How Climate Change Will Impact Farmland Investment
And how investors can help.
Climate change is having a significant impact on farmland investment.
As extreme weather events are becoming more common, this adds more risks for farmland investors.
We explore in this article which risks farmland investors should fear, and what are the opportunities and actions they can take to mitigate those risks.
1. Risks
A. Global warming
Global warming is expected to have a major impact on farmland by making many areas that were previously suitable for farming no longer able to grow crops, particularly in countries already victims of heatwaves.
Higher temperatures can lead to more pests and diseases on one hand, and drought on the other.
Many have speculated that this could lead to a decrease in the amount of available farmland in the future, which in turn could drive up the price of farmland in countries where global warming would not have a significant impact (mainly cold countries).
As a result, investors should make sure to invest in farmland protected from heatwaves.
B. Sea level rising
As sea levels rise, low-lying coastal areas will be increasingly at risk of flooding, which can damage crops and make it difficult for farmers to farm.
Furthermore, there is also a risk that seawater contaminates the soil.
The countries most at risk of sea levels rising are China, Bangladesh, India, Egypt, the Netherlands, the United States, Brazil, Australia, New Zealand, and most islands in the Pacific.
C. Extreme events
Climate change also increases the frequency of extreme weather events.
These events, such as heatwaves, droughts, and floods, can cause significant damage to crops and soil, leading to reduced yields and lower profits for farmers and investors.
In some cases, these events can even render farmland unusable.
Extreme events usually increase in places that already have extreme events. Geographical areas without extremes aren’t as sensitive as areas that already have.
2. Opportunities
The challenges highlighted above have also created different opportunities for investors mindful of having a positive impact on the world.
A. Shifting towards sustainable farming
In order to mitigate these risks and protect their investments, farmland investors can support sustainable and resilient farming practices.
This can include investing in drought-resistant crops, implementing efficient irrigation systems, and supporting farmers who use conservation tillage and other sustainable farming techniques.
Investing in sustainable farming practices can also provide opportunities for investors to capitalize on the growing demand for environmentally friendly and sustainably-grown food.
As consumers become increasingly conscious of the environmental impact of their food choices, we can expect considerable growth from planet-friendly agricultural products.
B. Finding new ways to grow food
One new technique of crop production that has gained popularity in recent years is vertical farming.
This method involves growing crops in stacked layers, often in controlled environments such as greenhouses or warehouses.
This allows for year-round production, even in areas with extreme climates.
Vertical farming also allows for efficient use of space, as crops can be grown in a smaller area compared to traditional farming methods.
This can be particularly beneficial in urban areas where land is limited.
Additionally, because the growing environment can be carefully controlled, vertical farming can allow for more precise management of factors such as temperature, humidity, and light, which can improve crop yields.
Another new technique of crop production is the use of precision agriculture, which involves using technology such as sensors, GPS, and drones to collect data on factors such as soil moisture and nutrient levels.
This data can then be used to optimize farming practices, such as applying fertilizers and irrigation only where and when they are needed.
This can help to reduce waste and increase crop yields, while also reducing the environmental impact of farming.
3. Conclusion
Predicting what impact climate change will have on farmland is not easy. In a world where we can hardly predict the weather of the next day, all we can do is speculate.
What we do know is that extreme weather events and shifting weather patterns will have an impact on farmland. Investors would be wise to focus on well-managed farmland located in colder countries that aren’t threatened by rising sea levels, like Estonia, for example.
Interested to invest in farmland? Go to landex.ai today.
