Land Use Policy 24 (2007) 4

erap

A

tree

Jam

ed f

nte

ex

pro

which they are part; this includes diversity within species,

vegetation and habitat types considered to be inadequatelyrepresented in National Parks and other conservation areas

tion, as manifest in the various natural resource manage-

the potential efcacy of debt-for-conservation swaps as anincentive for biodiversity conservation in a domestic

ARTICLE IN PRESSsetting.Section Debt-for-conservation swaps provides rele-

vant context to the investigation. Debt-for-nature swaps

0264-8377/$ - see front matter r 2006 Elsevier Ltd. All rights reserved.

doi:10.1016/j.landusepol.2006.07.001

Corresponding author. Tel.: +617 4775 2448; fax: +61 7 4728 6436.E-mail address: romy.greiner@riverconsulting.com.au (R. Greiner).between species and of ecosystems (Convention onBiological Diversity, 1992). Biodiversity generates a suiteof use and non-use values for humanity, both private andpublic (e.g. Mountford and Keppler, 1999; Rolfe, 2002).In Australia, federal and state government rely heavily

on on-farm conservation of biodiversity to meet interna-tional and domestic commitments for biodiversity protec-tion (Sinden, 2004). The biodiversity of Australias tropicalsavannas is particularly poorly represented in the nationalreserve system. The Burdekin Dry Tropics rangelands innorth-east Queensland typify this situation, with key

ment (NRM) plans across the tropical savannas, includingthe Burdekin Dry Tropics NRM Plan (Burdekin DryTropics Board, 2005), which stipulate a series of mediumand long-term targets for regional-scale biodiversity out-comes. The vast majority of land across the tropicalsavannas is being grazed for cattle production. It wouldtherefore appear that graziers areand need to bemajorproviders of biodiversity conservation in those landscapes.There are a suite of policy types and incentive instru-

ments availableconceptually and appliedto supporton-farm biodiversity conservation. This paper investigatesactivities. The case for relevance of the instrument is argued on the basis of empirical data from a grazing region in northern Australia.

Stakeholders and participants are identied for debt-for-conservation swaps and details for instrument design discussed. Results from a

grazier survey and lessons from a similar incentive in the USA support a critique of the incentive instrument against a range of policy

criteria.

r 2006 Elsevier Ltd. All rights reserved.

Keywords: Financial incentives; Biodiversity conservation; Farm debt; Debt-for-nature swaps; On-farm conservation; Policy design; Policy assessment

Introduction

Biodiversity is the variability among living organismsfrom all sources including, inter alia, terrestrial, marine andother aquatic ecosystems and the ecological complexes of

(Roth et al., 2002). The Brigalow Belt bioregion takes in alarge proportion of the Burdekin rangelands and has onlyapproximately 2.2% reserved in protected areas (Sattlerand Williams, 1999).Yet there is growing demand for biodiversity conserva-swap concept might be applicable and relevant in a domestic settingby alleviating farm debt in return for on-farm conservationSupporting on-farm biodivdebt-for-conservation sw

Romy Greinera,,aRiver Consulting, 68 Wellington S

bAustralian Centre for Tropical Freshwater Research,

Received 24 March 2006; received in revis

Abstract

Debt-for-nature swaps have been extensively applied in an i

developing countries. The swap involves alleviating a countrys

equivalent amount of resources into specied nature conservation58471

sity conservation throughs: Concept and critique

llyson Lankesterb

t, Townsville QLD 4812, Australia

es Cook University, Townsville QLD 4814, Australia

orm 22 June 2006; accepted 17 July 2006

rnational context to achieve nature conservation objectives in

ternal debt burden in exchange for that country investing the

grams or activities. This paper explores to what extent the debt-

www.elsevier.com/locate/landusepol

ARTICLE IN PRESSR. Greiner, A. Lankester / Land Uhave been extensively applied in an international contextfor two decades. As part of the swap, a developing countryis relieved of a specied amount of foreign debt in exchangefor a specied commitment to and investment in natureconservation. But debt is also a growing issue for farmsas illustrated for the tropical savanna landscapes, whereproperty prices and land values have risen sharply overrecent years, which has been a major driver for increasedfarm debt. The requirement to nance debt is a contribut-ing factor for grazing intensication, which has detrimentalbiodiversity outcomes. This situation provides the back-drop for the question of whether or not debt-for-conservation swaps are a suitable incentive for on-farmbiodiversity conservation.The paper develops the concept of debt-for-conservation

swaps in a domestic context, with specic focus on on-farmbiodiversity conservation in Australias tropical savannas(section Domestic application of debt-for-conservationswaps: the concept). It goes on to assess the conceptagainst a suite of policy criteria (section Domestic debt-for-conservation swaps: critique), using data from agrazier survey in the Bowen-Broken-Bogie catchmentswithin the Burdekin rangelands. The paper ends bydrawing conclusions as to the instruments efcacy.

Debt-for-conservation swaps

Concept and terminology

A debt-for-conservation swap is an economic incentiveinstrument intended to break the cycle of increasing debtand environmental degradation. The concept is based onthe premise that countries or enterprises with high levels ofdebt are likely to exploit natural resources at above-long-term-optimal levels in order to meet short-term debtservicing obligations and remain solvent. Having identieddebt as the cause of environmental degradation, the notionis to reduce debt and thereby enhance nancial viabilitywhile at the same time securing environmental outcomesthrough contracts that stipulate swap conditions in termsof environmental actions.The terminology concerning debt-for-conservation

swaps is confusing in-so-far as the instrument is alsocommonly referred to as debt-for-nature swaps or debt-for-environment swaps (Langanke et al., 2005). In theabsence of a terminological delineation in the literature, theauthors conceive all three as special categories of debtswaps in that they explicitly pursue environmental goals inexchange for debt relief.1 The above terms can be seen asnested, with debt-for-conservation swaps being the biodi-versity-preservation focused sub-set of debt-for-natureswaps, which consider fauna, ora and landscape con-servation more broadly. These, in turn, can be seen as asubset within debt-for-environment swaps, which concern1Debt-for-development swap is a similar swap concept but pursues

different objectives.themselves with the human surroundings more generally.The concept and methodology of debt-for-environmentswaps has been developed in an international context.

International context and application of debt-for-nature

swaps

Many developing countries have large international(public sector) debts and debt servicing absorbs asignicant to majority proportion of total budget expen-diture. The large scale of debt contributes signicantly toenvironmental degradation and the deterioration of thenatural resource base, including deforestation and deserti-cation (Mateo, 1993). Debt-for-nature swapsas they arepredominantly referred to in the international contextarea mechanism aimed at providing funds for naturalconservation programs in developing countries whilesimultaneously reducing their international debt.A debt-swap transaction normally involves a minimum

of three partiesa debtor country, an investor and aninternational lender. The investor/donor, typically a con-servation non-government organization, purchases thedebt from the international lender/creditor, typically acommercial bank or multilateral institution. The investorthen negotiates with the debtor country to exchange thedebt for a commitment by that country to use theequivalent amount of local currency for an agreed purpose(UNDP, 2003). In the case of debt-for-nature swaps therevenue is directed towards nature conservation programsor projects.The incentive for the swap lies in the ability of the

investor to purchase the debt at less than face value fromthe creditor and redeem it in the debtor country in localcurrency at face value (UNDP, 2003). The discount is aresult of the creditors low expectations for repayment bythe debtor country and/or desire to improve liquidity and/or desire to reduce credit exposure. The proceeds of theswap, the difference between purchase and redemptionprice, is invested in environmental programs or projects.The proceeds generated by a debt-for-nature swaps areoften administered by local conservation or environmentaltrust funds (rather than government), which disbursegrants to specic projects and ensure accountable, trans-parent and decentralized management (FAO, 2005). Swapconditions tend to be complementary to existing policiesand legislation to maximize compliance.The principal mechanism of the swap is illustrated in

Fig. 1. However, its implementation varies on a case-by-case basis, depending on country, donor, lender andconservation objective.Over the past two decades an estimated 30 countries

have participated in debt-for-nature swaps and in excess ofUS$1 billion in funding for the environment have beengenerated (UNDP, 2003). The WWF, Center for Con-servation Finance (2003) estimates that between 1987 and

se Policy 24 (2007) 458471 4592003 a total of US$168 million of face value of commercialdebt has been purchased for under US$46 million,

ARTICLE IN PRESS

Linc

t no

ational debt-for-nature swap (adapted from Philp, 1992).

