Increases in the cover of native vegetation are required to maintain biodiversity, improve water quality and soil health and increase profitability of livestock production enterprises through provision of shelter. Tree planting and direct seeding can be labour intensive and expensive. Recent research has shown that there is much potential to increase native vegetation cover through natural regeneration but there is much uncertainty about when it will happen. This uncertainty can translate into considerable risks for land holders, potentially reducing the use of natural regeneration.

In this paper we explore the costs of natural regeneration and direct seeding or tubestock planting on a representative farm in central Victoria, considering capital costs and foregone income. Our results suggest that although the capital costs of natural regeneration are far lower than tree planting or direct seeding, the inherent riskiness of natural regeneration can result in greater negative impacts on profitability. Improving our ability to predict where and when regeneration will occur will be essential if natural regeneration is to be adopted more broadly. We provide some strategies to reduce the risks associated with natural regeneration and outline recommendations for how incentive programs could improve adoption.