Implementing natural capital credit risk assessment in agricultural lending

Francisco Ascui, Theodor Cojoianu

Research output: Contribution to journalArticlepeer-review


Agriculture has critical impacts and dependencies on natural capital, and agricultural lenders are therefore exposed to natural capital credit risk through their loans to farmers. Currently, however, lenders lack any detailed guidance for assessing natural capital credit risk in agriculture, and are challenged by the fact that the relevant material risks vary considerably by agricultural sector and geography. This paper develops a natural capital credit risk assessment framework based on a bottom-up review of the material risks associated with natural capital impacts and dependencies for Australian beef production. It demonstrates that implementing natural capital credit risk assessment is feasible in agricultural lending, using a combination of quantitative and qualitative inputs. Implementation challenges include the complexity and interconnectedness of natural capital processes, data availability and cost, spatial data analytical capacity and the need for transformational change, both within lending organisations and across the banking sector.
Original languageEnglish
Pages (from-to)1234-1249
Number of pages15
JournalBusiness Strategy and the Environment
Issue number6
Early online date7 Apr 2019
Publication statusPublished - 4 Sep 2019


  • natural capital
  • credit risk assessment
  • environmental credit risk
  • agricultural lending
  • beef production
  • Australia

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