Nitrate Offsets

In September 2020 DEFRA announced the intention to set up a ‘Nitrate trading’ platform. 

The idea is that housing developers would be able to buy ‘nitrate credits’ to offset the footprint of new homes in areas particularly vulnerable to nitrate pollution. Credits could involve funding the creation of habitat like wetlands, meadows and woodland.  

Developers will need an ‘Appropriate Assessment’ of the development proposal if there is a likelihood to increase nitrogen loading into protected sites. A nitrogen budget must be calculated and if the site is not nitrate neutral then nitrate mitigation will be required. If this does not result in neutrality, then planning will be refused. 

The Government announced a pilot scheme on the 11th September 2020 to enable development on the Solent in Hampshire where development was prevented because of nitrate pollution to the Solent strait.  

The participation of landowners and farmers in nitrate offsetting involves two main options: indirectly through taking land out of high nitrogen uses, e.g. crops or intensive livestock systems, or directly through actions such as creation of ‘interceptor’ wetlands. Either type of scheme must be in place for a sufficient length, Natural England guidance suggests this will generally be 80-125 years. The area must also be of sufficient size to meet the legal tests in the Conservation of Habitats and Species Regulations whilst the location for mitigation land must be within the water catchment area of the development. The local planning authority will decide on the suitability of the proposed mitigation scheme based on the legal tests within the Habitats Regulations.  

For future developments the Government has proposed an online auction service that will allow landowners to list potential environmental improvements to nitrate buffer sites in an area. Developers will bid to use these improvements to offset nitrate contamination from their developments. Landowners listing improvements will receive a payment from the highest bidding developer to put them into place. The developer can then use them to help attain planning permission.  

Although this is currently a pilot scheme and limited to one particular area, the government has suggested it may be expanded around the country to other areas facing similar issues. It is worth noting that the requirement for the offsetting site to be within the water catchment of the development site, means that putting land forward for offsetting is dependent on local development within your area as opposed to Biodiversity Net Gain whereby the two sites may be further afield. 

Potential land use change to produce nitrate offsets 

Conversion of agricultural land for community and wildlife benefits  

Land use may be permanently changed, converting agricultural land with higher nitrogen loading to alternative uses with lower nitrogen loading. 

Woodland planting 

If planting woodland this will require a 20% canopy cover at maturity or roughly 100 trees per hectare depending on type of trees planted. Woodland planting is estimated to equate to 5 kg/ha of nitrate reduction per year.  

Wetlands 

Wetlands can remove a proportion of nitrogen through denitrification and sedimentation. Urban runoff can be routed through wetlands as can part of the flow of existing streams or rivers. Wetlands must be maintained to provide ongoing nutrient removal.  

For future developments the Government has proposed an online auction service that will allow landowners to list potential environmental improvements to nitrate buffer sites in an area. Developers will bid to use these improvements to offset nitrate contamination from their developments. Landowners listing improvements will receive a payment from the highest bidding developer to put them into place. The developer can then use them to help attain planning permission. 

Nitrate Vulnerable Zones (NVZ) 

There is speculation that nitrate offsetting may be a requirement for developments within all NVZs in the future. As this includes 55% of all land in England there may be huge demand for land with offsetting potential. Although currently the pilot scheme is limited to a few areas such as the Solent, it may be expanded around the country to other areas facing similar issues. 

Nitrate Offsets Value 

 As projects in this category are still in the pilot stage there are fewer examples on what can be gained from putting land forward. Based on the test sites from the pilot in the Solent, credits are being offered for £3,000/Nitrate credit for the cessation of farming practice. Proactive interventions such as creating wetlands may be worth more. Looking at three sites containing 3,633 credits (some of which have already been sold) across 78.5 ha with each credit representing 1kg/nitrates per year if all are sold this represents 46.28 credits/ha or £138,840/ha to the landowner over the lifetime of the agreement. If an 80-year project is assumed this would result in £1,735.50/ha pa. 

It should be made clear that this example is based on the local council purchasing land themselves and setting a price that developers in the region must pay. As such it is not an open market value of a nitrate offset but gives an estimate of what land previously used for grazing may provide when taken out of production. In this case agricultural activity ceased, however methods of lessening the intensity (such as reducing stocking density) will also produce credits, albeit a lesser amount.   

It is difficult to suggest that this council’s approach and what they have been involved with sets a UK wide market rate because, as we find with the Water Abstraction market, which involves a similar number of market catchment areas, prices vary considerably. However, this is still a useful comparable to take into account when the government expands the pilot to other catchment areas.   

What we can do for you: 

  • Although nitrate offsetting is still in development, please register your interest with us now to take advantage of these schemes as they progress.  
  • We can advise on suitability of areas for being nitrate buffer sites 
  • For those looking to purchase offsets we can add you to our register and match you to a site that suits your requirements and location
  • For our user guide on Nitrate Offsets see here. 
Alasdair Squires

Alasdair Squires
BA(Hons).

01392 823935
asquires@townsendcharteredsurveyors.co.uk