What to take into your next appraisal
- Check scope, exemptions and local requirements first.
- On-site delivery can carry an opportunity cost as well as maintenance costs.
- Compare options that achieve the required ecological outcome.
Establish what the permission requires
Government guidance states that developers in England must generally deliver at least 10% biodiversity net gain unless exempt, and should check whether the local planning authority requires more. Significant on-site gains and off-site gains require habitat maintenance for at least 30 years.
An ecologist must establish the baseline, applicable metric and achievable gain. A hectare of one habitat is not automatically interchangeable with a hectare of another. Record irreplaceable habitats, condition, location and delivery risk before comparing monetary options.
Build two valid delivery options
Assume an ecologist confirms that two fictional packages can meet the project’s requirement. On-site works cost £100,000 initially, annual management is £8,000 for 30 years, and lost developable capacity reduces net receipts by £250,000. An off-site package costs £420,000 including the seller’s stated management obligations.
The off-site quote needs its own scope check: legal work, allocation, monitoring and registration may be additional. The example assumes these are included so the comparison is explicit.
| Item | On-site | Off-site |
|---|---|---|
| Initial delivery cost | £100,000 | £420,000 |
| Foregone net development receipts | £250,000 | £0 |
| 30 years of management, undiscounted | £240,000 | Included in assumed quote |
| Undiscounted economic total | £590,000 | £420,000 |
Separate economic cost from cash funding
At a 5% annual discount rate, 30 year-end payments of £8,000 have a present value of approximately £122,980. If the initial works and foregone receipts occur now, the on-site economic cost is approximately £472,980.
Foregone receipts are an opportunity cost, not a contractor invoice. The cashflow must remove the affected sales receipts at their real dates and schedule maintenance separately. Do not also add the £250,000 as a cash payment.
Check the delivery dependency
Map the biodiversity gain plan, legal arrangements, allocation and other permission conditions into the programme. An apparently cheaper option can be unattractive if it delays commencement or cannot meet the required habitat specification.
Statutory credits sit at the end of the stated delivery hierarchy, after on-site and off-site options. Do not assume they can be purchased as an unrestricted substitute for early design work.
Record the continuing obligation
Present ecological feasibility, present-value cost, peak cash requirement and accountable land manager together. State who pays if management costs rise or the habitat underperforms.
Recheck the comparison after a layout change. Losing saleable capacity may make on-site provision more expensive, while a redesigned public space may reduce its incremental land cost. The answer follows the actual design and approved ecological outcome.
Sources and further reading
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