Table 1

Factors inuencing the market for developing country debt (adapted from

Philp, 1992)

Factors which inuence banks/creditors to sell developing debt

Desire to remove non-performing loans from books Desire to recoup the debts fair market price, the proceeds of which canbe re-invested elsewhere

Desire to reduce debt exposure, i.e. avoid providing further loans tothe debtor country to ensure existing debt commitments are serviced

Desire to minimise administration cost of debt, which can outweighpotential nancial benets of holding the debt

Factors affecting debt discount

Estimated ability of debtor country to replay the loan Estimated debtor countrys capacity to pay (debt:export ratio) Disagreement over rescheduling debt Creditors need for liquidity/cash

Factors affecting value of the debt

Cost of the debt on the secondary market Proportion at which the debtor government will convert the debt intolocal currency or bonds

d Ugenerating almost US$113 million in conservation funds.Among the countries with the highest debt relief wereCosta Rica (US$80 million), the Philippines (US$30million), Bolivia (US$12 million) and Madagascar(US$12 million). For example, in 1994 ConservationInternational purchased a face value debt of Madagascarof US$3.2 million for a purchase price of US$1.5 million,which generated the equivalent of US$1.7 million inMalagary francs to be expended on conservation projectsin Madagascar.

Review of international debt-for-nature swaps

In analysing completed debt-for-nature swaps, Deaconand Murphy (1997) nd that swaps are more likely incountries that are tropical, have a relatively high density ofthreatened species, and have experienced more rapiddeforestation. Participating countries also tend to havedemocratic institutions, such as elected government, and

Donor (bank,government,NGO)

International NGOUS$Debt noteUS$

Private bank orsecondary debtmarket

US$ Debt noteUS$

DebUS$

Fig. 1. Illustration of principal mechanism of a intern

R. Greiner, A. Lankester / Lan460are relatively stable politically. Their debt burdens are highrelative to repayment capacity, which might indicate thatthey attach a premium to reducing debt in order to regainaccess to credit markets.Philp (1992) lists a series of factors that contribute to the

market for Developing Country debt, including thosecontributing to the sale of debt, those affecting (secondary)market debt discount and those inuencing the value ofthe debt (Table 1). The benets that the debtor country andinvestor achieve are further summarized in Table 2.However, the literature reveals a lively debate about the

concept and its implementation. Jaeger (1990) praises debt-for-nature swaps as an innovative and promising concept.Moran (1992) regards as key benet of debt-for-natureswaps the time they buy to secure (more permanent formsof) environmental protection as well as protecting andpromoting the protection of natural resources, which are anecessary foundation for the economic sustainability ofdeveloping countries. Resor (1997) credits debt-for-natureswaps with signicant gains in conservation and otherocal NGO and/orstitution in debtorountry

Central bank ofdebtor country

teLocal currency or bondsexchanged at the officialexchange rate

Interest on bonds orcash in local currency Conservation of

natural resourcesPrincipal Conservation of

natural resources orendowment for localNGO

se Policy 24 (2007) 458471social programmes, as well as the way in which conserva-tion organizations, donors and governments in developedand developing countries approach the topic of nancingconservation. While there are conservation success storiesamong the suite of debt-for-nature swap applications (forexample, the 2002 USPeru Debt-for-Nature Swap: TheNature Conservancy (2006)), the concept has beencriticized for a number of reasons.Von Moltke (1991, p. 975) warns that unless debt-for-

nature swaps are closely observed and carefully negotiated,they could appear to be a sleight of hand: the turning of aliability into an asset. Mateo (1993) notes possible impactson the debtor countrys management of money supply, andsecurities market and interest rates, among others. Mahony(1992) specically points to perverse outcomes, whereby a

Exchange rate of converting debt into local currency

ARTICLE IN PRESSnd Ureduction in the face value of a countys debt may be off-setby an increase in that debts secondary market price andtherefore the amount of debt this country is expected torepay. Philp (1992) raises philosophical problems with theinstrument and argues that debt-for-conservation swaps donot address the fundamental causes of Developing Countryproblems while reducing the political and moral pressure

Table 2

Benets of debt-for-nature swaps (adapted from Mateo, 1993)

Benets for debtor country

Reduce level of external debt Encourage international aid by broadening investment opportunities Improving balance of payment situation by replacing foreign currencyliability with local currency liability

Facilitate domestic ow of funds to a sector that is generally neglected(environment)

Strengthen government institutions and private organisations involvedin the environmental conservation

Facilitate the funding of medium and long term projects, with theissuing of deferred maturity bonds

Benets for international investor/donor

Achieve biodiversity conservation Enhance bargaining power if the debt is negotiated on the secondarymarket at a signicant discount

Multiply value of the donated amount in local currency Enhance international agency/debtor country coordination withoutaffection national sovereignty

Generate spin-off benets and social well-being by helping to reducedebt servicing pressures and uncertainty

R. Greiner, A. Lankester / Lafor more meaningful solutions (p. 56). Deacon and Murphy(1997) note in an analysis of some 21 debt-for-nature swapcontracts that these swaps generally enhance the delinea-tion and enforcement of existing nominal property rights that

are held by the host government and note that swapsseldom transfer ownership of land or resources. Examplesare of debt-for-nature funding going towards biodiversitysurveying, additional resourcing of national park services,and the expansion of the national park estate of countries.Greener (1991) points to a raft of generic and speciccompliance and enforcement issues. Deacon and Murphy(1997) point out that because of compliance issues projectsare avoided which may be contrary to government self-interest and that the ability of donors to coerce agreednature conservation programs and projects is extremelylimited, specically if the investor is a non-governmentorganization. Finally, in terms of outcomes they also notethat the amount of money involved in debt-for-natureswapswhile growingis insignicant in relation todeveloping nations debt. Emerton et al. (2006) point outthe mixed successes of debt-for-nature swaps and illustratesome additional pitfalls, for example when proposed swapsare seen to have political and economic motivations thatare not considered as being in the interests of the country.Thapa (1998) states that debt-for-conservation swaps

cannot provide an effective solution for overall Developing

mentation, altered re regimes, spread of exotic fauna and

ora and climate change and various aspects associatedwith the intensication of grazing systems (MLA, 2005;Bortolussi et al., 1999; DEST, 1996), which is causing ageneral decline in landscape function (Sangha et al., 2005;Ritchie, 2005; Woinarski and Ash, 2002; Ludwig et al.,1999; Landsberg et al., 1997). The failure of graziers to de-stock early in emerging drought conditions or to asufcient extent exacerbates environmental decline(McKeon et al., 2004). Greiner and Lankester (2006)provide a detailed literature review on the biodiversityeffects of grazing intensication in the tropical savannas.Economic considerations are the key drivers of intensi-

