Our research shows that farmers earn more when they increase biodiversity on their fields.

From: Jim Radford, lecturer in ecology and environment, La Trobe University, Australia Grace Sutton, postdoctoral researcher in eco-remote sensing, La Trobe University Liz Heagney, affiliated researcher in environmental economics, Southern Cross University, Australia The agriculture and environmental sectors have long been perceived as conflicting interests. This is because agriculture remains a major source of greenhouse gas emissions. Another reason is that it requires large areas of land to be cleared, often with devastating consequences for wildlife and vegetation. For many years, governments and civil society organizations, such as local Landcare groups, have encouraged farmers to restore nature on their land. This is one way to increase their "natural capital" — a term that encompasses the total of all natural resources providing products and services of value to society. It includes soil, air, water, and all living organisms. Some farmers have been eager to strengthen their natural capital. Others, however, see it as a waste of time or money. But our world premiere study shows that maintaining and restoring nature on farmland can actually increase farmers' productivity and earnings. How is this possible? And how can we encourage more farmers to invest in nature? Natural capital is more than a buzzword. For farmers, it is a crucial part of running a productive and profitable business, and for the environment, natural capital serves as habitat for animals and wild plants, as well as a means to absorb and store carbon. Examples of natural capital on farmland include grazing pastures, preserved natural vegetation areas, and the soil in which crops grow. These provide a range of ecosystem services. For example, planted hedgerows — rows of trees and bushes — help conserve soil moisture and protect livestock from wind. It may seem obvious that farms with more natural capital would be more productive and profitable than those with less, but we do not know this for certain because traditional accounting methods do not account for how natural capital can contribute to a farm’s productivity. In our study, the first of its kind, we examined how the quantity and quality of natural capital on a farm affect its economic outcomes. The study included 114 livestock farms across the Australian states of New South Wales, Victoria, Tasmania, and Western Australia. We tracked their economic results over a five-year period from 2017 to 2022, which included drought years and years with high rainfall. We looked at three main measurement parameters: - Production efficiency: How well a farm converts inputs like fertilizer and diesel into products such as meat and wool, - Profitability: How much a farmer earns after paying all expenses, - Financial resilience: How stable a farm’s income is, especially during drought periods. We also assessed the quantity and condition of natural capital on each farm. This involved collecting data on: - The amount of tree cover and its distribution across the farm, - Types of grass species in pastures, - Coverage of low-growing plants, alive or dead, which help prevent soil erosion, - The overall ecological condition, relating to how much the existing ecosystems have been affected. Overall, we found that livestock farms with higher levels of natural capital were up to 3 percent more productive than farms with the lowest levels. This is significant, considering that Australia’s agricultural productivity has only grown by an average of 0.2 percent annually over the past decade. Even better, our research shows that farms with more natural capital are more financially resilient. This means there is less variation from year to year in their earnings, even when they experience drought periods. There are several ways natural capital can improve a farm’s economic results. Here are three: 1. Increasing production efficiency Our research suggests that farms with healthier pastures and trees and hedgerows spread across fields are generally more efficient. For example, sheep farms with more natural capital would require fewer inputs to produce the same amount of meat or wool. Sheep on farms with more natural capital would also be healthier and more likely to survive extreme weather events because they have more shade and shelter. 2. Reducing costs The price of inputs like pesticides and fertilizers can be high and unpredictable, but by allowing animals to graze on natural grasses and preserving and planting native vegetation, farmers can reduce the need for these inputs. Natural vegetation suppresses weeds and provides habitats for beneficial insects, bats, and birds, all of which prey on pests. 3. Making income more stable Our research shows that farms with more natural capital are better protected against extreme weather events such as droughts or heavy rains. For example, a sheep farmer maintaining areas of natural vegetation is less likely to lose lambs during wet and windy conditions. By protecting livestock, pastures, and crops, ecological restoration can also give farmers a more secure income. However, we do not want to turn farms into national parks. There is a point where too much natural capital begins to reduce farm productivity and food security. This occurs when the further reduction of land used for farming outweighs the benefits of increased natural capital. Instead, we need to find the golden mean where restoring natural capital enhances rather than limits agricultural production. Overall, our research challenges the notion that profitable farming and biodiversity cannot coexist. It shows that investing in natural capital can actually be worthwhile. The more we embrace this view, the better we serve both our economy and the environment. This study is part of the 'Farming for the Future Livestock' program, which aims to quantify the economic impacts of natural capital on farm performance in Australia’s large-scale livestock sector, covering 350 million hectares and accounting for more than 50 percent of the country’s total agricultural production. 'Farming for the Future' is an interdisciplinary program for agricultural research and change — initiated and initially funded by the Macdoch Foundation — designed to investigate the relationship between natural capital on farms and their economic results. The article was originally published in English on The Conversation on April 5, 2026.