Biodiversity Net Gain Impact in Financial Valuations
Following the introduction of biodiversity net gain (‘BNG’) regulation in February 2024, Grant Thornton’s infrastructure valuations team considers how this may impact financial valuations in the future, addressing potential methodologies and evaluating the impact on developer profitability.
The BNG legislation represents a new government approach to development that integrates measurably creating and improving natural habitats into granting local planning permissions, stating that any new development sites must demonstrate a BNG of 10%. To achieve this 10%, Grant Thornton speculates as to what additional costs may be incurred by developers to meet these requirements, including the costs of BNG credit markets for those unable to realise BNGs onsite, but also the potential for returns and additional revenue streams for sites that achieve BNG producer status.
Overall, the market for BNG credits is very much in its infancy, but developers can benefit from early consideration of impacts to the profitability and therefore valuations. Over time and as the market matures, they expect to see more certainty around these cash flow impacts.
This 5-minute video is part of our Biodiversity in Infrastructure series in collaboration with Michelmores and Grant Thornton. Continue watching:
