performance in the northern rangeland grazing system. Through this they have come to an understanding that lending on financial information only will result in the gradual degradation of the natural capital – natural capital stocks are an important part of the risk management profile in grazing landscapes( Bentley, 2017).
Apx Table C. 12 Strengths and challenges of low interest loans
Strengths
� Directly addresses a known barrier to adoption to land management change
� Provides a large upfront amount of finances which could be useful for projects requiring large capital investment( such as engineering works)
� Already exist( QRIDA)
Challenges
� Loan repayments still have to be made by the landholder
� Interest of banks to engage
� Does not fund the ongoing lost income from land taken out of production. There is still a financial cost to landholders
C. 2.7
Debt for conservation swap
A debt for conservation swap is an economic instrument intended to break the cycle of increasing debt and environmental degradation. The concept is based on the premise that entities( countries or businesses) with high levels of debt are likely to exploit natural resources at above long-term optimal levels in order to meet short term debt servicing obligations and remain solvent( Greiner & Lankester, 2007). Debt servicing was raised as an impediment to adopting conservation management practices by graziers in the Burdekin( Greiner & Gregg, 2011). This is because when graziers have high debt they operate their business with a focus of servicing debt and do not have the capacity to work for other outcomes from their property. The debt for conservation notion is to reduce debt and thereby enhance financial viability while at the same time securing environmental outcomes through contracts that stipulate swap( Greiner & Lankester, 2007).
A traditional debt swap involves three parties – the debtor, an investor and a lender. In the international context, the investor( typically a conservation non-government organization) purchases the debt from the international lender( commercial bank or multilateral institution). The investor then negotiates with the debtor country to exchange the debt for a commitment by that country to use the equivalent amount of currency for an agreed purpose( such as nature conservation). Greiner and Lankester( 2007) explain that the incentive for the swap in the normal context lies in the ability of the investor to purchase the debt at less than face value from the creditor and redeem it in the debtor country in local currency at face value. The discount is a result of the creditors low expectation for repayment by the debtor country and / or desire to reduce credit exposure. The proceeds of the swap – the difference between the purchase and redemption price is invested in environmental programs and projects. These proceeds are usually distributed by a local organization onto on-ground projects.
Landholders driving change: Exploring new incentives | 87