New research by Farming for the Future has shown that enhancing natural capital can generally boost farm performance, and even if a tradeoff point exists, most farms have not yet reached it.

Australia’s Farming for the Future program unveiled the results of an extensive program that collected and analysed financial, ecological, and social data from 130 Australian grazing and cropping enterprises at the recent National Farmers' Federation & Farming for the Future Natural Capital Summit in Canberra in September.

The findings showed that it is possible to establish and quantify the relationship between a farm’s natural capital and its productivity and profitability.

Farming for the Future’s research aimed to deliver a baseline for emissions and natural capital conditions and values in productive landscapes. The findings insights are invaluable in supporting both policy and private investment in creating financial value and climate resilience for Australian agriculture as well as driving on-farm environmental sustainability.

Dr Sue Ogilvy, Program Director of Farming for the Future, said that even though the program is in the prototype phase, it has already found evidence that shows there is great potential to be realised by being able to quantify the value of investing in a farm's natural capital.

A glimpse into the discoveries

Here are some of the key insights revealed in the preliminary results:

• Profitability and natural capital – Farms with higher natural capital are more profitable in financial terms, although high productivity can still be achieved in intensive livestock enterprises with lower natural capital.
• Benefit pathways – Natural capital can support farm businesses through various "benefit pathways," such as improving productivity and reducing input costs.
• Positive relationships – Most observed relationships between natural capital and farm business performance are positive and linear, suggesting that most farms could improve their outcomes by enhancing their natural capital.
• Private financial benefits – Landholder surveys indicate that the potential for private financial benefits is a compelling reason for farmers to invest in natural capital improvements.
• Opportunity zone – The research has identified an "opportunity zone" where investment in the ecological condition of a farm is associated with financial benefits.

Overall, the research suggests there is significant room for increased productivity and profitability through further investment in natural capital.

Acknowledgments 

The Farming for the Future research team collaborates with a multidisciplinary network of farm advisors, natural resource management experts, and scientists to conduct their research, and involving farmers and their advisors in the research process was important to choose and tease out metrics related directly to farm management.

This direct exchange with farmers and advisors could be the key to developing practical tools and benchmarks for informed decision-making about natural capital investments.

This research initiative, supported by the Macdoch Foundation and industry stakeholders, aims to expand its scope to include a diverse range of farming businesses across Australia. By quantifying the private benefits to farmers in managing natural capital for environmental and economic gains, Farming for the Future seeks to empower farmers to make informed choices about their natural capital investments.

Sources: Media Release 13 September 2023, World-first research suggests natural capital impacts farm performance.