Project Snapshot

The initiative focuses on financing habitat banking schemes in England to mitigate biodiversity losses from housing developments. The project, led by the Royal Society for the Protection of Birds (RSPB) with Finance Earth, utilises a habitat banking mechanism that directs compensatory payments from developers to local councils into a designated habitat bank. This preemptive approach ensures the creation of compensatory habitats before environmental damage occurs, particularly benefiting the cirl bunting population. The initiative demonstrates a collaborative model involving public, private, and philanthropic stakeholders to establish a sustainable compensation-based revenue stream for habitat banking.

Investment and operating model

The RSPB implements a habitat banking model at Ashill, integrating compensatory payments from housing developers under Section 106 agreements as the primary revenue source. Additional income is generated through farm tenancy lease payments, diversifying financial streams and enhancing commercial viability.

To acquire the 37-hectare Ashill site in Devon, the RSPB initially used its cash reserves in 2017. In 2020, it refinanced the land acquisition through a five-year unsecured commercial loan of £0.5 million from Lloyds Bank, featuring a floating interest rate and regular repayments. The repayment plan relies on expected revenue from Section 106 funds and farm tenancy agreements. For the initial five years, fixed lease payments cover loan interest, with subsequent payments allocated to site management and monitoring.

This structure enables the RSPB to transition from a traditional donation-based funding model to a more financially efficient mechanism for nature restoration. The approach ensures long-term funding for conservation while maintaining financial flexibility for the RSPB’s broader activities.

Impact measurement

Performance metrics focus on the cirl bunting population, a key biodiversity indicator. Under the agreement with the local planning authority, habitat compensation payments are based on a requirement of 2.5 hectares per displaced breeding pair. The RSPB committed to increasing the cirl bunting population by at least 14 breeding pairs while maintaining the site as a nature reserve.

Monitoring involves a combination of baseline assessments, annual winter surveys, and a broader sample monitoring programme conducted by trained volunteers. National surveys occur every 10–12 years, with the next scheduled for 2028. These assessments provide essential data to verify that compensation payments are effectively delivering biodiversity benefits.

Scalability and replication

The initial five-year restoration phase concluded in December 2023, with plans for the RSPB to enter a new agri-environment scheme to enhance wildlife support over the next five years. The introduction of the Biodiversity Net Gain (BNG) policy in England in 2024 presents opportunities for replicating this financing approach across other habitat banking initiatives.

The project’s methodology, underpinned by the Defra statutory biodiversity metric, provides a standardised framework for measuring biodiversity gains. This model offers a scalable blueprint for leveraging private finance in habitat restoration, allowing conservation efforts to be implemented proactively before development impacts occur.

Private investment and conservation

The initiative aligns with the objectives of the Coalition for Private Investment in Conservation (CPIC), which seeks to increase private-sector investment in conservation through innovative financing mechanisms. The project’s integration of private debt funding into habitat banking illustrates a viable model for balancing economic development with biodiversity protection.

Within high-risk sectors like agriculture, alternative business models are crucial for reducing environmental impact while maintaining financial resilience. Investors can utilise tools such as ENCORE to assess and manage nature-related risks effectively. The habitat banking model demonstrated in this project serves as a reference for conservation financing strategies that align with regulatory frameworks and biodiversity enhancement goals.