Biodiversity offsetting

30th April 2013

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John Box, from Atkins, describes a development where Defra's biodiversity offsetting metric was applied retrospectively

Biodiversity offsetting is a market-based system for conservation activities involving measurable actions designed to compensate for residual negative impacts on biodiversity from development after avoidance and mitigation measures have been implemented.

The goal of biodiversity offsetting is to achieve no net loss, or preferably a net gain, for biodiversity with respect to species, habitats and ecosystems services.

Biodiversity offsetting schemes have been trialled by Defra in pilot schemes in England since April 2012. Guiding principles for Defra schemes include the expansion and restoration of habitats in perpetuity and the enhancement of ecological networks through the creation of more, larger and better joined up areas for biodiversity.

The Defra biodiversity offsetting metric

Under the Defra approach a habitat-based metric that is a function of “distinctiveness”, “condition” and area is used to derive a biodiversity offset value for each of the habitats lost due to development and for the habitats created or enhanced through biodiversity offsetting.

Habitat “distinctiveness” has three categories: low (for example intensive agricultural land), medium (such as, semi-natural habitats) and high.

Habitat “condition” can range between 1 (poor) and 3 (good) and is based on the condition assessment tool used for higher level of environmental stewardship under the Natural England’s agri-environment scheme.

Demonstrable biodiversity gains can be generated by creating new habitats, improving the condition of an existing habitat or increasing the distinctiveness category of a habitat (for example, creating habitats on agricultural land).

Table 1 shows the matrix used by the Defra pilot scheme for calculating the biodiversity offset score for each unit area of a given habitat:

Table 1: Distinctiveness and condition matrix

Distinctiveness Low Medium High
Condition Score 2 4 6
Good 3 6 12 18
Moderate 2 4 8 12
Poor 1 2 4 6

Retrospective application

This biodiversity offsetting system was applied retrospectively to a case where both onsite and offsite biodiversity compensation measures were used in relation to the impacts of a development in Coombeswood, near Halesowen.

The development included a new sports club (with cricket pitch and bowling green) and new school pitches on a separate site. Planning permission for the development was granted by Dudley Metropolitan Borough Council in 2009.

The main negative impact on biodiversity from the proposed development was the loss of 3.2ha of species-poor semi-improved neutral grassland within the Coombeswood site of local importance for nature conservation (SLINC).

The onsite compensation measures comprised the creation of species-rich neutral grassland (1.05ha), the planting of trees and scrub, and the creation of narrow, linear reedbeds.

The offsite compensation measures included:

  • the lease by Dudley MBC of the Coombeswood North site of importance for nature conservation (SINC) from St Modwen (the developer) for 50 years;
  • an understanding that this land would be declared a statutory local nature reserve (LNR);and
  • a lump sum payment for habitat enhancement measures.

The loss of habitats within the development site was predominantly semi-improved neutral grassland with some bramble scrub, a total area of 3.4ha, both habitats being of “medium” distinctiveness and assigned as “moderate” condition. Using the Defra metrics the calculated biodiversity offset value was 26.96.

There is a general principle in biodiversity compensation schemes that biodiversity gains should always be greater than losses to allow for uncertainties involved in natural ecological processes (for example colonisation, natural succession) and in the techniques of habitat creation, enhancement and restoration. The Defra approach requires the application of risk multipliers to allow for these uncertainties, only two of which are applicable to the Coombeswood case study.

First, a delivery risk multiplier of 1.5 is required for the creation of species-rich neutral grassland to replace the species-poor neutral grassland that was lost.

Second, a time multiplier of 1.4 is required on the basis that the compensation measures can reach the desired habitat quality within 10 years.

There is no requirement for a spatial risk multiplier as the locations for the offsetting measures are in close proximity to the development sites and are all within the Coombeswood Green Wedge.

The overall risk multiplier in the case study would be 2.1 (1.5 delivery risk multiplier x 1.4 time multiplier).

The biodiversity compensation package comprised a) onsite measures involving the creation of various habitats, predominantly species-rich neutral grassland, with a total predicted biodiversity offset value of 16.79 based on the habitats attaining a “good” condition; b) offsite measures including enhancement of the habitats within the SINC that are predicted to increase the existing biodiversity offset value by 32.80.

The total biodiversity offset value of the onsite and offsite compensation measures is 49.59. Therefore the overall gain:loss ratio is 1.84 to 1 based on a 49.59 gain to a 26.96 loss.

This ratio is less than the overall risk multiplier of 2.1 derived from the Defra guidance, but this 2.1 multiplier is based on the compensation measures being solely for the creation of species-rich neutral grassland.

However, the delivery risk multiplier for habitat enhancement or restoration of the habitats in the SINC is 1 which is lower than the multiplier of 1.5 for the creation of species-rich neutral grassland in this case study.


The Coombeswood case study demonstrates that the agreed ecological compensation for the loss of semi-improved neutral grassland based on professional judgement, broadly accords with the present Defra methodology which uses a more quantitative approach.

Second, the Defra guidance for biodiversity offset value makes use of a surrogate “metric” that is a function of habitat distinctiveness, condition and area. In this context, habitat distinctiveness and condition are being used as a proxy for the biodiversity value (which takes into account a range of ecological characteristics).

Third, the quantification of risks involved with the delivery of habitat creation, restoration and enhancement is particularly interesting because it provides an attempt to quantify the subjective judgements that are currently used by experienced ecologists to determine the likely success of ecological mitigation and compensation measures.

This case study also highlights a number of questions that need to be addressed if biodiversity offsetting is to be more widely applied to compensation measures for development projects:

  • How should species be accounted for? For example, their responses to habitat loss at a development site and their ability to colonise a new offsetting site.
  • How should ecological functions, such as wildlife corridors, be accounted for? Could the biodiversity offsetting metric evolve into an ecosystem services metric?
  • How should social and community values for habitats and sites that of green space in urban areas, or well-used local areas of green space, been accounted for?
  • How should designations such as SLINCs, SINCs and LNRs be taken into account? These designations are important in that they provide formal recognition of the nature conservation value of a site.
  • How can precision of the delivery risks and the values of the risk multipliers be increased?
  • How to ensure the very long term revenue funding required for the management of habitats and their associated species in any biodiversity offsetting scheme.

This article was written as a contribution to the EIA Quality Mark’s commitment to improving EIA practice.

John Box, CEnv FIEEM, is a director based in the Atkins’ Telford office the views expressed in this article are his personal views.

Atkins is involved in one of the complementary projects for the Defra biodiversity offsetting pilot scheme.


The agreement of St Modwen to the use of this project for this case study is gratefully acknowledged. David Coote (Atkins), Ian Romano (St Modwen) and Alan Preece (nature conservation officer, Dudley Metropolitan Borough Council) have been involved in the Coombeswood project and their advice on the project and drafts of this paper have been much appreciated. In addition, Claire Millar and Richard Chapman (Defra), Jo Treweek (Treweek Environmental Consultants) and Tom Tew (The Environment Bank) commented on a draft of a longer version of this paper.

More information from Defra:

Biodiversity offsetting: background
Biodiversity offsetting: guiding principles for biodiversity offsetting

Biodiversity offsetting pilots technical paper: the metric for the biodiversity offsetting pilot in England


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