Balancing viability and value

Efforts to meet political aspirations of zero carbon will drive the initial development of policies, with viability work determining whether they can be delivered. In higher-value areas, a surplus may be available that makes all policies viable. In many locations, the impact of the policy will impact viability.

If viability allows a choice, then a key discussion point is how to determine which sustainability policies are most effective. Electric charging points, biodiversity net gain and water efficiency measures contribute towards net-zero, but do we understand which of these deliver the best ‘bang for your buck’? At this stage, as technologies are emerging, probably not.

This all implies that it is the public’s role to bear the burden of the viability gap, but authorities generally feel that the responsibility should also fall on landowners and developers. A perpetual viability sticking point is the expectations of the value of landowners’ sites.

Without an understanding of the intricacies of viability and perhaps expecting a windfall after holding land for decades, landowners often have a price fixed in their mind and do not take heed of the latest policy, because it is having the intended effect of capturing more land value for public benefit.

Developers are similar, beholden to minimum profit levels by their funders while dealing with significant cost increases. Shareholders are starting to recognise their ESG responsibilities, but it is too early to determine whether this translates into acceptance of lower profit levels.

The issue of where the responsibility lies in delivering net zero policies is not easy to solve, but ongoing transparent dialogue between stakeholders will give the best opportunity to solve it fairly. A committed policy environment will bring forward innovation and solutions, which substantially reduce carbon but without significant increases in costs.

Brett Devenish is director of AspinallVerdi