Water scarcity risk for Australian farms and the implications for the financial sector

Posted on 26 Jan 2021
Updated on 26 Jan 2021
2-minute read

ISF partnered with AgTech company The Yield to come up with a new method for calculating the water risk exposure for farms.

RESEARCH OUTPUTS

Newell highway off Moree town in Artesian basin of Australian wheat belt at flat plains of developed agriculture farms along Gwydir river with rest area by the road

Water scarcity represents a material risk factor for farms across Australia, with the potential for a reduction in yields and increasing the costs of farm production.

At present, the reality of water risk is not fully incorporated into the assessment of farm loan applications. Introducing water risk assessment processes into farm loan applications has the potential to reduce financial risks for farms.

National Australia Bank approached ISF to help develop a new method of calculating the water risk exposure for a farm. Working in partnership with AgTech company The Yield, ISF researchers examined the approach undertaken by financial officers in the Agribusiness sector and Australian farmers in Australia when assessing water risk.

The study allowed ISF to identify opportunities to improve the associated financial decision-making processes, and develop a new method to calculate the water risk exposure for a farm.

Water Scarcity Risk For Australian Farms & The Implications for the Financial Sector (2019) (Report)