cation, including the ability of grazing properties toprovide an income for the owner family, to service nancialcommitments and to generate competitive returns oninvestment. Farm debt is thus an indirect driver forintensication (Greiner et al., 2003), requiring graziers togenerate sufcient income to cover interest payments andCountry debt nor for their environmental problemsinlight of the extent of that debt and the scope ofenvironmental degradation. Thapa (1998, p. 261) furtherasserts that solving the debt crises would not solve theenvironmental crisis as deforestation cannot be totallycurtailed but sees debt-for-nature swaps as a plausible anduseful tool though in specic circumstances, where devel-oping countries are proactive in nature conservation, suchas Costa Rice. Another suggested country is Nepal, wherethe government supports nature conservation and can beexpected to implement swap conditions (Thapa and Thapa,2002). Resor (1997) reminisces that debt-for-nature swapsare only a means rather than an end in itself. The ultimatesuccess of debt-for-nature swaps depends on the viability of

the programmes financed, and on the strength of the

organizations and communities implementing the pro-

grammes and managing the swap proceeds.

The relationship between farm debt and on-farm biodiversityin Australias tropical savannas

The question is whether the concept of debt-for-natureswaps may be relevant for an Australian domestic context,with emphasis on the situation of north Australias tropicalsavannas, and more specically the rangelands of theBurdekin Dry Tropics region, where farm debt has beenincreasing rapidly on the back of a rural property boom.The tropical savannas are extensively used for grazing.

Most land is pastoral leasehold and leases are mostlylargeoften hundreds of square kilometersand livestockdensities are low by western agricultural standards,reecting the generally low fertility of these rangelands.Despite the comparatively low production intensity, thethreats to on-farm biodiversity from grazing are multiple.They include clearing of native vegetation, habitat frag-

se Policy 24 (2007) 458471 461principal repaymentsthrough good years and bad. Theneed for xed payments can prevent early and adequate

ARTICLE IN PRESS

1990

nsl

d Ude-stocking in drought years and motivates short-termmaximization of production.Land values specically in north and central Queensland

have seen an unprecedented rise in recent years. The capitalvalue per hectare of land (with stock) has increased fromless than $9 in 1978 (in 2004 $ values) to just under $200 in2003 and 2004. An analysis by Carr and Honnef (2005)reveals a functional relationship between cattle prices andQueensland grazing property prices. Specically, for everyrise in cattle prices by 10 c/kg, land prices tend to followwith an increase of on average $15/ha over the ensuing 6months. Rural debt in the beef industry in Queensland hasincreased by 83% between 2001 and 2003 (Fig. 2), with theprincipal sources being purchase of new farm (60%) andfarm improvement (29%) (Moore Stephens, 2004). Debtincrease has been in line with capital value increase soequity has been maintained at levels of about 90%. Mean

0

100000

200000

300000

400000

500000

600000

700000

800000

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

Farm

deb

t ($)

Farm business debtLand purchase debtCapital value

Fig. 2. Farm capital value and debt for beef producers in central north Quee

www.abareconomics.com/ame/mla/mla.asp. Values normalized to 2004.

R. Greiner, A. Lankester / Lan462farm debt for beef properties in northern central Queens-land now exceeds $750,000 while mean capital value isaround $9 million. While equity does not appear to be anissue in most cases, the real challenge is managing the cash-ow implications of servicing that debt.Potential nancial pressures on graziers with high levels

of debt can come from two sources. Firstly, highdebt requires high levels of net income to pay interestand repay principal. Anything that reduces incomeand/or increases interest thus threatens nancial viability.Secondly, debt is nanciers capital. Bank lending intoagribusiness has increased while capital values haveincreased and equity has not been an issue. How-ever, downward pressure on capital values would seeequity decline with resulting pressure from lenders torecover debt. High debt thus increases the risk exposure offarms to adverse economic and environmental condi-tions. Forecasts of a signicant and long-lasting declinein beef prices (ABARE, 2005; MLA, 2005) thus cast somedoubt on the sustainability of grazing properties with highdebt.Domestic application of debt-for-conservation swaps: theconcept

Stakeholders and principal mechanism

The question is whether a workable approach of debtswaps can be conceived in the domestic context to enhancebiodiversity outcomes through debt relief for landholders.Conceptually, debt-for-conservation swaps are an instru-ment which directly addresses that link. The challenge is totailor the application of the debt-swap concept to thespecic domestic situation.The rst step is to work out who would be involved in

debt-for-nature swaps, why and in what capacity. Table 3identies the key stakeholders, why they might want toparticipate, and what role they would play in thetransaction. Fig. 3 provides a graphical illustration of the

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

0

12

34

5

67

89

10

Capi

tal v

alue

($ m

illion)

and and Atherton Tablelands. Source: Compiled from ABARE (2005) data

se Policy 24 (2007) 458471domestic application of debt-for-conservation swaps.Landholders are the debtors and (potential) beneciaries

in the program. The idea is to target the policy at familyfarms, which are more exposed to nancial risk associatedwith running a grazing enterprise than corporation-owned/shareholder-based property portfolios, which tend to bediversied as well as geographically stratied for environ-mental risk management and have vertically integratedtheir production process.Financial resources to nance a debt-for-conservation

swap could conceivably come from three sources. Firstly,government has traditionally assisted the farming sector,most recently through AgricultureAdvancing Australia(AAA), a package of Commonwealth programs adminis-tered by the Department of Agriculture, Fishing andForestry (DAFF, 2005). It was implemented in September1997 and is designed to help primary producers inagriculture, shing, forestry and processed food industriesbecome more competitive, sustainable and protable. Anumber of programs within this package are specicallyrelevant to crisis circumstances, including the Rural

ARTICLE IN PRESS

Table 3

Stakeholders in debt-for-conservation swaps

Threat Motivation Role

Landholder Farm debt threatens resilience in a variable

production environment and therefore

nancial viability

Reduce debt servicing requirements Participant

Improve equity

Avoid liquidation of farm

Sometimes little opportunity cost

associated with committing a specic area

of the property to biodiversity conservation

Rural lender If land values stagnate/fall and/or beef

protability declines, there is a high

probability that the incidence of bad debt

will increase

Minimise bad debt Funding

Commitment to resource sustainability Forego some prot for increased

lending security (insurance

premium)

Seen by general public as behaving

ethically

Government Intensication threatens reliance of on-

farm conservation for securing biodiversity

values in savanna regions

Pursue socialand environmentalvalues

through biodiversity conservation

1. Funding

Measure in support of ESD principle Share cost of program withnancial institutions

Overall scope of program smalldue to program being highly

targeted

Opportunity cost to on-farm conservation

is purchase of more land for reserves and

subsequent management by agencies

2. Administration

Possibly through expandedscope of the Agriculture

Advancing Australia package

3. Enforcement

Ensure ongoing compliance ofparticipants with swap

conditions

Non-government

nature

conservation

organisation

General biodiversity decline and loss of

habitats in bio-regions

Alternative model of conservation to

acquisition of properties and ongoing

active management through salaried

manager

Funding

Regional NRM

body

Gradual loss of biodiverse areas on farms

threatens achievement of regional-scale

conservation outcomes stipulated in

regional NRM plans

Achieve biodiversity conservation

outcomes stipulated in NRM Plan

1. Brokerage:

Pursue long-term interests of regional

community

Facilitate the establishment ofdebt-for-conservation swaps

agreements

Support regional landholders 2. Monitoring and evaluation

Investor(NRM group,government,NGO)

Landholder

AU$

Reduced debtrepayments

Biodiversityconservation:land set-aside,land management

Rural Lender / Bank

Conservationcontract

Adjust(reduce)

debt

Fig. 3. Illustration of debt-for-conservation swap in domestic context.

