Climate impacts on credit risks in agriculture

Changing climate conditions — including rising daily maximum temperatures, more extreme heat days and changing rainfall patterns — can hinder crop production, ultimately harming farm profitability and increasing credit risk to agricultural finance institutions.

As a result, projections of farm profitability and credit risk can be used to assess future financial risks driven by weather and crop yield projections, as well as identify adaptation solutions that agricultural lending institutions can finance to support their customers’ financial resilience.

This tool examines projections of revenue and net return to understand changes in future profitability, and debt-to-asset ratio to evaluate credit risk. Publicly available farm financial and balance sheet data, as well as market projections, are the foundation for these modelled results. See the methodology summary on the next steps tab for additional information.

Select one of the farm examples below to view the projected financial impact of changes in climate and subsequent crop production through mid-century. These examples demonstrate how differences in crop rotation and starting credit risk profile affect projected profitability and credit risk under changing weather conditions.

Farm financial and credit risk outcomes are also highly impacted by factors other than climate change and changes in crop yields. The results shown on this page fix commodity prices, input costs, crop insurance rates and other market factors to a medium profitability scenario. By downloading the full dataset on the next tab, you will be able to explore two additional profitability scenarios that vary projected commodity prices and costs of production.

To build your own farm profiles and see how weather and crop yields impact profitability and credit risk, select “explore the data.”