Leveraged private investment encourages ‘public’ and ‘private’ markets to work in tandem. Public, or government, natural resource management (NRM) investors are ‘in the market’ for environmental and other public benefit outcomes. Private financiers and private equity, are ‘in the market’ to invest in profitable enterprises.

Leveraging takes an explicit cash co-investment approach and targets near-commercial projects with sustainability benefits, rather than targeting primarily public-good environmental outcomes.

A fundamental reason for government intervention in environmental management and NRM is that many existing land-use practices, while profitable, can also cause or contribute to the degradation of the natural resource base and biodiversity values.

Some productive land uses, and land and water management practices, can also deliver significant environmental benefits. For example, planting woody perennial vegetation such as timber species, sandalwood, oil mallee or broombrush for commercial purposes may also deliver improved salinity outcomes, carbon sequestration, or wildlife corridors and habitat.

However, in many instances these type of projects face two hurdles:

• their commercial returns may be marginally lower than other investment opportunities with similar risks, and therefore the project will not attract investment, or
• they may not offer enough environmental benefit to justify 100% public investment.

Leveraged private investment projects are co-funded by the private and public sectors, with the public sector covering the shortfall in any commercial returns in order to attract private-sector investment.

This approach relies on access to a pool of public funds and a thorough assessment of the environmental and commercial benefits and the risks of competing proposals. Proposals are selected for ‘gap’ funding based on their combined commercial and environmental attributes.

There are few examples of this approach being used in Australia, with the exception of the Greening Australia–CSIRO Land Innovation Fund trial. However, leveraged private investment may have potential for regional NRM groups in the future where regional NRM groups invest with the private sector in commercial projects that also provide environmental outcomes.

Leveraged private investment encourages ‘public’ and ‘private’ markets to work in tandem. Public, or government, natural resource management (NRM) investors are ‘in the market’ for environmental and other public benefit outcomes. Private financiers and private equity, are ‘in the market’ to invest in profitable enterprises.

Leveraging takes an explicit cash co-investment approach and targets near-commercial projects with sustainability benefits, rather than targeting primarily public-good environmental outcomes.

A fundamental reason for government intervention in environmental management and NRM is that many existing land-use practices, while profitable, can also cause or contribute to the degradation of the natural resource base and biodiversity values.

Some productive land uses, and land and water management practices, can also deliver significant environmental benefits. For example, planting woody perennial vegetation such as timber species, sandalwood, oil mallee or broombrush for commercial purposes may also deliver improved salinity outcomes, carbon sequestration, or wildlife corridors and habitat.

However, in many instances these type of projects face two hurdles:

• their commercial returns may be marginally lower than other investment opportunities with similar risks, and therefore the project will not attract investment, or
• they may not offer enough environmental benefit to justify 100% public investment.

Leveraged private investment projects are co-funded by the private and public sectors, with the public sector covering the shortfall in any commercial returns in order to attract private-sector investment.

This approach relies on access to a pool of public funds and a thorough assessment of the environmental and commercial benefits and the risks of competing proposals. Proposals are selected for ‘gap’ funding based on their combined commercial and environmental attributes.

There are few examples of this approach being used in Australia, with the exception of the Greening Australia–CSIRO Land Innovation Fund trial. However, leveraged private investment may have potential for regional NRM groups in the future where regional NRM groups invest with the private sector in commercial projects that also provide environmental outcomes.