Context

Ambitious targets under the Paris Climate Agreement and the Kunming-Montreal Global Biodiversity Framework bring increasing urgency for agriculture to play an active role as a nature-based solution to climate and biodiversity loss. But widespread uptake of nature-based solutions by the agriculture sector has proved elusive. This paper presents the results of the Farming for the Future Livestock Program, a large-scale program that sought to quantify the financial implications of natural capital for farm business performance in Australia's broadacre livestock sector, which covers 350 million ha and contributes more than 50% of the country's gross value of agricultural production.

Objective

We aim to build a better understanding of the financial implications of natural capital on farms - a critical knowledge gap that limits effective policy and landholder adoption of nature-based solutions in the agriculture sector. We aim to quantify the effect of on-farm natural capital on farm business performance.

Methods

We collected natural capital data from 114 farms via satellite imagery analysis and on-ground vegetation surveys, alongside production and financial data collected via detailed producer surveys. We used five natural capital metrics (Ecological Condition, Aggregation, Proximity, Ground Cover, and Forage Condition) to understand the effect of natural capital on farm business performance (productivity efficiency, profitability and financial resilience) on farms with a combined land area of >230,000 ha, in the largest analysis of its kind to date.

Results and conclusion

Our multi-region models tested a total of 20 natural capital – farm business performance relationships (4 business performance measures x 5 natural capital metrics). There was moderate or strong evidence for 6 of these (5 positive, one negative) and weak statistical evidence for a further 6 relationships (4 positive, 2 negative). Region-specific models yielded similar results to the multi-region model. This suggests that high-performing livestock businesses benefit from high levels of natural capital. High levels of specific types of natural capital were associated with increased production efficiency of up to 3%, improved livestock gross margin, higher farm earnings, and higher levels of climate resilience.

Significance 

We highlight the important role that integrating robust information about the financial implications of natural capital in production systems can play in shaping appropriate and adoptable nature-based climate solutions for the agriculture sector.