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Saving Nature with Revolving Real Estate

By Mat Hardy, Sarah Bekessy, Ascelin Gordon & James Fitzsimons

Revolving funds buy land with high nature value, protect these values through conservation agreements and then resell them. The funds from sales then purchase more land.

Internationally, there is a growing focus on protecting important biodiversity found on privately owned land. In some countries, privately protected areas (PPAs) are included in a nation’s effort to meet international conservation targets.

PPAs can be created in a variety of ways. These include outright acquisition and management of land by conservation organisations, or by landholders protecting their land with a conservation covenant. A major constraint on the creation of PPAs, however, can be a lack of financial resources, particularly where land is expensive to buy and manage as a private conservation reserve, or where existing landowners are reluctant to enter into permanent conservation agreements.

One strategy conservation organisations have employed to deal with these issues is to purchase land with ecological assets, and then resell that land to new conservation-minded owners, in the process adding a permanent conservation agreement (such as a covenant). The proceeds from the sale can then be used to purchase and protect additional land. In Australia, this approach is referred to as a revolving fund.

Surprisingly, given the number of revolving funds in operation around the world, not much is known about the process of buying, protecting and reselling land for this purpose. In fact, the approach has a variety of different names (and operate in different ways), so for clarity here we refer to the approach as purchase-protect-resale (PPR).

But what is the global scale of PPR, where is it used, and what’s been achieved to date? What are the benefits of buying and reselling land for conservation? What are the challenges? With these questions in mind, we systematically reviewed the literature to find out more.

Globally, we found more than US$384 million in funding available for land purchase and protection through PPR programs. Collectively, more than 684,000 ha have been protected via PPR, with most of the programs operating in the United States. Australia’s programs have also made their mark, protecting more than one-fifth of the total global area protected by PPR.

Through our review we identified a number of benefits arising from the PPR approach. Some of these benefits are unique to PPR, such as the ability to replenish expenditure and recycle funds. Other benefits neatly aligned with the aspirations of mainstream conservation strategies, including the ability of PPR to target important conservation land, and shift land into conservation-minded ownership.

We also uncovered a number of challenges. Some of these were unique to PPR, such as working within the limited market for conservation land, and the pressure for continual purchase and resale to achieve conservation. And some challenges were similar to those experienced by other conservation approaches, such as finding ways to recover costs, working within a dynamic market, and having to make decisions based on incomplete information.

Due to its reliance on property resale, the PPR approach is likely restricted to conserving specific types of properties, and is unlikely to be appropriate in all circumstances. Because of this, the role of PPR is therefore likely as part of the broader mix of approaches used to protect nature on private land.

Nevertheless, the ability to recover costs through resale suggests an important role for PPR in private land conservation, particularly where land is expensive to purchase. And its ability to intervene in the property market highlights its value in protecting land where previous owners have been unwilling or unable to protect their land.

PPR clearly requires complex decision-making, and we suggest further research could help improve the implementation of PPR, including detailed evaluation of the outcomes of PPR programs, and identification of where in the landscape the approach may best be used.

In particular, economic theory could prove useful for thinking about how to use PPR strategically. For example, should managers of PPR programs focus their efforts on smaller properties close to population centres likely to be resold quickly, or on more remote properties with exceptionally high conservation value that will likely take longer to resell?

Our review suggests that where suitable market conditions exist, and with targeted property selection, PPR programs show promise as a self-sustaining approach for permanently protecting biodiversity on private land. While it’s unlikely to work in all circumstances, PPR appears a useful part of the conservation toolkit, and a valuable complement to other approaches used by conservation organisations to create PPAs.

Mat Hardy, Sarah Bekessy and Ascelin Gordon are based at RMIT University. James Fitzsimons is with The Nature Conservancy. This research was supported by the Centre of Excellence for Environmental Decisions.