Give farmers HECS-like loans to do land restoration projects: ANU

Professor David Lindenmayer said land regeneration projects increase productivity, but the average farm carries about $2.4 million of debt, so the idea of tackling environmental problems by adding more debt to their bottom line "was a bit of a problem".

"There is not enough money in the world to fix the land degradation problems we've got without creative financing," Prof Lindenmayer said.

"A lot of the feedback we get from farmers is that they would love to [do land restoration projects], but it's just another bill that they don't necessarily have the money for."

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Prof Lindenmayer approached his ANU colleague, Professor Bruce Chapman, who helped create HECS, the world's first national income-contingent loan for higher education.

They put forward the idea of FECS - Farm Environment Contribution Scheme - for projects such as native tree plantings, shelter belts and dam renovations, with loan repayments would be based on annual revenue.

There is "a profitability part to all this", Prof Lindermayer says.

"For example, if you improve the condition of your farm dams, you're not only getting better quality water but the water persists for longer, so it's part of drought resilience," he said.

"That has a potentially big impact on your bottom line because you've got better livestock that are heavier, worth more and you don't have to do a fire sale when it starts to get drier.

"Another one is putting in proper shelter belts, so that your lambs don't die in the winter and your angus cows don't fry in the summer because they're black and it's boiling."

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When farmers have begun to reap the productivity benefits of the land restoration projects and are in a better financial position, then they repay the loan when their revenue permits.

Prof Lindermayer has spoken with federal government officials about the proposal and said it would be a perfect fit for the nature repair market and biodiversity schemes Labor is in the process of developing.

The National Farmers' Federation 2030 Roadmap has a goal for 5 per cent of all farm income to be derived from environmental services.

NFF chief executive Tony Mahar the ag industry should see investment into biodiversity as a triple win for the environment, productivity and profitability.

"As the rising cost of finance is a barrier for many farmers, we are keen to explore any options to make participation easier," Mr Mahar said.

The FECS proposal would need to be paired with regular monitoring to ensure the loan has been used for its intended purpose.

"We've got really good science around this to guide it, we know what kind of interventions work, we also need to keep that monitoring going to support the nature repair market, otherwise it's going to be gamed and scammed," Prof Lindermayer said.