Biodiversity Net Gain A Market Built By Law, Tested By Policy, and Won By Communication

Biodiversity Net Gain (BNG) is no longer a niche environmental add-on. It is a legally mandated market that now sits squarely inside the UK’s planning system, shaping land use decisions, development viability and the economics of nature restoration. Yet despite clear demand signals and an expanding pipeline of capital, the market remains fragmented, unevenly understood, and, crucially, under-communicated.

For habitat bank businesses, that last point is becoming existential. Success in BNG will not be determined by ecology alone, but by who can clearly articulate value to local planning authorities (LPAs), developers and their advisers at the moment decisions are made.

From ecological decline to legal obligation

BNG was introduced through the 2021 Environment Act as a direct response to long-term biodiversity loss across England. Its core aim is simple: new development must leave biodiversity in a measurably better state than before.

Since February 2024, most planning permissions in England require a minimum 10% biodiversity net gain, secured for at least 30 years. This obligation sits with developers, but LPAs are responsible for enforcement, monitoring and long-term compliance. In practice, BNG now touches the entire built-environment ecosystem: planners, ecologists, civil engineers, surveyors, lawyers and landowners.

Where on-site delivery is not viable, developers can turn to off-site biodiversity units, supplied by habitat banks, or as a last resort, statutory credits sold by government.

A demand curve written into law

BNG is unusual because demand is not speculative, it is statutory. Every qualifying planning application creates demand for biodiversity gain. That demand is accelerating as housing targets rise and infrastructure investment expands.

Market estimates consistently place the total addressable market for housing-led Biodiversity Net Gain in England at around £3bn by 2035. This figure is driven almost entirely by residential development, reflecting the volume of planning applications subject to mandatory BNG and the proportion of schemes expected to rely on off-site delivery.

Additional demand is likely to emerge over time from transport and energy infrastructure, commercial and logistics development, and public-sector land regeneration, but these are generally treated as upside rather than core assumptions in current market models.

Pricing reflects scarcity. Depending on habitat type and location, off-site units typically range from £20,000 to £40,000+ per unit, with significantly higher prices emerging in high-pressure planning authorities where supply is constrained.

Institutional capital has begun to flow into the sector. Gresham House, for example, is targeting a £300m raise for its GHBC strategy, which invests in habitat banks created by Environment Bank Limited – a vertically integrated model focused on delivering BNG units from landscape-scale nature restoration assets.

Others are demonstrating what effective delivery and positioning can unlock. Nattergal, for example, has built a portfolio of habitat banks across Norfolk, Lincolnshire and Essex, with around 4,000 biodiversity units available for off-site delivery. Its ability to translate large-scale nature restoration into planning-ready solutions has seen units secured by national housebuilders such as Bellway Homes, while partnerships with organisations like Arup link biodiversity delivery directly into wider net zero and nature-based solutions strategies.

Supply is fragmented, local, and insufficient

Despite rising capital flows, supply remains constrained.

Today, the BNG market is highly decentralised:

• Dozens (not hundreds) of verified habitat bank businesses
• Several hundred registered off-site BNG locations
• Strong geographic mismatches between supply and development demand

Most habitat banks are small, regionally focused and dependent on local planning relationships. This creates friction for developers operating across multiple LPAs and for planners seeking confidence in long-term delivery.

There are early discussions around market infrastructure – registries, exchanges and brokerage platforms – but for now, BNG remains a local, relationship-driven market. That puts a premium on clear, credible communication.

A cumulative constraint, not a temporary shortage

This is not simply a question of immature supply. BNG operates on a single-use, land-based model: once biodiversity units are allocated to a development, they are permanently retired, while the land itself is secured for long-term nature recovery. As housing delivery continues amid population growth, demand steadily consumes locally acceptable supply, but suitable land for off-site biodiversity is finite. The result is not a national shortage but increasing pressure in high-growth planning authorities over time.

This cumulative dynamic helps explain why pricing pressure, policy tension and planning risk are becoming defining features of the BNG market.

Housing policy vs biodiversity reality

The tension at the heart of BNG is political.

As early as 2021, estimates of the land needed for housing were already pushing against the limits of England’s available land supply.  Fast forward to Labour’s commitment to build 1.5 million homes in its first five years of government, and the pressure intensifies.

Two uncomfortable truths emerge:

1. The target is unlikely to be met under current planning and delivery constraints.

2. Several policy signals actively undermine biodiversity goals:

• • Re-designating “fringe” green belt as grey belt for development
  • Proposals to exempt smaller developments from BNG requirements
  • A national housebuilding programme repeatedly missing its own targets

England may be a green country in perception, but the supply of land that can realistically be brought forward for development is finite. As more greenfield sites come forward, off-site biodiversity becomes unavoidable, not optional.

The value divide

A persistent source of confusion in the BNG market is the distinction between biodiversity units and statutory credits.

Biodiversity units are generated from off-site land where habitats are created or enhanced and legally secured for a minimum of 30 years. They are tied to specific parcels of land, registered on the statutory biodiversity gain register, and typically expected to align with local planning authority spatial requirements and Local Nature Recovery Strategies.

Statutory biodiversity credits are sold exclusively by the UK government and may only be used where on-site and off-site options are demonstrably unavailable. They are deliberately priced at a premium and function as a last-resort compliance mechanism rather than a preferred delivery route.

From a long-term perspective, biodiversity units are generally regarded by planning authorities and developers as offering:

• Stronger local ecological outcomes
• Greater planning certainty and acceptance
• Closer alignment with ESG, nature-positive and place-based reporting frameworks

Biodiversity units are not freely tradable commodities. Once allocated to a specific development to discharge a planning obligation, they are effectively retired and cannot be resold or transferred. Their value lies in certainty, compliance and long-term delivery, rather than liquidity.

The communications gap

Here is the market failure few talk about: BNG supply does not fail because of ecology – it fails because of messaging.

LPAs are under-resourced, risk-averse and wary of long-term liabilities. Developers are time-poor and focused on planning certainty. Habitat banks that cannot clearly explain:

• How units are secured
• How sites are managed for 30 years
• How risk is mitigated
• How delivery aligns with local nature recovery strategies

In a decentralised market, trust is built locally, and trust is built through consistent, professional communication.

A market that will reward clarity

BNG is not going away. If anything, it will become more central as housing pressure collides with environmental limits.

Ultimately, success will not be determined by land ownership or capital alone, but by the ability to convert ecological outcomes into planning certainty. For habitat bank businesses, a clear and credible communications strategy is the bridge between statutory demand and truly bankable supply.

In a market created by law and shaped by politics, clarity may prove to be the most valuable habitat of all.