Too much of a good thing: The relentless rise of Nutrient Neutrality
Key messages:
Any development creating overnight accommodation in a catchment where a protected waterbody is affected by nutrient pollution will have to demonstrate nutrient neutrality – either by installing on-site mitigation measures or by off-setting through nutrient credits. 74 local authorities in England are now affected.
This creates opportunities for landowners to create nutrient credit banks by entering into long term land use change agreements to reduce nitrate and phosphate use.
Pressure on farmers to reduce nutrient run-off continues to mount. Grants and advice are available, but inspections are going to increase. Now is the time to future-proof farming businesses.
What’s the problem?
Nitrogen and phosphorus are key plant nutrients, essential for growth. They are highly valuable on land where they can be taken up and used by crops, but can be very damaging if they end up in a watercourse. We have known this for decades – nitrate regulations were first introduced in 1990 – but it has been brought into sharp focus in England recently because of the impact on protected waterbodies, which has resulted in a ban on new development in some affected catchments unless nutrient neutrality can be demonstrated.
Nitrates and phosphates can cause eutrophication in waterbodies when some algae and plants respond quickly to the enriched environment, causing de-oxygenation and knocking the aquatic ecosystem out of balance. Many waterbodies in England (including lakes, river systems and estuaries) are protected under the 2017 Habitats Regulations as SSSIs, SACs, SPAs or Ramsar Sites. As part of the system of protection, a Habitats Regulations Assessment (HRA) must be carried out if any “plan or project” is proposed which might have a significant effect on a protected site.
In practical terms, this means that any planning application for development within a protected catchment will be subject to an HRA, which is carried out by the local planning authority and which Natural England will review.
Nutrient neutrality
Following a European court case known as the “Dutch N case” in 2018, Natural England issued advice to several local planning authorities that it would require HRAs in affected catchments to show that the impact of the proposed development on levels of nitrates and phosphates had been assessed and that measures would be put in place to ensure that the impact on the catchment was “nutrient neutral”. In other words, the expected increase in nutrient pollution from the new development (through wastewater and sewage) would have to be mitigated so that there would be no additional nutrients in the catchment, or it would have to be offset against reductions in nutrients elsewhere in the same catchment.
The effect of this new approach was an immediate moratorium on development in the affected catchments as local planning authorities and developers considered the implications and tried to find solutions. In this context, development generally means new overnight accommodation, so includes houses but also student and tourist accommodation.
Natural England acknowledges that this is a temporary position. The Government has an obligation to improve the water quality in the affected catchments, but this will take time and the current approach has been adopted in an attempt to prevent the situation deteriorating further.
Affected catchments
The catchments first affected by the revised approach were Poole Harbour, the Solent and the River Avon (Hampshire and Dorset); the River Camel (Cornwall); Stodmarsh (Kent); the River Lugg (Herefordshire) and the Somerset Levels and Moors. Thirty-two local authorities were affected, including City, Borough and District Councils and National Park Authorities.
In March 2022 Natural England extended its advice to a further 20 protected waterbodies, including the River Eden SAC in Cumbria and the Teesmouth and Cleveland Coast SPA/Ramsar, the combined catchments of which extend almost coast-to-coast across Cumbria, County Durham and Middlesborough; and the River Wensum SAC and parts of the Norfolk Broads SAC/Ramsar, the combined catchments of which cover a large part of Norfolk. In total, a further 42 local authorities are affected.
The full list of catchments and a map showing their extent can be found in Natural England’s letter to Chief Planners, available from Cornwall Council’s website: https://www.cornwall.gov.uk/media/gbpk3k1y/ne-water-quality-and-nutrient-neutrality-advice-16_03_2022-issue-1-final.pdf
Nutrient credit banks
A number of different solutions have been used to overcome the challenge posed by nutrient neutrality. Some developers are incorporating Sustainable Urban Drainage Systems or constructed wetlands into developments and on smaller sites, package sewage treatment plants might be installed.
Where it is not possible to entirely mitigate the impact on-site, developers have entered into agreements to purchase “nutrient credits” from landowners who commit to long term land use change by stopping the application of nitrates and phosphates on the land. In the Solent catchment, which was one of the first affected, nutrient credit banks have been created by a Wildlife Trust, several local authorities and some private landowners.
It is likely that similar solutions will be sought in the 20 catchments newly identified by Natural England and that number could rise again in future. So does this represent an opportunity for landowners interested in natural capital markets?
Pros and cons of a nutrient credit bank include
Off-site nutrient mitigation must endure for as long as the development, so the land use change required by the scheme should be considered permanent.
The nutrient bank must be in the same catchment as the development which it is offsetting.
The greatest saving in nutrients is likely to occur when changing use from conventional agriculture (arable or intensive grassland) to an extensive system with no nutrients applied – including manure or slurry.
The cost of making any change and future maintenance costs (potentially in perpetuity) must be built into the pricing model.
The amount of nutrient credits per acre which can be created is likely to be site specific and the price paid by developers for a unit will be subject to local supply and demand pressure.
The agreements entered into will be binding on future landowners.
Such restrictions on the future use of the land might adversely affect its capital and rental value.
If the change involves the cessation of agriculture, some tax reliefs might be at risk.
Where there are other reasons why a landowner might want to extensify the land use or reduce nutrients, selling nutrient credits might provide an income stream to enable the change.
There could be opportunities to stack other benefits on the same land, such as biodiversity credits or carbon credits, provided that the additionality rules were met.
This could suit relatively small areas of land in sensitive locations, perhaps buffering other sites, such as woodland.
The bigger picture
All this is happening in the context of the wider Government policies to improve nature recovery across England: one of the new environmental targets announced on 16th March 2022 was to reduce the nitrogen, phosphorus and sediment contribution from agriculture in the water environment by at least 40% by 2037, against a 2018 baseline. This is to be achieved by providing grants to improve facilities and practices on farm (through another round of the Farming Investment Fund later in 2022), providing more advice and support through the Catchment Sensitive Farming scheme and by ramping up the level of inspections from about 400 per year to 4,000 by 2023.
Now is very much the time for farmers to take advantage of the advice and financial support on offer to future-proof their businesses against ever-tighter restrictions on the use and storage of nutrients, including manures and slurries. The grants for improving the storage and handling of manures and slurry might be useful to arable farmers needing temporary storage for manure or sewage sludge, as well as to livestock farmers.
Defra’s Policy Paper Nutrient Pollution: reducing the impact on protected sites was published on 16th March 2022 and can be found at
https://www.gov.uk/government/publications/nutrient-pollution-reducing-the-impact-on-protected-sites/nutrient-pollution-reducing-the-impact-on-protected-sites
31st March 2022