigation
- SHMA: BNG or Landscape Recovery — weighing up double counting (December 2024)
- Parliamentary POST Note 728: Biodiversity Net Gain (September 2024)
- DEFRA Environment Blog: BNG — what are the exemptions?
- NFU: Biodiversity net gain — latest guidance
Question about Biodiversity Net Gain? Email Phil directly at phil@opensourcearts.co.uk or use the contact page. We’ll reply before the 30 April workshop where possible.