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Developing an evidence base for assessing natural capital risks and dependencies in lending to Australian wheat farms
journal contribution
posted on 2023-05-19, 12:53 authored by Cojoianu, TF, Francisco AscuiFarmers are highly dependent on stocks of natural capital, and lenders are in turn exposed to natural capital through their loans to farmers. However, the traditional process for assessing a farmer’s credit risk relies primarily on historical financial data. Banks’ consideration of environmental factors tends to be limited to major risks such as contaminated land liabilities, and to large project and corporate finance, as opposed to the smaller loans typical of the Australian agricultural sector. The relevant risks and dependencies for agriculture vary by sub-sector and geography, and there is a lack of standardised methodologies and evidence to support risk assessment. We provide an evidence base to support natural capital risk assessment for a single sub-sector of Australian agriculture – wheat farming. We show that such an assessment is possible, with a combination of quantitative and qualitative inputs, but the complexity and interconnectedness of natural capital processes is a challenge, particularly for soil health.
History
Publication title
Journal of Sustainable Finance & InvestmentVolume
8Pagination
1-19ISSN
2043-0795Department/School
TSBEPublisher
Earthscan Ltd.Place of publication
United KingdomRights statement
Copyright 2017 Informa UK Limited, trading as Taylor & Francis GroupRepository Status
- Restricted