Statutory nutrient mitigation credits – opportunities for farmers

Farmers can be both suppliers and buyers of Natural England’s (NE) statutory nutrient mitigation credits in the Tees catchment. 

This is the first area in which NE is offering the credits to developers to help them offset the impact of nitrogen pollution from housebuilding. The mitigation is a condition attached to planning permissions.

Two rounds of statutory nitrogen credit sales have taken place, the most recent ending on 28 July. Earlier this year, the first round saw enough credits sold to allow 1,461 homes to be built.

See also: Phosphate issues cause long delays for farm planning applications

These have been created through government-funded agreements between landowners and Natural England (NE), with the landowners putting in place measures to counteract the pollution from developments.

Defra and the Department for Levelling Up, Housing and Communities (DLUHC) are putting £30m into the creation of a bank of statutory NE credits to kick-start progress on housing projects in affected catchments.

Tees scheme

The Tees scheme seeks to mitigate the impact of development on the Teesmouth and Cleveland Coast Special Protection Area and Ramsar site.

It covers nitrogen mitigation credits only, for housing and other overnight accommodation. The credits are tied to the development they are bought for and cannot be traded.

How does nutrient mitigation work?

Planning permissions in 74 local planning authorities (LPAs) are dependent on being able to demonstrate that new developments do not produce an increase in nitrogen and/or phosphorus, which damage habitats.

In these areas, water catchments are judged to be in unfavourable condition part of the planning process is for a Habitats Regulations Assessment (HRA) to be carried out.

These are carried out by or on behalf of the LPA or the Environment Agency and consider the implications of the project. If the assessment finds damage due to nutrient pollution will result, then mitigation to reduce the impact must be put in place.

This can be achieved on- or off-site, for example by creating wetlands, woodland, grassland or otherwise changing the way land is managed. Alternative drainage and sewage treatment systems are also an option in some cases.

Where this is not possible on- or off-site, then statutory nutrient credits can be bought – so far only in the Tees catchment.

The nutrient neutrality requirements apply to any new overnight accommodation such as new homes, holiday accommodation and tourist attractions.

There will be opportunities for private landowners to create mitigation schemes and sell the resulting credits.

Landowners in certain areas will be able to create and sell both nutrient neutrality credits and biodiversity net gain units from the same parcel of land.

Nutrient credits

A credit accounts for the mitigation of 1kg of total nitrogen or 1kg of total phosphate.

In the case of the Tees, NE nitrogen credits have been priced at £1,825 each, to cover the cost of delivering the mitigation measures and the associated monitoring, maintenance and administration costs.

Developers have to apply for credits on a first-come, first-served basis, with 60% of the Tees credits being allocated to developments of 50 or fewer housing units and the remainder going to larger projects.

Demand for the NE nutrient credits is understood to be strong and the supply is unlikely to be sufficient.

As a result, developers are looking for private deals with landowners to create nutrient mitigation through measures such as wetland and woodland creation.

See also: Nutrient scheme plans unveiled to ease planning backlog

Land agent GSC Grays advises both developers and landowners on nutrient mitigation.

The firm is working with a landowner to develop a nutrient mitigation scheme for the private market, creating wetland habitat to help clean up some of the dirty water going into the river Tees, says director Calum Gillhespy.

National media attention has turned to nutrient pollution recently, blaming it for “blocking” new housing development.

“The housebuilders are also trying to get NE to reassess the calculation of the nitrogen impact of new developments,” says Calum. “There’s a lot of criticism that it had been overestimated.”

However, an appeal court case last year upheld NE’s methodology for nutrient calculations of this type.  

Which laws govern nutrient neutrality?

Many internationally important water dependent sites in England are protected under the Conservation of Habitats and Species Regulations 2017 (as amended).

These include Special Areas of Conservation, Special Protection Areas and Ramsar sites.

A Habitats Regulations Assessment (HRA), carried out in several stages, is used to judge the likely impact of a development.

A Ramsar site is a wetland site of international importance, designated under the United Nations Educational, Scientific and Cultural Organisation’s Ramsar Convention, also known as The Convention on Wetlands, an international environmental treaty signed in 1971 in Ramsar, Iran.

Small on-farm developments

Farmers who build small developments, including under permitted development rights, have the option to buy credits from NE or provide their own mitigation scheme.

“For a five-to-10 house scheme, a private sewage treatment plant can help mitigate the nutrient impact relatively easily,” says Calum.

“One farmer we advised did this and also planted an orchard as part of the mitigation scheme. The trees take up the nitrogen that is discharged and this is easy to manage.”

Calum estimates that the cost of this scheme was comparable to buying the NE credits at £1,825 each.

Intensive livestock

tree saplings

© Paul Maguire/Adobe Stock

New and expanding intensive livestock units, such as large pig, poultry and dairy projects, also have to factor nutrient neutrality into their plans and budgets.

“We advised on an intensive pig unit that took two years to get planning and which is almost six miles from the coast.

“We had to model the ammonia deposition over that distance and provide measures to mitigate its impact on the dune system.”

A set of screening tools was used to estimate the amount of acidity, nitrogen or sulphur deposited on to a habitat or sensitive ecosystem.

Output from these models can then be used to assess whether impact limits for the habitat will be breached by a proposed project.

This provides an initial screening for nutrient neutrality assessments under the Habitats Directive.

“The mitigation for this included tree planting around the building and construction of a covered muck store,” says Calum. 

“By reducing airflow over the muck, the emissions are dramatically reduced. This probably added 30-40% to the cost of the overall project, although some grant aid may be available for elements like this.”

The firm is also marketing land in the Tees catchment with nutrient neutrality potential.

NE seeking sites

NE is inviting landowners to offer land for further nutrient mitigation schemes on which it can create credits for sale.

It is also encouraging other environmental non-government bodies to get involved in designing and delivering future mitigation measures.

Local authority and private mitigation schemes will also play a part, as well as on-site mitigation measures built into the design of housing developments.

Statutory credits will not be necessary in all areas, says NE, with private schemes already operating in Somerset and the Solent.

Common nutrient mitigation measures


© Kevin Eaves/Adobe Stock

  • Creation or restoration of new semi-natural habitats such as woodlands, grassland and natural wetlands
  • Treatment wetlands, for example to catch run-off, from farmland, diverted river water or waste water treatment works
  • Temporary agricultural measures such as fallowing, cover crops or buffer strips
  • Retrofitting sustainable urban drainage systems into existing developments
  • Installation of package sewage treatment plants

CJ Fry and Son Supreme Court case

A west country developer, C J Fry & Son, is challenging the nutrient neutrality rules.

It lost a High Court case last year, where it was ruled that an appropriate assessment should be made of the impacts of the development project on the nearby Somerset Levels and Moors Ramsar Site, which was not done when the planning application was made.

Unusually, the developer has been allowed to bypass the Court of Appeal in what is known as a “leapfrog” case, which means it will go straight to the Supreme Court.

The development and planning community is waiting for this case to be heard, as it has implications for the future of the nutrient neutrality regime.

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