Farming is an industry full of contradictions:
- Farmers depend absolutely on biodiversity, ecosystems, and watersheds, yet common farming practices undermine all of them.
- Food is needed by all people everywhere, yet investors treat farming as risky, and farming communities face perennial economic hardship.
- Food price spikes destabilize economies and governments, but too little support is given to farmers to ensure sustainable affordable production.
- A growing global population needs more food, and more agriculture, but farmland is being sold off for housing, without resolving the housing crisis.
- Farmers would be the number one beneficiaries of a green economy that values natural systems, but many vote against such policies.
The reasons for all these contradictions have to do with how financial resources are allocated, both by policy incentives and by markets. Farmers and the local economies of farming communities tend not to be priorities for public policy or for financial or commodity markets. The focus of public policy tends to be reducing the cost per unit of food and maximizing production, and markets want to generate higher returns for investors.
Both of these dynamics can have the effect of siphoning money away from farmers and rural communities. As a result, too little direct investment goes into ensuring farmers are well compensated for high quality resilience-building performance.
Too often, incentives that are urgently needed by small farmers and underserved rural communities go to large corporate conglomerates, who persuade investors and political leaders that their scale confers efficiency, and their income can be income for farmers. In many cases, this practice results in subsidies generating financial returns but not economic stability for small-scale farms and rural communities.
The solutions offered to farmers to make their risky labor-intensive endeavor easier put chemicals into the environment, undermine ecosystems, degrade fresh water supplies, and siphon money away from on-farm asset-building. This system puts pressure on farmers not to spend more than they normally would, to innovate. For many, it feels like a trap.
A key step toward reducing harmful farmland runoff and improving agricultural sequestration of carbon compounds is to emphasize on-farm asset-building. Climate-resilient farming requires rich soil ecology; living organisms are carbon biomass; they help to sequester carbon in the soil, and make the soil more productive. Soil ecology also helps soil retain moisture and makes soil erosion from wind and water less likely.
Soil ecology is an on-farm asset. It is inherently valuable for the resilience and productivity of the farmland itself, and it is investable—both as an optimizing precondition for organic, regenerative and agroecological production, and as a way to draw down atmospheric carbon and play a constructive role in the global climate response.
Public policies and financial instruments that value resilience of farmland, watersheds, and ecosystems, and which reward the restoration and build-up of soil biomass, fresh water resources, and on-farm assets can boost returns for public and private investors, and make healthier food more available. These strategies can also reduce climate impact-related risks and costs, and support the diversification of rural economies.
As clean agriculture advances, and investments linked to Earth systems data expand, the opportunity to provide relevant intermediary services will also expand. Incomes available in rural communities will grow, and many of the socio-economic trends that undermine the stability and prosperity of rural economies can be reversed.
The importance of this piece of the process of shifting to clean agriculture cannot be overstated: More people will be required to bring knowledge and insight into the overall process of establishing and evolving value chains that support clean, sustainable agriculture that produces healthy, affordable food in ways that are climate-resilient and good for nature. Those that wish to reinforce an extractive model—where money is added to the system to narrow margins for producers and shift income to already powerful interests—may not like this at first, but the benefits of adding so much capability and economic vibrancy to the overall system will be to everyone’s benefit.
Because resilience is a way to build foundational value, to reduce risk and cost across the local economy, farmland resilience and agroecology measures can also open up new kinds of insurance to optimize the flow of financial resources from the public and private sectors, and further support improved livelihoods and economic diversification.
This optimizing function of climate-resilient farming practices provides important risk and resilience insights for investment decisions. Especially for institutional investors with long-term value-building as a core priority, it is vital to understand if a particular practice or business model adds to the rapidly accumulating stock of nonlinear compounding risk affecting future value potential.
Unsustainable practices degrade farmlands and the ecological background systems that support them. This, on top of the effects of climate disruption, makes it more likely harvests will fail and food prices will spike. Costly economic and political destabilization can ensue, with devastating risk to financial holdings.
Clean agriculture is possible. Upstream and downstream communities working together to make it into a cohesive economic development strategy can attract new investment and improve opportunity, livelihoods, health outcomes, and fiscal stability.
We cannot afford further erosion of the natural systems that make agriculture work. The risks to our food supply are too great. It’s time to start mobilizing the metrics and incentives that will make clean, climate-resilient agriculture the standard everywhere.
