Conservation Covenants – DEFRA's response

The Department for Environment, Food and Rural Affairs has published a response to the consultation on a new statutory scheme.

In July 2019, the Department for Environment, Food and Rural Affairs (DEFRA) published its response to the earlier consultation on a new statutory scheme for conservation covenants.   The final legislation is due to go through Parliament in October 2019.

What is a conservation covenant?

A conservation covenant is a private voluntary agreement between a landowner and a "responsible body" (expected to be a conservation organisation, possibly a charity or a public body) to manage their land for a conservation purpose for the public good.   This could be to conserve the natural or historic environment of the land. 

These conservation covenants are intended to run with the land and bind future owners, but the terms are expected to be open to negotiation, including the duration of the covenant.

This forms part of the Government's 25 year plan to protect and improve habitats and wildlife.  Conservation covenants will form part of the wider package to replace the current farm subsidy system (basic payment scheme) and replace it with a new environmental land management system.   The Government is exploring new and innovative funding and delivery mechanisms, which may include private payments for ecosystem services, reverse auctions and conservation covenants.

Who would be involved in a conservation covenant?

It appears there will be scope for responsible bodies to include for-profit organisations as well as charities and other conservation organisations – these will be designated by the Secretary of State and will be required to submit annual returns to provide information about the covenants they are involved with.

In order to enter into covenants, tenants must have a lease of more than 7 years.  It is possible that a number of adjoining landowners (and tenants) will collaborate to enter into covenants as part as a wider scheme.

How would conservation covenant arrangement work?

It is intended conservation covenants will be a largely private arrangement between the landowner and responsible body, and will not attract public funding, nor public monitoring or enforcement of covenants.  It is expected the Government will legislate to require developers to ensure habitats are enhanced, with a 10% increase in habitat for wildlife compared with the pre-development base line. It is also thought developers will engage with new local public bodies (local nature recovery strategies which will be created for all of England) who will link the developer up with relevant statutory biodiversity units which it is thought in turn will be arranged through conservation covenants. It is possible to foresee an evolution in which high energy consumers are required to offset via conservation covenants.

Whilst the exact role of the responsible bodies and landowners (plus tenants) is not fully clear, it appears there will be opportunities for the parties to diversify into these activities and covenants may be particularly appealing where land is already managed in a largely compatible way.  Clearly the financial benefit will need to be put in the balance and care will need to be taken as to any tax planning implications and possible loss of tax reliefs.