A prospective evaluation of contingent loans as a means of financing wild dog exclusion fences

Cockfield, Geoff and Botterill, Linda Courtenay and Kelly, Simon (2018) A prospective evaluation of contingent loans as a means of financing wild dog exclusion fences. The Rangeland Journal, 40 (6). pp. 591-601. ISSN 1036-9872

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Abstract

Invasive species, such as wild dogs can be considered an externality arising from the activities of pastoral enterprises, with producers having limited responsibility for the problem and limited capacity to mitigate it. There are therefore arguments for government intervention through encouraging both individual and collective control measures. Governments are however increasingly inclined to ensure recipients of support make some contribution where there are private benefits. An example of this, in Australia, is the requirement that students repay some of the cost of their tertiary education. Using the issue of wild dog exclusion fencing in south-west Queensland as a case study, this paper considers if and how a policy instrument adopted for higher education (HECS-HELP), contingent loans, could be adapted to address problems of externalities in rural Australia. Central to the issue of exclusion fences are high upfront costs and highly variable incomes that limit the ability to recoup those costs according to a predictable timeline. Considering a range of incomes and a variety of private/government shares of the cost of the fences, we examine the effects of revenue contingent loans for the construction of these fences, using model farms developed from survey data for farm businesses in south-west Queensland. We find that contingent loans could mitigate the hardship effects of additional debt and variable incomes. Businesses with smaller properties and relatively lower incomes may however struggle to pay back larger loans. Using south-west Queensland as a case study, we show how different shares of contributions change the time to pay back loans, outline how a contingent loan scheme might be administered and note some issues with integrating personal contingent loans into a collective fence arrangement.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Accepted version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School: Current - Institute for Agriculture and the Environment
Date Deposited: 05 Dec 2018 05:55
Last Modified: 11 Dec 2018 03:16
Uncontrolled Keywords: collective action, predation on livestock, public benefit, rangelands grazing
Fields of Research : 14 Economics > 1402 Applied Economics > 140201 Agricultural Economics
16 Studies in Human Society > 1605 Policy and Administration > 160510 Public Policy
07 Agricultural and Veterinary Sciences > 0701 Agriculture, Land and Farm Management > 070101 Agricultural Land Management
Socio-Economic Objective: B Economic Development > 83 Animal Production and Animal Primary Products > 8303 Livestock Raising > 830311 Sheep - Wool
D Environment > 96 Environment > 9604 Control of Pests, Diseases and Exotic Species > 960403 Control of Animal Pests, Diseases and Exotic Species in Farmland, Arable Cropland and Permanent Cropland Environments
B Economic Development > 83 Animal Production and Animal Primary Products > 8303 Livestock Raising > 830310 Sheep - Meat
Identification Number or DOI: 10.1071/RJ18054
URI: http://eprints.usq.edu.au/id/eprint/35176

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