Water is the central chemical without which life, let alone agricultural production, cannot function. And it comes to us mostly for free. Yet, as more extreme weather, including drought and deluge, is forecast than at any time in human history, effective water management is essential for future farm resiliency.
Farming has always been concerned with the quantity of water, namely water in the right place at the right time. However, water quality is important as well, both as it comes to the farm (and with the rises in atmospheric microplastics and pathogens this is by no means certain) and as it leaves the farm to avoid either damage to the farm itself or the threat of environmental penalties. The risks from drought or flood to all types of agricultural production are well known, but the scale of the impact is rising. There is also increasing risk of new environmental regulations as well as the reputational risks of being seen as a polluter.
To a bank, a farm that is exposed to the risk of lower water quality and quantity, and therefore facing year-on-year falls in yield and crop quality, or even total production loss, is seen as a poor credit opportunity. Parts of the UK are already under high water stress, indicating poorer resiliency and therefore higher risk for lending.
With too much water, there will be impacts on both the green and grey infrastructure of any farm – the risk of field or farmyard flooding, lodging, soil erosion, nutrient run-off and stress on both livestock and deadstock. Poorly managed soils cause a loss in the land asset value as topsoil will simply wash away. Water stress clearly then also leads to off-farm supply chain disruptions, which can cause both local and indeed global issues – food price volatility is frequently driven by water issues around the world.
All businesses should be assessing water data, water dependencies, water risks and impacts and opportunities to mitigate these risks in a location specific way. Oxbury is working with its customers to identify mitigation strategies and suitable investments in either grey or green infrastructure to ensure more resilient farm businesses.
Although grey infrastructure improvements in the farmyard will be required, such as adequate drainage to rainwater harvesting, the largest opportunity is using green infrastructure to capture and hold water. These include land use choices (such as key-line agroforestry planting or wetland restoration) or simply increasing soil organic matter to ensure total water holding capacity per hectare improves: Every 1% increase in soil organic matter could store an additional 185,000 litres per hectare.
Using green infrastructure opens up numerous opportunities for farmers to capitalise on a role as water managers, both with respect to quality by entering nutrient neutrality markets and quantity by entering natural flood management markets. The same natural capital investments will also offer a range of other commercial opportunities around carbon and biodiversity net gain. Such opportunities are already being exploited at both the farm level, where Oxbury is lending as part of our DEFRA supported Natural Environment Investment Readiness Fund (NEIRF) and at the catchment level, for example by the North East Cotswold Farmer Cluster’s project to restore the health of the Evenlode Upper Thames Catchment. Such collaboration may well be essential for all farmers to ensure they are managing the precious resource that is water well into the future.