Swings & roundabouts, & private land conservation

What factors influence the selection of a property for a revolving fund?

Much private land holds considerable conservation value. Purchasing land and locking it up in a reserve is an expensive option. Encouraging owners to sign up to conservation contracts can be more cost effective. Revolving funds provide a unique, self-replenishing approach to make this happen. (Photo by Mat Hardy)

Much private land holds considerable conservation value. Purchasing land and locking it up in a reserve is an expensive option. Encouraging owners to sign up to conservation contracts can be more cost effective. Revolving funds provide a unique, self replenishing approach to make this happen. (Photo by Mat Hardy)


KEY MESSAGES:
  • The effectiveness of a conservation revolving fund for land acquisition relies upon selecting the right properties
  • Whilst conservation factors are important, financial and social factors are also highly influential, with a major determinant being whether the property can be on-sold within a reasonable timeframe, and at a price that replenishes the fund
  • To facilitate the on-sale process, often selected properties include the potential for the construction of a dwelling

Acquiring private land with significant conservation value (in order to then protect it) can be a powerful way to permanently protect important species and ecosystems. But this approach can be expensive, particularly in areas where land values are high. An alternative to buying the land and making it a reserve is to enter into permanent agreements with private landholders (such as conservation covenants or easements, see Decision Point #97), that restrict both current and future landowners from conducting activities that would be harmful to their land’s ecological value. In recent years some conservation organisations have developed an innovative approach that integrates targeted land acquisition with permanent conservation agreements, drawing on the use of a revolving fund.

A revolving fund is a pool of money that conservation organisations can use to acquire land with high conservation value as it becomes available for purchase. The organisation then ‘on-sells’ the land to conservation-minded owners, with a condition that the new owners enter into a conservation covenant or easement. Owners of existing land can’t be ‘forced’ to enter a conservation agreement, but anyone wanting to purchase these revolving-fund blocks need to agree to enter a covenant as a condition of buying the land.

The proceeds from the sale are then used to purchase, protect and on-sell additional properties, incrementally increasing the amount of protected private land. It’s a great way to buy and conserve land that needs protecting, whilst also being able to recover costs and then go out and do it all again.

The beauty of the revolving-fund approach is that it is potentially self-sustaining. However, the effectiveness of this approach is based upon selecting the right properties. In a general sense, a ‘good’ property shouldn’t cost too much to purchase, should possess features of high conservation value, and should be desirable enough to new buyers, even with the requirement of entering into conservation covenant. If these conditions aren’t met then the revolving fund might start shrinking or be less effective in delivering worthwhile conservation outcomes.

Figure 1: Influence diagram of the revolving fund purchasing decision. Solid boxes represent factors influencing the suitability of the property, dashed boxes represent factors influencing the decision of how much fund managers are willing to pay for the property. Exogenous factors in the decision of how much to pay may include, for example, the current trend in the property market or the manager’s desire to avoid inflating land prices in the region (which may make future purchases more difficult).

Figure 1: Influence diagram of the revolving fund purchasing decision. Solid boxes represent factors influencing the suitability of the property, dashed boxes represent factors influencing the decision of how much fund managers are willing to pay for the property. Exogenous factors in the decision of how much to pay may include, for example, the current trend in the property market or the manager’s desire to avoid inflating land prices in the region (which may make future purchases more difficult).

But how do these general requirements translate into specific day-to-day decision-making for the various revolving funds currently in operation? The approach must be working, as almost 146,000 hectares have been protected to date. But until our study, no-one had explored the various factors that influence the property selection decisions being made.

To remedy this, we conducted semi-structured interviews with managers from each of the five major revolving funds in Australia to explore how they go about choosing properties. We asked them about the factors they currently consider when buying properties for this scheme, and how these factors are integrated into their decision-making.

Pulling out the common themes from the managers’ responses, we found that whilst conservation factors are of course important, there are also a number of financial and social factors in the mix, with a major determinant being whether the property can be on-sold within a reasonable timeframe, and at a price that replenishes the fund. This makes sense if you’re trying to turnover properties and protect as much important land as possible.

But we also uncovered just how tricky these decisions can be. Managers are faced with clear trade-offs between conservation, financial, amenity and other factors. An example is the need for managers to make sure there is room on the land for the new owners to build a house if they wish to, without compromising the ecological integrity of the property. The study identified a number of ways that managers work through these trade-offs,  and mitigate the risks of using revolving funds to conserve private land.

Give me a home among the gum trees. Many people place a high value on living with natural ecosystems. (Image: the Smiths Lake House by sandberg schoffel architects)

Give me a home among the gum trees. Many people place a high value on living with natural ecosystems.
(Image: the Smiths Lake House by sandberg schoffel architects)

Managers clearly have a huge wealth of on-ground experience in making the revolving fund approach work. In our recent paper in Conservation Biology, we have documented some of their knowledge in order to help others who are either currently running, or considering setting up a private land conservation revolving fund (Hardy et al, 2017).

Based on the commonalities between programs, we suggest there is scope for further development of shared learning and an opportunity for an adaptive approach to property selection decisions. Working together, we believe managers can better navigate the challenges of revolving fund property selection. In so doing, we are confident they will be able to better manage the trade-offs, risks and challenges that arise from this promising new approach to private land conservation.


Aussie revolving funds in nutshell

As of June 2016 there are five major revolving fund programs in Australia. They are operated by the Nature Conservation Trust of NSW, the Queensland Trust for Nature, the Nature Foundation SA, the Tasmanian Land Conservancy, and the Trust for Nature (Victoria). Collectively they have $29 million of revolving fund capital, purchased and on-sold 155 properties and established conservation agreements on around 146,000 hectares.


More info: Mathew Hardy mat.hardy@rmit.edu.au

Reference

Hardy MJ, JA Fitzsimons, SA Bekessy & A Gordon (2017). Factors influencing property selection for conservation revolving funds. Conservation Biology DOI: 10.1111/cobi.12991 http://onlinelibrary.wiley.com/wol1/doi/10.1111/cobi.12991/abstract

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