R. Greiner, A. Lankester / Land Use Policy 24 (2007) 458471 463

need to include structural and functional indicators, be

ARTICLE IN PRESSd UFinancial Counselling Service, the Farm Help (SupportingFamilies through Change) package and the Farm Manage-ment Deposits scheme. AAA is also administering thefederal Exceptional Circumstances program and NaturalDisaster Relief Arrangements. Similarly, at the state level,the Queensland Rural Adjustment Authority currentlyprovides low interest loans and interest subsidy assistancefor eligible farmers in the form of (among others) droughtcarry-on loans, drought recovery loans, interest subsidy inexceptional circumstances, natural disaster assistance, andLandcare loans (QRAA, 2005).Secondly, rural lenders could strategically write off some

landholder debt, the rationale being that some debt write-off could help minimize the incidence of future baddebt, i.e. a loan receivable that is considered uncollec-tible and is written off by the bank. However, thecontinuing strength in the rural property market and ahistoric low of bad debt would seem to provide littleincentive at present for rural lenders for participating in apossible debt-for-conservation program. A point infavor of participation, however, is that banks are startingto see themselves as stakeholders in natural resourcemanagement. There is growing recognition of the linkbetween farm debt and resource condition. The NorthQueensland Beef Research Committee conducted abankers forum in February 2005 in the Burdekin regionwhich saw 30 agribusiness managers from nine bankinginstitutions attend (DPI, 2005). The forum specicallyexplored the link between bank lending practices,carrying capacity and debt serviceability. There wasrecognition that these relationships needed to translateinto bank policy through the involvement of high-level bank managers. More recently, the Third RegionalBanking and Agribusiness Forum in September 2005(Australian Bankers Association, 2005) invited speakersto address the question of resource sustainability. Therelationships are specically relevant in the context ofstructural adjustment. A presentation by Head ofCorporate Affairs of the National Australia Bank inSydney to the Outlook Conference in March 2005(McKanna, 2005) alerted to signicant changes in therural lending sector including the emergence of newlenders and corporations, and a suite of new productsthat are available to farmers such as farm managementdeposits and water mortgages. McKanna (2005) sees theobjectives of lenders as maintaining asset values for non-viable farms and facilitating growth of efcient andviable farming enterprises. Both objectives can only beachieved it the resource base of farms is maintained.Thirdly, non-government conservation organizations

such as the Bush Heritage Trust are reviewing their currentinvestment models, which are based on the strategicacquisition of land holdings and subsequent (ongoing)management of that land for biodiversity conservationpurposes (DEH, 2005). Debt-for-conservation swaps might

R. Greiner, A. Lankester / Lan464provide an alternative and complementary investmentstrategy for the NGO sector.tailored to the geographical scale of the inquiry and thebiogeographical region (Langanke et al., 2005), and takeadvantage of improving remote-sensing technology (Bastinet al., 2002).Unlike the BushTender program, the contract detailing a

debt-for-conservation swap would need to be of consider-able duration to truly safeguard biodiversity rather thandefer the inevitable by a few years. Also, it can be expectedthat large sums of debt relief would be sought bylandholders, so contract terms could be of equivalentlength to loan terms. For the duration of the contract, theswap conditions would form part of the title to thedesignated land.Regional NRM bodies could provide an importantbrokerage function in the negotiation and implementationof debt-for-conservation swap contracts. They pursuebiodiversity conservation objectives as part of theirbusiness of implementing management actions to achieveregional resource condition targets, which are outlined inthe regional plans (e.g. BDTB, 2005). While the nancialresources of these bodies (e.g. $20 million for the BurdekinDry Tropics region over 3 years) are unlikely to besubstantive enough to provide the sums presumed neces-sary to invest in debt swaps, their information and humanresources can facilitate the implementation of the incentive.

Tailoring debt-for-conservation swaps

To maximize the effectiveness of debt swaps as abiodiversity conservation instrument it is useful to geo-graphically target the policy by dening an area withsignicant and critical on-farm biodiversity assets, wherefarm debt is considered an issue for landholders. TheBowen-Broken-Bogie rangelands are such an area.The process of selecting participants in a debt-for-

conservation swap program could be mirrored on theVictorian BushTender program (Stoneham et al., 2003;Connor and Hatton MacDonald, 2002), whereby land-holders submit bids that outline what area and type of landthey would be willing to swap for what amount of debt.The bids would be sorted on the basis of dollars per unit ofbiodiversity value and the best value bids would befunded, up to the scope of the program. Bids would befurther reviewed and assessed on site.The biodiversity value of the bids would be established

through a metric, which systematically assesses the landoffered on the basis of possibly several biodiversity-relatedattributes. The metric would identify areas of highbiodiversity valuefor example wetlands, riparian vegeta-tion, endangered habitats, and examples of largely un-modied ecosystems. Metric design can be a complex taskand a multitude of approaches exist to quantify thebiodiversity value of areas (Fleishman et al., 2005). Metrics

se Policy 24 (2007) 458471Finally, monitoring and evaluation procedures need tobe dened and appropriate processes and penalties dened

into a conservation easement, either for financial reasons or

study, with a combined land holding of 319,000 ha. All but

ARTICLE IN PRESSR. Greiner, A. Lankester / Land Use Policy 24 (2007) 458471 465for breach of contract conditionsincluding the reinstate-ment of debt for serious breaches.

Experience with debt-for-conservation swaps elsewhere

An extensive literature and information search revealedonly one application of the debt-for-nature concept in acountry-internal context. The United States Department ofAgriculture implemented the Debt for Nature Program,also know as the Debt Cancellation ConservationContract Program in the year 2000 (USDA, 2001). Sincethen, approximately US$61 million of farm debt have beenforgiven on the basis of 740 conservation contractscovering an aggregate area of 1457 square kilometers(Mel Thompson, USDA, personal communication 13/01/2006).Farmers can qualify for cancellation of a proportion of

their debt,2 thus improving their nancial stability, inexchange for a conservation contract. The contract is avoluntary legal agreement that restricts the type andamount of development that may take place on envir-onmentally sensitive areas of a borrowers property.Contracts may be established to conserve wildlife habitatand improve the environmental and scenic value of farms.In the program, the nature value of the land offered by

borrowers is not directly taken into consideration whenestablishing contracts with landholders. Rather, the metricinvolves area and debt parameters only. The maximumamount of debt cancellation is derived from the presentmarket value of the farm, the borrowers debt secured byreal estate, and the size of the area to be covered by thecontract. Generally, a 33 per cent cancellation limit appliesto loan principal.Contracts are entered with terms of 10, 30 or 50 years

and stay with the land. Contract establishment costs andongoing administrative costs are covered by the govern-ment. Severe penalties apply for breaches of contractconditions, including re-instatement of the debt.In general, the following activities are prohibited on land

covered by a debt for nature contract: building andconstruction; altering of vegetation and water systems;grazing; agriculture; timber harvesting; dumping of wastes.The landholder retains the right to control public accessand may use the area in a manner compatible with thecontractif allowed by the management plan.Thompson (Mel Thompson, USDA, personal commu-

nication 13/01/2006) explains that the Debt for NatureProgram is a loan servicing program but stresses that theland entered into a contract must have conservation value.He adds that ywe try to assure that the land entered into aconservation contract has conservation value as well as

assisting the borrower with debt cancellation.There is a remarkable absence of information about the

program on the USDA and related websites, and2Eligibility is restricted to borrowers who have debt secured by real

estate through the USDA Farm Service Agency.four respondents discussed their debt situation. Of thosewho did, four respondents were debt-free, the other haddebt ranging from tens-of-thousand dollars up to $10million.3 Combined debt was $37.2 million, mean debt was$1.7 million. Equity was generally between 70% and 90%.The information obtained from the respondents wastriangulated by a nancial advisor and a rural propertyanalyst, who were also consulted as part of the research.

