SFI Scrapped: Could Biodiversity Net Gain (BNG) be a viable alternative for farmers?

With the recent decision to halt new applications for the Sustainable Farming Incentive (SFI), UK farmers are once again facing uncertainty around financial support for sustainable land management.

For those who had factored SFI payments into their financial planning, this sudden change raises urgent questions: What’s next? How can farms maintain income while supporting environmental goals?

One option some landowners are considering is Biodiversity Net Gain (BNG). While it isn’t a direct replacement for SFI, it does provide a market-driven opportunity for farmers to generate income by creating and managing Biodiversity Gain Sites.

What is Biodiversity Net Gain (BNG)?

Under the Environment Act 2021, developers working on most development types in England must ensure a minimum 10% net gain in biodiversity when carrying out new projects. If they cannot achieve this onsite, they must offset their impact elsewhere by purchasing off-site biodiversity units from landowners.

This creates an opportunity for farmers to:

- Generate a stable, contractual income by restoring or enhancing habitats.
- Utilise underproductive or marginal land without compromising food production.
- Work alongside private sector funding, making it less susceptible to government policy changes.

Can BNG Be an Alternative to SFI?

SFI was part of the Environmental Land Management (ELM) scheme, rewarding sustainable farming practices such as soil health improvement and biodiversity enhancement. However, with its sudden removal, many farmers need to explore alternative ways to fund environmental projects.

BNG presents a potential solution by enabling farmers to sell biodiversity units to developers who must offset their environmental impact. This could provide a long-term, stable revenue stream while contributing to conservation efforts.

However, BNG isn’t a quick fix. It requires careful planning, legal agreements, and ecological assessments. While it won’t suit every farm, for those with suitable land, it could be a commercially viable way to diversify income.

Comparing BNG and SFI: What Are the Key Differences?

Advantages of BNG Compared to SFI

• 1. Higher long-term revenue potential

  BNG agreements typically last for a minimum of 30 years, providing stable, private-sector funding. Unlike SFI payments, which were subject to government policy shifts, BNG contracts are legally binding.

• 2. Market-drive opportunity

  Rather than relying on government subsidies, BNG operates within a private sector marketplace, offering a source of income in line with unit sales.

• 3. Greater land use flexibility

  Farmers can choose which land to allocate for biodiversity projects, often focusing on marginal or low-yielding areas, reducing impact on food production.

• 4. Alignment with business and environmental goals

  BNG complements sustainable farming practices, such as rewilding, hedgerow planting, and conservation grazing - offering both ecological and financial benefits.

Challenges of BNG Compared to SFI

• 1. Higher initial costs and complexity

  Setting up a BNG project requires ecological assessments, habitat creation plans, and legal agreements. However, working with a BNG provider such as Integrated Land Management can help reduce complexity and upfront costs.

• 2. Long-term land commitment

  While SFI allowed for short-term commitments, BNG typically requires a minimum 30-year agreement, limiting land-use flexibility.

• 3. Uncertain demand and pricing

  BNG operates as a market, meaning unit prices fluctuate depending on developer demand and location. Unlike SFI, which had fixed payments, BNG income depends on market conditions.

• 4. Eligibility and suitability challenges

  Not all land is suitable for BNG. Location, existing biodiversity value, and planning constraints can affect eligibility.

How Farmers Can Benefit from BNG

✔️ Long-Term Revenue Streams
Developers enter legally binding agreements with landowners, often 30 years, ensuring predictable income. Current estimates suggest biodiversity unit values could range from £30,000 to £40,000 per unit, with potential for future increases.

✔️ Complements Sustainable Farming
Many BNG-compatible actions—such as conservation grazing, rewilding, and hedgerow planting—fit within regenerative farming models.

✔️ Greater Farm Resilience
BNG provides income diversification, helping reduce financial reliance on subsidies and mitigate risks from climate change, price volatility, and policy uncertainty.

Is BNG Right for Your Farm?

BNG isn’t for every farm, but for those with suitable land, it could offer a viable, long-term income stream.

At ILM, we understand that BNG must be practical, not just policy-driven. Our Managing Director, Sam Paske, has first-hand experience in conservation grazing and land management, giving us a real-world perspective on what works for farmers.

In a recent article for CIEEM’s In Practice magazine, Sam and Melanie explored how grassland habitats can be effectively managed for biodiversity gain, balancing ecological benefits with commercial viability.

If you’re curious about BNG and whether it could work for your farm, let’s have a chat.

📖 Want to read more? Read our article in CIEEM’s In Practice magazine here.