Novel financing solutions for land use change

New financing options may help support land-use and land management changes. Environmentally beneficial changes that are also financially beneficial will likely secure funding through traditional methods. However, where the changes are not profitable, have significant capital costs and/or can’t access finance through traditional measures, novel financing solutions may be required.

This project investigated possible options to support land-use enhancement where access to finance is a key barrier. While this research had hoped to identify a novel financing solution that would support a variety of land-use and management changes, there is no single novel financing solution that will be suitable for all situations. This report provides a range of recommended actions for the financing options that were ranked highest.

A variety of mechanisms are required so landowners can select those that are most suited to their situation and desires, or combine solutions. For example, catchment groups could combine projects to a significant scale so that they are attractive to philanthropic funding sources, which could then be used to create a self-sustaining endowment fund.

One solution stood out as having the most potential: creating and monetising new products, primarily biodiversity credits. However, it is incredibly complicated to create well-functioning public markets and there is significant work that needs to be done before this financing solution can realise its potential.

This work aims to generate conversations about the potential options to finance land use and land management change. These conversations are important if we want to achieve a future where catchments contain mosaics of land uses that are more resilient, healthy, and prosperous than today.