Effectiveness and dependability

The question is whether debt-for-conservation swaps aretechnically suitable for achieving biodiversity outcomesand whether they can deliver a desired conservationobjective even when knowledge about likely biodiversityresponses is uncertain and measurable responses may beobscured by other factors such as rainfall variability andclimate change.for some other reason, it would generally make more

financial sense to use a conservation easement program

(w/reimbursement based on market value) rather than a debtforgiveness program, so demand for the debt forgiveness

program has been pretty close to zero. Debt forgiveness only

makes sense if land values are falling or for farmers that have

managed to convince their lender to loan them more money

than their collateral is worth.

Domestic debt-for-conservation swaps: critique

An evaluation of the concept of debt-for-conservationswaps against a suite of evaluation criteria is helpful indetermining rstly, whether the concept bears merit, andsecondly, whether and how it could be best employed tocomplement the existing policy mix targeting biodiversityconservation. The following list of criteria is based onYoung et al. (1996) and has been previously implementedby Greiner et al. (2000).The incentive evaluation is based on conceptual thought,

supported by empirical data collected from a surveyconducted of landholders in the Bowen-Broken-Bogierangelands, a sub-region of the Burdekin Dry Tropicsregion. Overall 24 landholdersabout two-third of allfamily-operated farms in the regionparticipated in thecorrespondence with various nominated contact ofcersin central and regional ofces of the USDA have revealedscant knowledge about the program in the administration.This would seem to indicate that the debt for natureprogram is not a program of signicance or prominence.This has been conrmed by P. Sullivan (USDA, personalcommunication 6 October 2005) who explains that sincethe early 1990s, US farmland values have generally increased

faster than farm debt. If a farmer is interested in putting land3Currency is Australian Dollars unless otherwise stated.

debt-for-nature swap program. Of the 17 respondents vehave submitted bids. A total of 14,290 ha of land are

region in the study area have topped $200/ha. Of the ve

ARTICLE IN PRESSd UOf the 24 respondents, all except two rated the impact ofdebt on on-farm biodiversity conservation as highlynegative. The principal explanation given was that thosegraziers who are in debt carry more cattle than they wouldideally want to carry because of loan servicing commit-ments and tend to be more reluctant to reduce stocknumbers during drought. This supports the underpinningassumption about the relationship between farm debt andon-farm biodiversity conservation. At the time of inter-view, due to ongoing low-rainfall conditions, mostrespondents carried 1030% fewer cattle than what theythought their properties would typically carry.Six respondents were very interested in pursuing a

possible debt-for-conservation swap while another sevenrespondents were interested, in principle. On the basis ofonly basic assumptions about a potential program, verespondents submitted written bids, covering a combinedarea of 14,300 ha for total debt relief of $2.95 million. Thisindicates signicant interest in the incentiveand couldlead to a signicant area supplement of the small area offormal conservation areas within the Bowen-Broken-Bogierangelands.Assuming similar contract conditions to the USDA Debt

for Nature Program, a landholder would cease theproductive use of the land covered by the contract butcontinue to manage the land for conservation objectives. Inthe Bowen-Broken-Bogie rangelands this would typicallyinvolve removing cattle from the land and possibly fencingit off and closing off existing water points for cattle.Ongoing control measures would be required to combatthe spread of noxious weeds and to minimize competitionand impact by feral animalsand possibly some prolicnative animalson sensitive native plant and animalspecies. However, grazing is the single most effective weedcontrol strategy and without cattle as the primary weedcontrol mechanism, the question is what other meanslandholders could usefully employ in its placeor whetherstrictly limited access for cattle would be a legitimate weedcontrol mechanism and thus compatible use of the land.Overall, the effectiveness of the incentive as a biodiver-

sity conservation mechanism can be rated as possiblypositive. Equally, it can conceivably be an effective debtrelief mechanism.

Precaution

Precaution assesses whether an instrument avoids thechance of serious or irreversible consequences. Theprecautionary effect of debt-for-conservation swaps islinked to three variables, the total biodiversity value (area)subscribed to the program, the length of the contractperiod and the degree to which landholders adhere tocontract conditions. Iflike in the case of the USexamplecontract periods of as little as 10 years areavailable, then the program has at best a deferring effect

R. Greiner, A. Lankester / Lan466on grazing and intensication-related biodiversity impacts.From the bids received it is evident that respondents preferbids, two are below that amount, two are 3065% aboveand one respondent is asking about seven-fold the top per-hectare market rate. An explanation for this may lie inwhat Rolfe et al. (2006) term engagement costs and thepremium that some landholders are seeking to extractwhen engaging with government.In terms of instrument cost, debt-for-nature swaps may

offer cost savings over the more traditional approach tobiodiversity conservation through land acquisition in someinstances. Importantly the incentive may provide access tooffered in the bids, with total debt reductions sought of$2.95 million. Respondents seek to retire between 6% and100% of total farm debt.In the absence of a metric to determine the biodiversity

value of land, the analysis is restricted to assessing cost ona per hectare basis. The cost per bid ranges from $40/ha to$1364/ha. The area offer curve is shown in Fig. 4. The bidsare ranked in order of cost. The area offered is shown ascumulative. Despite the low number of bids, the datapoints draw a familiar supply curve (Stoneham et al.,2003).As shown earlier in this paper, recent land prices in theshort contract periods over long ones. The land underconservation contract is only safe if stringent compliancemechanisms are in place as well as appropriate penaltieswhich deter from breach of conditions. On the other hand,if substantive areas and/or areas of signicant biodiversityvalue can be put under conservation contract through thismechanism, then it will have precautionary outcomes.Overall, the instrument would rate as questionable to

possibly positive against this criterion.

Efficiency

There is a need to distinguish between three aspects ofefciency. First, the question needs to be asked whetherdebt-for-conservation swaps are an efcient instrument forachieving biodiversity conservation, asking about the costper unit of biodiversity conservation. Secondly, the impactof debt-for-conservation swaps on productive efciency orfarm protability needs to be assessed. Thirdly, there is thequestion about the impact of the incentive on allocativeefciency of the grazing industry.

Cost of conserving biodiversity

Landholders in the Bowen-Broken-Bogie rangelandsparticipating in the research were asked to submit writtenbids if they were interested in participating in a potential

se Policy 24 (2007) 458471some areas within existing land holdings that wouldotherwise not be available for biodiversity conservation.

