Implications of the BNG Spatial Risk Multiplier for Developers and Habitat Banks

Biodiversity Net Gain (BNG) has become a critical consideration in development planning. A central concept within the BNG framework is the Spatial Risk Multiplier (SRM), a mechanism designed to encourage biodiversity offsetting local to the development sites where ecological harm is set to occur. But what exactly is the spatial risk multiplier, and how does it impact developers and off-site BNG providers such as habitat banks?

 Let’s break it down.

What Is the Spatial Risk Multiplier (SRM)?

The spatial risk multiplier is part of the Defra Biodiversity Metric, used to calculate the ecological value of land, considering factors like habitat type, condition, size, and location. SRM aims to address the ecological risks associated with delivering biodiversity enhancements in locations distant from the impacted area. In essence, it ensures that the ecological benefit of off-site measures aligns geographically with the area affected by development. The further the compensation habitat is from the development site, the more the SRM impacts the required off-site compensation, reflecting the potential loss of ecological connectivity and localised biodiversity benefits. This is outlined in Table 9 of DEFRA’s Statutory Biodiversity Metric User Guide (July 2024):

Source: DEFRA - The Statutory Biodiversity Metric – User Guide July 2024

As we have said, the spatial risk multiplier in the Biodiversity Metric is designed to encourage habitat compensation close to the development site. The multiplier reduces the biodiversity unit value of habitats delivered further from the development site, meaning that off-site providers need to provide more BNG units to generate the same biodiversity value.

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In a nutshell, what does this mean for:

Developers?

The SRM impacts the number of BNG units a developer will require an off-site provider to allocate to their project. The further away (within/neighbouring/outside the NCA/LPA), the more units will be required.

Habitat Banks?

The SRM impacts the number of BNG units and, correspondingly, the amount of land (in hectares for area habitats or km for linear habitats) needed to offset a development’s BNG.

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Let’s explore a simplified example to illustrate the point

A development site baseline consists of 1 hectare (ha) of Modified Grassland (Moderate Condition) (Low Distinctiveness), which will be entirely lost with no on-site mitigation provided (a rare scenario, but let’s keep it simple). This means all compensation and a 10% net gain must be secured entirely off-site.

Scenario 1 – Off-site compensation with Other Neutral Grassland

The habitat bank starts with a baseline of Arable Land (Condition N/A) (Low Distinctiveness).

To compensate for the loss of 1ha of the Modified Grassland and provide a 10% gain, the habitat bank could create Other Neutral Grassland (Moderate Condition) (Medium Distinctiveness) on their arable land. Here is how this looks for the three tiers of the Spatial Risk Multiplier:

As you can see, the development requires 4.40 off-site units (4.00 mitigation + 0.40 gain) (columns C-E). The off-site requirement by habitat area (column F) increases by multiples of x1, 1.33* and 2**, as does the number of BNG units the habitat bank will need to account for (column G).

*1 divided by SRM 0.75 = 1.33

**1 divided by SRM 0.5 = 2

Scenario 2 – Off-site compensation with Lowland Meadows

In this scenario, the off-site units are provided by enhancing Other Neutral Grassland (Moderate condition) (Medium Distinctiveness) to Lowland Meadows (Good condition) (V.High Distinctiveness):

The only column that differs when comparing Scenario 1 with Scenario 2 is F—habitat area (ha), showing that 75% less area is required to deliver the same BNG requirement when providing V.High Distinctives Lowland Meadow units vs. Low Distinctiveness Modified Grassland (albeit the off-site baseline is higher than scenario 1 - Other Neutral Grassland ‘Moderate’ here).

Scenario 3 – Off-site compensation with Other Woodland, Broadleaf

In this scenario, the off-site units are provided by converting Arable (Condition N/A) (Low Distinctiveness) to Other Woodland, Broadleaf (Moderate condition) (Medium Distinctiveness):

Again, the only column that differs is F – Off-site habitat area required.

The above three scenarios illustrate that the number of off-site BNG units required by the development remains consistent at each level of SRM (E) (4.40 units), however, the number of units and habitat area/length that an off-site provider will need to allocate in order to provide the same biodiversity value for the development goes up in increments of x1 (SRM 1), x1.33 (SRM 0.75) and x2 (SRM 0.5).

Personally, I think the BNG metric is an impressive tool, so hats off to the Excel wizards who created it.

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So what?

Several of the developers and consultants we speak to express confusion about the SRM, partly because off-site providers quote differently when the SRM applies (variety is the spice of life, right?). From what we have gathered, this comes down to whether the off-site provider presents the BNG units they are providing pre-SRM (G) or post-SRM units (I) and instead applies the SRM multiplier to their price. Ultimately, how habitat banks choose to present this is up to them; this is a private market, after all.

Remember

When off-site BNG compensation is registered on the Biodiversity Gains Register, the habitat land area or length is logged, not the number of BNG units. The habitat bank provider will, therefore, need to account for the additional units sold from their project as required under their S106/Conservation Covenant and for internal purposes.

The off-site section of the Biodiversity Gain Plan should show the allocation of BNG pre-SRM calculation (G), which is calculated by the unit difference between baseline and post-intervention.

When a developer receives an Allocation Notice from a habitat bank, they can expect to be presented with a pre- (G) and/or post-SRM (I) BNG unit figure, but it should be clear which has been used.

Final thoughts

The spatial risk multiplier is a powerful tool for ensuring that Biodiversity Net Gain is meaningful and locally impactful. However, it also presents challenges for developers, particularly in regions where suitable compensatory land is not yet available.

For developers, early engagement with their consultants and off-site providers like Nature Impact is critical for designing viable and impactful schemes. It also allows them to secure off-site BNG early, providing cost certainty and preventing delays.

As proud advocates of Biodiversity Net Gain, a globally influential regulation, we’re committed to supporting developers and others in our network to deliver meaningful ecological outcomes. Reach out to us today to discuss how we can help you meet your BNG goals and contribute to this world-leading initiative.

Notes

• The above tables assume that the development site and habitat bank are located in an area of low strategic significance (“not in local strategy/no local strategy”).

• The BNG Trading Rules provide flexibility to developers and habitat banks to deliver biodiversity in different ways.

• Last resort statutory credits – remember, for credits the 0.5 SRM always applies, so you need to double the credits you require when considering this option.

• For nuances for intertidal and watercourse habitats, please refer to the table above and p.35 of the metric guidance: https://shorturl.at/FSB6t

This is our first blog. Was it helpful? Please share any thoughts and questions that you have.

Thank you to whom I have consulted on this, including Nick White, the Natural England team, Jack Potter, and Angus Walker.

Written by Tom Nelson, Nature Impact