Does investment in sustainable farming pay off?

November 29, 2016

Exploring the nascent field of sustainable farmland investment, a new report from the Yale Center for Business and the Environment found that innovative investment strategies focused on sustainable agriculture appear to deliver financial, environmental, and social returns.

Though industrial agriculture has long been seen as an efficient method for feeding the world--the United Nations predicts food production will need to increase by 70 percent by 2050--long-term concerns are growing around negative environmental externalities and climate change vulnerability. Sustainable farming has emerged as a potential alternative solution. Authored by two Yale students, this report is an attempt to understand the provenance, strategies, key trends, value drivers, and structural challenges of investment in sustainable farming. (The authors adhere to the definition of sustainable food systems put forth by the Royal Society.)

Sustainable farming currently offers two primary avenues for returns on investment. First, supporting farming efficiencies and improvements, particularly as they relate to ecosystem function, enhances asset performance. Second, there is growing consumer demand for natural and organic products, which command a price premium. Initial findings indicated that conversion to organic agriculture, water efficiency projects, and raising grass-fed beef were particularly promising investment targets.

The authors also uncovered an array of creative tools that investment firms are testing in this unexplored market. In the case of leasing, for instance, investment managers are experimenting with new structures, including: rent payments tied to ecological performance, with discounts provided based on soil health; delayed or reduced payments to accommodate the multiyear process of converting from conventional to organic; unusually long leases (up to fifteen years) that incent land managers toward more forward-looking and sustainable practices. In one case, an investor is consolidating holdings by acre rather than maintaining distinct parcels -- a mechanism that allows for critical economies of scale and flexible management schemes that increase soil health.

Investors' and land managers' willingness to experiment is crucial to determining what methods are successful in delivering market rate returns. The results have so far been very promising, but more needs to be done.

One central challenge for this work is a public policy vacuum around these investment efforts. As the authors note, "Sustainable farming support has a long way to go before it can outweigh the regulatory financial benefits associated with conventional growing practices."

Limited data also made it difficult to generalize conclusions or draw direct relationships between investment activities and their returns.

"Greater effort is needed to make the connection between specific sustainable farming activities and asset performance," write the authors. Far beyond an academic exercise, fortifying and clarifying these connections through further study would help sustainable farmland investors communicate the value of their efforts and facilitate fundraising for further investment. This would also provide useful decision-making information for existing assets.
The Yale Center for Business and the Environment is based at the Yale School of Forestry & Environmental Studies and the Yale School of Management.

To view or download the full report, visit the website:

Yale School of Forestry & Environmental Studies

Related Sustainable Agriculture Articles from Brightsurf:

Identifying local solutions in the barotse floodplain for sustainable agriculture development
To develop locally relevant strategies that improve food security, nutrition, and conservation, researchers employed a gendered ecosystem services approach in Zambia.

Post-pandemic brave new world of agriculture
Recent events have shown how vulnerable the meat processing industry is to COVID-19.

Agriculture - a climate villain? Maybe not!
The UN's Intergovernmental Panel on Climate Change (IPCC) claims that agriculture is one of the main sources of greenhouse gases, and is thus by many observers considered as a climate villain.

New functions of a protein may improve biocontrol methods in sustainable agriculture
The laboratory of the UMA 'BacBio' has proved that Bacillus subtilis cells, when deprived of an amyloid protein (TasA), exhibit a range of cytological anomalies and dysfunctions leading to their premature death.

Digital agriculture paves the road to agricultural sustainability
In a study published in Nature Sustainability, researchers outline how to develop a more sustainable land management system through data collection and stakeholder buy-in.

Comparisons of organic and conventional agriculture need to be better, say researchers
The environmental effects of agriculture and food are hotly debated.

EU agriculture not viable for the future
The current reform proposals of the EU Commission on the Common Agricultural Policy (CAP) are unlikely to improve environmental protection, say researchers led by the German Centre for Integrative Biodiversity Research (iDiv), the Helmholtz Centre for Environmental Research (UFZ) and the University of Göttingen in the journal Science.

Discovery linking microbes to methane emissions could make agriculture more sustainable
Common dairy cows share the same core group of genetically inherited gut microbes, which influence factors such as how much methane the animals release during digestion and how efficiently they produce milk, according to a new study.

Global agriculture: Impending threats to biodiversity
A new study compares the effects of expansion vs. intensification of cropland use on global agricultural markets and biodiversity, and finds that the expansion strategy poses a particularly serious threat to biodiversity in the tropics.

A new vision for genomics in animal agriculture
Iowa State University animal scientists helped to form a blueprint to guide the next decade of animal genomics research.

Read More: Sustainable Agriculture News and Sustainable Agriculture Current Events is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to