ARTICLE IN PRESS

8te a

r de

nd UProductive efficiency

The effects of a debt-for-conservation swap on enterpriseprotability can be positive if the debt reduction issignicant enough to decrease the costs associated withinterest payments (and principal repayments)while at thesame time the reduction of productive area has a relativelybenign effect on farm income. That means that the areasset aside as part of the swap are of low productivity orifthey are very productiveare small in size. The swap alsoimproves the equity situation of the propertyprovidedthat the asset value is not affected by the swapandtherefore provides the landholder with renewed options foron- and off-farm investment. However, many respondentsin the research expressed concern about the possible effectsof a swapand associated conditionson the propertyvalue and future sale price.During the interviews with respondents it became evident

that landholders use farm debt strategically as an effectivemeans for minimizing income tax liabilities and maximizingtheir assets. Several respondents indicated thatif they had

0

200

400

600

800

0 4000 6000

1000

1200

1400

2000aggrega

cost

($/ha

)

Fig. 4. Area offer curve fo

R. Greiner, A. Lankester / Laa signicant amount of debt written offthey would seek tobuy more land elsewhere to continue their nancial growthstrategy. Debt does not appear to be a problem for efcientlandholders, rather a nancial tool which is favored bycurrent taxation laws. Some respondents without debtsuggested that they might seek to incur debt to be eligiblefor participation in a swap program.

Collective efficiency

If the incentive is offered in a geographically andnancially contained manner, this would have little impacton resource allocation decisions by the cattle industry.However, the incentive has the potential to slow structuraladjustment process by improving the viability of someotherwise unviable farms. This, combined with theimproved liquidity and quest to purchase more land byother participants, may put upward pressure on land pricesin the area where the incentive is operating.The widespread use of intensication measures in thebeef cattle industry demonstrates that land in the tropicalsavannas is an increasingly scare resource (Makeham andMalcolm, 1993). As the trend continues, economicallyefcient grazing practices will be increasingly detrimentalto the grazing sensitive spectrum of biodiversity. Debt-for-conservation swaps are unable to change these funda-mental relationships, which raises the questions whetherthe term on-farm conservation may be a contraction interms and, consequently, whether biodiversity conservationis best pursued through a deliberate spatial separation ofproduction and conservation.

Continuing incentive and innovation

Debt-for-conservation swaps are not an instrument thatencourages experimentation and change, or provides anongoing incentive for biodiversity improvement. It can beargued that once the debt is written off, the incentive forfullment of the swap conditions is only maintained ifeffective penalties are in place for breach of the conditions,

000 10000 12000 14000 16000rea offered (ha)bt-for-conservation swaps.

se Policy 24 (2007) 458471 467which requires strict monitoring and enforcement. TheUSDA Debt-for-Nature Program threatens re-instatementof debt for signicant breaches of contract conditions. Themotivation to conserve biodiversity is extrinsic (as opposedto intrinsic) andas in the case of regulatory instrumentstends to achieve compliance through reward for just-compliance and punishment for non-compliance (Greineret al., 2000).Unless the incentive is combined with suasive and

educational measures it does not achieve learning aboutbiodiversity by landholders nor effect change in landmanagement practices on the farm areas that are notincluded in the swap contract.

Administrative cost and feasibility

Debt-for-conservation swaps are an administration-intensive instrument. To start off with, it would requiresignicant negotiation with all stakeholders and research

ARTICLE IN PRESSd Uinto a swap metric just to put the program into practice.Further signicant resources are required for administeringand policing the program. Specically, the level of planningand negotiation that would be required to complete everysingle contract is high, and ongoing monitoring, evaluationand enforcement costs are also high due to the geographi-cally dispersed nature of the areas offered to the programand the need for on-ground monitoring to check that theswap conditions are being complied with and measure thebiodiversity outcomes of the incentive.

Equity

By its very denition, the instrument is targeted atlandholders with debt. It thus excludes landholders withoutdebt. The supply of (biodiversity) area is limited by farmdebt. Landholders with large debt stand to gain more fromparticipating than those with less debt. The instrumentdoes not discriminate between the sources of the debt.There is a risk that debt alleviation could reward poorpast investment decisions and poor land managementand possibly entice landholders to go into debt to beeligible for participation in the program or increase existingdebt in order to maximize the amount of potential debtrelief.In summary, the incentive is inequitable, the distribution

effects of debt-for-conservation swaps are questionable andthere is the possibility of perverse outcomes of theincentive.

Political and community acceptability

Acceptability is a necessary condition for the durabilityof a policy. Transparent and equitable policies reducepolitical and bureaucratic rent seeking, hereby reducing therisk of government and bureaucracy failure (Young et al.,1996). The acceptability of debt-for-conservation swapshinges on its ability to convince people that it can deliverbiodiversity conservation outcomesrather than being asubsidy for debt-stricken landholders, as is the case withthe US debt-for-nature program. There is also the questionas to whether rural lendersas an identied primestakeholder in a possible programare willing to supportthe policy.

Durability

This is not a criterion that is commonly discussed, butdoes take some signicance in the context of debt-for-conservation swaps. The effects of debt-for-conservationswaps are durable over the contract period, which in theUS are up to 50 years in length. This is an advantage overincentives which rely on annual payments or short-termfunding and therefore rely on ongoing approval and

R. Greiner, A. Lankester / Lan468recurring positive funding decisions by (successive) govern-ments and through changing situations.Debt-for-conservation swaps as part of a policy bundle

Multiple authors have stressed that a policy mixofmarket and non-market instrumentsis necessary toachieve an efcient long-term level of conservation andsustainable use of biodiversity (e.g. OECD, 2004; Young etal., 1996). This thinking builds on Tinbergen (1950) whosuggested that a policy mix is superior to a singleinstrument approach in situations where there are multipleobjectives and issues. An effective mix contains at least onepolicy instrument to alleviate each threat and pursue eachobjective, allowing for adjustment of each element of themix without compromising other objectives. Young et al.(1996) argue that compliance with the Tinbergen principleensures that as knowledge, prices, technology and socialvalues change over time, the policy mix can be adjustedefciently and equitably.There is a suite of incentive mechanisms that already

operate in the Australian Rangelands (DEH, 2005). Theseinclude national market-based incentives but also non-government initiatives such as revolving fundswherebynon-government organizations purchase properties and sellthem on after conducting conservation works or covenant-ing of areas with high biodiversity valueand theestablishment of a non-public property estate through thephilanthropy-funded purchase and subsequent manage-ment of properties by non-government conservationorganizations.Debt-for-conservation swaps are an economic instru-

ment and fall under the Industry Commission (1997)category of subsidies and tax concessions. As opposed tosome broadly conceived instruments such as regulation andincome tax incentives, they are highly targeted and wouldbe tailored to landholders with high levels of debtirrespective of their economic performance and conserva-tion orientationwho seek to reduce the on-going cost ofservicing debt and would receive this subsidy in exchangefor a commitment to producing biodiversity outcomes onpart of their land.Greiner and Lankester (2006) visualize the instrument as

part of a mix of policies and stress specically that adebt-for-conservation swap program may generateinvolvement by landholders across the participationspectrum (Fig. 5), as long as they meet the eligibilitycriteria. It would thus appear that the incentive canprovide a useful addition to more broad-brush policies,such as environmental regulation and income tax incentivesfor investment in conservation, which are not suitablefor protecting geographically specic biodiversity re-sources.However, that policy space can also be lled with other

incentives, specically stewardship (and other forms ofcompensation) payments. The payments received byparticipants in the Victorian BushTender program arestewardship payments, which are essentially recurring

se Policy 24 (2007) 458471remuneration payments for biodiversity services providedby landholders (Stoneham et al., 2003).

