2008, Volume 16, Paper 3
ISSN: 1883-5675
Land Repair Fund: A model for exploiting the nexus between land repair, improved production and profit
John E Leake
Julian B Morison
Abstract
Typically, the techniques used by the best farm managers to improve productivity are correlated with actions that address land and water degradation issues, thus establishing a nexus between land repair, improved production and profit. To address broader environmental degradation issues, there are a number of programs through which landholders can voluntarily conserve areas of ecological value on their properties. They range from nonbinding, temporary agreements to binding agreements that are attached perpetually to the title of the land.
There are other ecosystem values for which incentives are being developed, for example, salinity, carbon sequestration and amenity purposes and often there is a range of these that may be applicable to a particular land area.
This paper overviews some of the existing revolving fund schemes that have been implemented or are currently being tested in Australia, considers the payment of landholders for providing ecosystem services and then provides details on a case study of one type of revolving fund, the Land Repair Fund. There is a wide range of structural, legal, financial, investment and fiscal options available to assist in encouraging private investment in the repair of degraded lands in Australia. It should be possible to attract investors who are seeking longer-term returns on investment assisted by appropriate tax concessions and /or payments perhaps through tenders for desired ecosystem services. A single, fixed structure and business model will not address the significant variation in conditions and needs relating to particular properties or areas in need of repair. The appropriate business structure may vary significantly from case to case and be enhanced by a variety of possible payments for ecosystem services. It is this area in particular where government, perhaps through local and regional natural resource management boards, who can assess desired ecosystem service outcomes, could play a role in facilitating private investment in funds that will, in turn, invest in large scale land repair activity. The case studies discussed in this paper demonstrate that investment in land repair can be financially attractive. The main drivers of profit are derived from the scale of operation and leading management practices that have historically generated attractive returns in top performing Australian farm businesses.
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