La Trobe University researchers have developed a new way to measure and report the environmental performance of farms in a move that could pave the way for future ‘sustainability ratings’ on consumer food and fibre products.
Published in Methods in Ecology and Evolution, the measurement, developed across 50 mixed grazing and cropping farms in south‑eastern Australia, addresses one of the biggest challenges facing agriculture: the rising demand for accurate, farm‑level data on biodiversity, ecosystem services and environmental sustainability.
Lead author Dr Jim Radford, Director of La Trobe's Research Centre for Future Landscapes, said the Farm‑scale Natural Capital Accounting method was the first to combine production data, remote sensing, ecological modelling and on-ground assessments to deliver transparent and verifiable farm-scale accounts.
"In order to truly value the systems that underpin agricultural productivity, we need to put natural capital on the books,” Dr Radford said.
“Farmers need robust, repeatable and scientifically sound ways to understand the condition of their land’s natural capital—and to demonstrate their sustainability credentials to global markets.”
Aligned with the UN's System of Environmental Economic Accounting framework, the Farm‑scale Natural Capital Accounting method allows farmers to quantify their natural assets including soil, water and biodiversity, and their contribution to production through pollination, pest control, forage production, shade and shelter for livestock and habitat for wildlife.
The method also incorporates measures of environmental performance such as greenhouse gas emissions, water‑use intensity and pollution.
Fifty-eight per cent of Australia’s land is managed by farmers, but Dr Radford said natural capital assets were invisible in conventional financial accounting systems.
“Farmers are under increasing pressure to measure and report on their farm’s environmental management but there is no currently agreed method to do so at a farm-scale level.”
Farm-scale Natural Capital Accounting offers farmers practical insights for improving management, identifying degraded areas and tracking changes over time. It also provides supply chains and retailers with trusted, verifiable reporting, helping to counter false or exaggerated ‘greenwashing’ sustainability claims.
“Retailers and consumers are increasingly demanding proof of sustainability. This framework delivers the transparency required to strengthen trust across the entire supply chain,” Dr Radford said.
Dr Radford said the method could easily be adapted to develop environmentally friendly product ratings that could ultimately appear on food and fibre packaging like the widely recognised Health Star Ratings.
Dr Radford and his team are already working with Woolmark Plus to develop its Nature Positive farming framework, which enables a verifiable certification of Australian wool growers’ environmental performance.
Looking forward, the researchers aim to expand the application of Farm‑scale Natural Capital Accounting across more farming systems and regions.
“Our goal is to accelerate the transition to nature‑positive agriculture,” Dr Radford said. “We’ve also been able to show in related research that livestock farms with higher levels of natural capital are more productive, profitable and drought resilient.”
“By giving farmers clear, credible and repeatable measures of natural capital, we can help promote both environmental resilience and productive and profitable farming.”
This project was jointly funded through La Trobe University, Odonata Foundation and the Australian Government through funding from the National Landcare Program under the Natural Heritage Trust.
Media enquiries
Debora McInnes – d.mcinnes@latrobe.edu.au, +61 487 448 734
Case study: Jo and Greg Bear, Canary Island & Loddon Vale, Victoria
On their 4,500‑hectare property in north‑central Victoria, sheep farmers Jo and Greg Bear have shown how nature-friendly farming can improve productivity and be economically sustainable. By restoring wetlands, protecting native grasslands and creating habitat for endangered species, they’ve built a low‑input, resilient business that produces high‑quality wool and lamb with minimal stress on the environment. Their pastures thrive without fertiliser, their sheep stay healthy in diverse native grasslands, and their operation weathers tough seasons better than many high‑input farms.