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Developing an evidence base for assessing natural capital risks and dependencies in lending to Australian wheat farms

Citation

Cojoianu, TF and Ascui, F, Developing an evidence base for assessing natural capital risks and dependencies in lending to Australian wheat farms, Journal of Sustainable Finance & Investment pp. 1-19. ISSN 2043-0795 (2017) [Refereed Article]


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DOI: doi:10.1080/20430795.2017.1375776

Abstract

Farmers 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.

Item Details

Item Type:Refereed Article
Keywords:Natural capital; environmental risk; environmental credit risk assessment; responsible lending; wheat farming; Australia
Research Division:Commerce, Management, Tourism and Services
Research Group:Accounting, Auditing and Accountability
Research Field:Sustainability Accounting and Reporting
Objective Division:Environment
Objective Group:Environmental and Natural Resource Evaluation
Objective Field:Sustainability Indicators
Author:Ascui, F (Dr Francisco Ascui)
ID Code:121939
Year Published:2017
Deposited By:Tasmanian School of Business and Economics
Deposited On:2017-10-23
Last Modified:2017-10-27
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