The Revolving Fund: the financial benefits stack up

13 June 2017

The value of land with natural assets

Nature has immeasurable value to us from a source of peace or inspiration to supporting food production and health products our lives rely on.

At times, it can be difficult to explain the value of nature to those who are not connected with it. This is often experienced when owners of a covenanted property seek to sell their land and are required to deal with real estate agents, valuers or bank employees working in strictly commercial industries.

It has certainly been our experience at Trust for Nature that operating a revolving fund to purchase and sell bushland properties has increasing value to not only the environment, but to the value of the property itself. In the 20 years the Revolving Fund has received sales receipts in excess of purchase costs, which then enables Trust for Nature to continue to purchase and protect more properties of conservation value.

The benefit of remnant vegetation to property values is also being backed up by research. A recent University of Western Australia study assessed the private financial benefits of native vegetation on private property. They looked at a range of property types and sizes across a 3 million hectare area of north central Victoria. The researchers applied economic modelling techniques to 20 years of property sales data for the area to estimate the financial benefit of native vegetation to property values.

It found that some retained native vegetation can increase the market value of all properties types. Smaller properties (1ha) are likely to experience the greatest increase in sales prices, and will receive a financial benefit with up to 90% cover of native vegetation. Even for large properties (greater than 100ha) that have a far higher proportion of productive uses, improved sales price for land will be experienced with up to 40% native vegetation cover.

Rural property values were once driven by the financial return of faming the land. This study, published in the American Journal of Agricultural Economics, shows that a broader property market now exists, one where the value of nature can be reflected in land prices. 

Polyakov M, DJ Pannell, R Pandit, S Tapsuwan and G Park (2014) Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape.
American Journal of Agricultural Economics 97(1):299-314