ARTICLE IN PRESS

atio

hipucti

s

or-c

pol

nd UConclusions

Debt-for-conservation swaps rest on a deceptively simplenotion, the reduction in the debt of a landholder in returnfor increased biodiversity conservation efforts on his/herbehalf. The notion is appealing in the context of Australiastropical savannas, where grazing intensication is exerting

Biod

ivers

ity v

alue

high

low

ParticipNon-adopters Conditional

non-adopters

Regulation

StewardsTender/A

Grant

Debt-f

Fig. 5. Debt-for-conservation swaps as part of a

R. Greiner, A. Lankester / Ladetrimental effects on landscape functionality and biodi-versity conservation, and increasing farm debt is fueled byrapid rises in land values.An initial assessment of possible participants and players

in the swap supports the principle of the swap concept.Financial support could conceivably come from govern-ment, rural lenders and non-government conservationorganizations, while regional natural resource managementbodies could play an important rule in brokering andevaluating the incentive.A detailed assessment of the incentive against a number

of policy criteria, supported by empirical research, revealsthat the incentive has the potential to safeguard some on-farm areas cost-effectively and can do so over possiblyextensive contract periods. However, the incentive is shownto be inequitable, with no intrinsic motivation for a changeof land-management practices, and there is an overwhelm-ing potential for unintended perverse consequences.Firstly, the swap could reward past management andinvestment decision, and/or entice landholders to incurdebt to be eligible for participation. Secondly, farm debt isused as an effective tax minimization and asset maximiza-tion tool by many landholders. Debt swaps conceivablyreinforce this strategy and inate land prices. Thirdly, byimproving the viability of otherwise unviable farms, theincentive could hinder structural adjustment of the grazingindustry. Finally, the transaction costs of the incentive arelarge. In the lead-up to implementation a metric wouldneed to be designed for relating debt relief to biodiversityconservation outcomes. Debt swaps would need to betailored to every single participant and negotiations wouldinvolve several parties. Similarly, the ongoing monitoringof compliance enforcement and evaluation would incur

n spectrumPassive adopters Active adopters

paymentson systems

Income tax incentives

Covenants

EductionInformation

Training AwardsPrizes

Recognition

onservation swaps

icy mix (based on Greiner and Lankester, 2006).

se Policy 24 (2007) 458471 469substantive administrative costs.In summary, the critique of a possible domestic

application of debt-for-conservation swaps reads similarto the debate about its international counterpart in theliterature, although the domestic manifestation is not asstructurally complex and does not face the complication ofdealing with sovereign countries. Debt-for-conservationswaps have initial appeal as an incentive to alleviate farmdebt and improve biodiversity conservation. However, thispaper raises serious concerns about the efcacy of theincentive mechanism. Furthermore it is unable to conclu-sively demonstrate that farm debt is indeed signicantlydetrimental to on-farm biodiversity conservation, which isthe key assumption supporting the swap concept. A debt-for-nature swap program implemented in the USA doesnot deliver convincing conservation outcomes. Also, abuoyant grazing property market in Australia does notprovide a favorable environment for the implementation ofa debt-swap incentive.It is therefore concluded that a domestic application of

debt-for-conservation swaps should not be further pursuedas a possible incentive for biodiversity conservation.Instead the paper provides clues that the notion of on-farm biodiversity conservation might require re-appraisalin the context of the conservation of grazing-sensitivebiodiversity. The ndings suggest that other possible

ARTICLE IN PRESSd U(market-based) incentives, including stewardship pay-ments, warrant further exploration.

Acknowledgements

This research has been commissioned by the BurdekinDry Tropics Board and is funded by the QueenslandDepartment of Natural Resources, Mines and Waterthrough the National Action Plan for Salinity and WaterQuality and the Natural Heritage Trust II.We are grateful to two anonymous reviewers for their

constructive comments. We also wish to thank Prof. KevinParton, and Drs. Beth Clouston, Jeanette Stanley and JillWindle for helpful comments on an earlier draft of thispaper. This paper is based on a presentation delivered atthe 2006 conference of the Australian Agricultural andResource Economics Society.

References

ABARE, 2005. Australian commodities 12, 1.

Australian Bankers Association, 2005. Third Annual Regional Banking

and Agribusiness Forum, Sydney, 9 September, 2005.

Bastin, G.N., Ludwig, J.A., Eager, R.W., Chewings, V.H., Liedloss, A.C.,

2002. Indicators of landscape function: comparing patchiness metrics using

remotely-sensed data from rangelands. Ecological Indicators 1, 247260.

Bortolussi, G., Hodgkinson, J.J., Holmes, C.R., McIvor, J.G., Coffey,

S.G., 1999. Report on the Northern Australian beef industry survey,

CSIRO Tropical Agriculture, Indooroopilly.

Burdekin Dry Tropics Board, 2005. Burdekin Dry Tropics Natural

Resource Management Plan (20052010). Burdekin Dry Tropics

Board, Townsville.

Carr, R., Honnef, P., 2005. Cattle prices beef up property values. Press

release 4 March 2005. Herron Todd White.

Connor, J.D., Hatton MacDonald, D., 2002. Incentives, policy and

voluntary approaches to improve natural resource management in the

Onkaparinga Catchment, CSIRO Land and Water, Adelaide.

Convention on Biological Diversity, 1992. Convention Text. /http://www.biodiv.org/convention/articles.aspS.

DAFF, 2005. Agriculture Advancing Australia, Department of Agriculture,

Fisheries and Forestry. /http://www.daff.gov.au/content/output.cfm?S.Deacon, T.R., Murphy, P., 1997. The structure of an environmental

transaction: the debt for nature swap. Land Economics 73 (1), 124.

DEH, 2005. Incentives for biodiversity conservation: delivery in the

rangelands. In: Proceedings of the Workshop, 23 December, 2004,

Department of the Environment and Heritage, Canberra.

DEST, 1996. AustraliaState of the Environment. Department of the

Environment, Sport and Territories. CSIRO Publishing, Collingwood

(Vic).

DPI, 2005. Bankers understand the Land. Press Release February 2005.

Emerton, L., Bishop, J., Thomas, L., 2006. Sustainable nancing of

protected areas: a global review of challenges and options. Publication

13. In: Valentine, P. (Ed.), Best Practice Protected Area Guidelines

Series. The World Conservation Union (IUCN), Gland, Switzerland.

Online at: /http://www.worldwildlife.org/conservationnance/swaps.cfmS.

Food and Agriculture Organisation (FAO), 2005./www.fao.org/documents/show_cdr.asp?url_le=/DOCREP/006/T0670E/T0670E00.HTMS.

Fleishman, E., Noss, R.F., Noon, B.R., 2005. Utility and limitations of

species richness metrics for conservation planning. Ecological Indica-

tors 6, 543553.

Greener, L.P., 1991. Debt for nature swaps in Latin American countries:

R. Greiner, A. Lankester / Lan470the enforcement dilemma. Connecticut Journal of International Law 7,

123180.Greiner, R., Lankester, A., 2006. On-farm biodiversity conservation in

Australias tropical savannas: production trade-offs, impediments,

motivators and policy approaches. In: Rolfe, J. (Ed.), Proceedings of

the Resource Economics Workshop, Rockhampton, 28 October, 2005,

in press.

Greiner, R., Young, M.D., McDonald, A.D., Brooks, M., 2000. Incentive

instruments for the sustainable use of marine resources. Ocean &

Coastal Management 42, 2950.

Greiner, R., Stoeckl, N., Stokes, C., Herr, A., Bachmaier, J., 2003.

Natural resource management in the Burdekin Dry Tropics; social and

economic issues, CSIRO Sustainable Ecosystems, Townsville.

Industry Commission, 1997. Role of Economic Instruments in Managing

the Environment, Staff Research Paper, Industry Commission,

Melbourne, July.

