Investors could fund the creation of Victorian forests under a radical plan hatched by conservationists.
Advocates for the creation of a massive new Great Forest National Park are lobbying the state government to issue a $224 million sustainability bond to fund the dream.
"This sort of thing has never been done before," environmentalist Sarah Rees told ABC News.
The proposed Great Forest National Park, about 90 minutes' drive north-east of Melbourne, would take in more than half a million hectares and triple the area of Central Highlands forest currently protected.
"Generating a bond is a different way of investing in regional renewal and regenerating our forests using private investment," Ms Rees said of the financing plan.
"The government is ultimately the manager, and the government administers the fund."
Bonds are issued by governments and corporations when they want to raise money. In exchange, investors are paid back the face value of the loan on a specific date, along with periodic interest payments.
Unlike other bonds, funds raised through green bonds must go towards projects that have a positive environmental impact.
Ms Rees has spent a decade campaigning for the creation of the Great Forest National Park, and said using a green bond should be considered.
"The bond will deliver recreational opportunities for Melbourne. It will deliver new business opportunities for local communities, and it will deliver regional renewal that our areas need, particularly since logging stopped," Ms Rees said.
Money generated by the bond would go towards projects including tourism infrastructure, fire management and conservation work, with the park forecast to create up to 750 jobs.
Not everyone in favour of national park
While supporters of the park's creation suggest it could be to Melbourne what the Blue Mountains are to Sydney, not everyone is in favour of the idea.
Strong opposition has come from groups including hunters and four-wheel-drivers.
Detractors argue people who use Victoria's forests for four-wheel driving, hunting and camping would be locked out if it was all national park.
In August, even the Victorian premier said she was opposed to padlocking up large swathes of forest.
She noted the need to protect some pockets of forest, but noted a balance must be reached to also protect the various uses of the expanse of bushland.
What are green bonds?
Sustainability and green bonds have been growing in popularity in recent years.
"A green bond is just like a normal bond except it is used to fund specifically projects that provide environmental benefits," Melbourne Uni's Leslie Martin said.
Dr Martin, an environmental economics expert, said the green bond market had taken off.
"The World Bank helped to create this investment vehicle and to publicise it," she said.
In 2016, the Victorian government became the first in Australia to issue a green bond, worth $300 million.
In 2021, the state government launched a sustainability bond program, which according to its latest annual report "has now raised $7.3 billion to fund eligible projects totalling $16.9 billion".
The federal government currently has $7 billion worth of Green Treasury Bonds issued.
Projects funded under the bond program have ranged from replacing old traffic lights with LEDs, to the Metro Tunnel rail project.
Dr Martin said the benefit of green bonds as a funding option was still open for debate."We're pretty confident that when you issue a green bond, that the money is being used to finance green projects, but it's not as clear that those green projects wouldn't have happened anyway, or that they wouldn't have been just as green with a regular form of financing," Dr Martin said.
Despite their increasing use, funding a national park using a green bond would be an innovative move.
"Green bonds haven't been used for a project like this and this gives the Allan government the opportunity to be a national leader," Ms Rees said.
"The idea of a green bond is actually to allow for mum and dad investors, institutional investors, banks, to invest in a plethora of different projects that help to renew and regenerate the regional areas.
"We're asking the Allan government to take a bit of a leap of faith.
"But we know within 10 years this bond will pay itself back."
Investors would get behind green bond for park, say supporters
Early indications, according to supporters, are that a Great Forest National Park green bond would be well received by investors, and oversubscribed.
Craig Connelly, a partner at global asset manager Perpetual Limited, has backed the proposed Great Forest National Park.
"This would be an amazing demonstration project that others would then copy and follow and there'd be demand in the billions of dollars for similar opportunities right across the country," he said.
He said the government could set up a national park without funding it through a bond and cover the cost of restoration, access and amenity project via state coffers.
"The reality is that private capital provides a layer of integrity to the process that historically, governments have not implemented well," he said.
"Private capital will hold the ecological restoration work in particular, to a higher standard than would otherwise be the case."
Green bonds bring with them extra obligations, including transparency about climate outcomes, and generally lower yields.
"How much the investors are going to receive for purchasing it is typically going to be a few basis points lower," Dr Martin said.
"It's money that you obtain at more favourable conditions as an issuer, because it has these green characteristics."
She said there were generally two reasons for investors to buy green bonds — a desire for a portfolio that reflected their values, and a general attempt to make the world a better place.
Future of the proposed park up in the air
The future of the proposed Great Forest National Park is far from a sure thing.
While advocates argue it won't lock out a full variety of forest users, including dog walkers, concerns remain.
In a statement, Environment Minister Steve Dimopoulos said the end of native timber logging had given the state a chance to rethink the way forests were managed.
"The Great Outdoors Taskforce is consulting the community about the future of over 1.8 million hectares of public land across Gippsland and North-East Victoria previously allocated to timber harvesting," he said.
"Separate to the work of the taskforce, the eminent panel has been consulting community on the future uses of state forests in the Central Highlands.
"Both processes were established to ensure community views help inform government on the future management of state forests before any decisions are made."
Mr Dimopoulos said so far, no decisions had been made on the future use of public land in the Central Highlands.
"It would be rude to the many Victorians who have shared their views, for me to make judgements about land tenure prior to considering those views," the minister said.