Jaeger, C., 1990. Debt, conservation, and innovating sustainable regional

development. International Environmental Affairs 2 (2), 166173.

Landsberg, J., James, C.D., Morton, S.R., Hobbs, T.J., Stol, J., Drew, A.,

Tongway, H., 1997. The effects of articial sources of water on

rangeland biodiversity. Final Report to the Biodiversity Convention

and Strategy Section of the Biodiversity Group, Environment

Australia. Environment Australia and CSIRO, Canberra.

Langanke, T., Rossner, B., Vrsajc, B., Langa, S., Mitchleyd, J., 2005.

Selection and application of spatial indicators for nature conservation

at different institutional levels. Journal for Nature Conservation 13,

101114.

Ludwig, J.A., Eager, R.J., Williams, R.J., Lowe, L.M., 1999. Declines in

vegetation patches, plant diversity, and grasshopper diversity near

cattle watering-points in the Victoria River District, Northern

Australia. Rangeland Journal 21, 135149.

Mahony, R., 1992. Debt-for-Nature Swaps: who really benets? The

Ecologist 22 (3), 97103.

Makeham, J.P., Malcolm, L.R., 1993. The Farming Game Now.

Cambridge University Press, Cambridge, New York, Melbourne.

Mateo, C.A.Q., 1993. Debt-for-Nature Swaps to Promote Natural

Resource Conservation. FAO Conservation Guide 23.

McKanna, G., 2005. The role of nancial institutions in rural adjustment.

Paper presented to the 2005 ABARE Outlook Conference.

McKeon, G., Hall, W., Henry, B., Stone, G., Watson, I., 2004. Pasture

degradation and recovery in Australias rangelands: learning from

history, Queensland Department of Natural Resources, Mines and

Energy, Brisbane.

MLA, 2005. Australian Beef Industry: productivity and nancial

performance. Australian Beef 04 (1).

Moore Stephens, H.L., 2004. Rural debt in Queensland survey 2004,

Queensland Rural Adjustment Authority, Brisbane.

Moran, K., 1992. Debt-for-nature swaps: a response to debt and deforesta-

tion in developing countries? In: Downing, T.E. (Ed.), Development or

Destruction. West View Press, Boulder, CO, pp. 305316.

Mountford, H., Keppler, J.H., 1999. Financing incentives for the

protection of biodiversity. The Science of the Total Environment

240, 133144.

OECD, 2004. Recommendations of the council on the use of economic

instruments in promoting the conservation and sustainable use of

biodiversity, Organisation for Economic Co-operation and Develop-

ment.

Philp, J., 1992. The debt crisis and the debt-for-nature strategy: A

discussion and critique. Monash Publications in Geography 42.

QRAA, 2005. Queensland Rural Adjustment Authority. /http://www.qraa.qld.gov.au/needitem.jsp?product=24S.

Resor, J.P., 1997. Debt-for-nature swaps: a decade of experience and new

directions for the future. Unasylva vol. 48, no. 1, Issue 188. Online at:

/http://www.fao.org/forestry/foris/webview/forestry2/index.jsp?siteId=2342&langId=1S.

Ritchie, E., 2005. The macro ecology and conservation of the antilopine

wallaroo (Macropus antilopinus). Tropical Savannas CRC: Darwin.

/http://savanna.ntu.edu.au/education/students/antilopine_wallaroo.htmlS.

se Policy 24 (2007) 458471Rolfe, J., 2002. Economics of vegetation clearing in Queensland. Range-

lands Journal 24, 152169.

Rolfe, J., McCosker, J., Windle, J., 2006. Identifying the incentives that

graziers in central-western Queensland need to manage land more

conservatively in vegetation corridors or linkage zones. In: Rolfe, J.

(Ed.), Proceedings of the Resource Economics Workshop, Rock-

hampton, 28 October, 2005, in press.

Roth, C.H., Lawson, G., Cavanagh, D., 2002. Overview of key natural

resource management issues in the Burdekin catchment, with

particular reference to water quality and salinity: Burdekin condition

study phase 1. Burdekin Dry Tropics Board, Townsville.

Sangha, K.K., Midmore, D.J., Rolfe, J., Jalota, R.K., 2005. Tradeoffs

between pasture production and plant diversity and soil health

attributes of pasture systems of central Queensland, Australia.

Agriculture, Ecosystems & Environment 111, 93103.

Sattler, P., Williams, R., 1999. The Conservation Status of Queenslands

Bioregional Ecosystems. Environment Protection Agency, Queensland

Government, Brisbane.

Sinden, J., 2004. Do the public gains from vegetation protection in north-

western New South Wales exceed the landholders loss of land value?

Rangelands Journal 26, 204224.

Stoneham, G., Chaudhri, V., Ha, A., Strappazzon, L., 2003. Auctions for

conservation contracts: an empirical examination of Victorias

BushTender trial. The Australian Journal of Agricultural and

Resource Economics 47 (4), 477500.

Thapa, B., 1998. Debt for nature swaps: an overview. International

Journal of Sustainable Development and World Ecology 5, 249262.

Thapa, S., Thapa, B., 2002. Debt-for-Nature Swaps: potential applica-

tions in Nepal. International Journal of Sustainable Development and

World Ecology 9 (3), 239255.

The Nature Conservancy, 2006. USPeru Debt-for-Nature Swap. Online

at: /http://www.nature.org./sucess/perudebt.htmlS.Tinbergen, I., 1950. On the theory of economic policy. Elsevier, North-

Holland, Amsterdam.

UNDP, 2003. Debt-for-environment swaps. /www.surf-as.org/Papers/Dept-for-environment%20swaps%20Sep03.pdf.S: United NationsDevelopment Program.

USDA, 2001. Debt for nature program, United States Department of

Agriculture.

von Moltke, K., 1991. Debt-for-Nature: the second generation. Hastings

International and Comparative Law Review 14, 973987.

Woinarski, J.C.Z., Ash, A.J., 2002. Responses of vertebrates to

pastoralism, military land use and landscape position in an Australian

tropical savanna. Austral Ecology 27, 311323.

WWF, Center for Conservation Finance, 2003. Commercial debt-for-nature

swaps summary table. /www.worldwildlife.org/conservationnanceS.Young, M.D., Gunningham, N., Elix, J., Lambert, J., Howard, B.,

1996. Reimbursing the future: an evaluation of motivational,

voluntary, price-based, property-right, and regulatory incentives

for the conservation of biodiversity. Report of the Biodiversity

Series, Paper No. 9, Department of the Environment and Heritage,

Canberra.

ARTICLE IN PRESSR. Greiner, A. Lankester / Land Use Policy 24 (2007) 458471 471

Supporting on-farm biodiversity conservation through debt-for-conservation swaps: Concept and critiqueIntroductionDebt-for-conservation swapsConcept and terminologyInternational context and application of debt-for-nature swapsReview of international debt-for-nature swaps

The relationship between farm debt and on-farm biodiversity in Australiaaposs tropical savannasDomestic application of debt-for-conservation swaps: the conceptStakeholders and principal mechanismTailoring debt-for-conservation swapsExperience with debt-for-conservation swaps elsewhere

Domestic debt-for-conservation swaps: critiqueEffectiveness and dependabilityPrecautionEfficiencyCost of conserving biodiversityProductive efficiencyCollective efficiencyContinuing incentive and innovationAdministrative cost and feasibilityEquityPolitical and community acceptabilityDurabilityDebt-for-conservation swaps as part of a policy bundle

ConclusionsAcknowledgementsReferences