Crowdfunding finance for environmental improvement projects

I have been recently thinking about the possibilities that crowdfunding might be offering in an environmental context. This came out of discussions around how could farmers get paid for doing the right thing by the environment. For instance, a change in farming practice (e.g. lowering the fertilization rate) or reserving part of the farmland for native bush to act as a buffer preventing pollutants entering waterways could have significant positive environmental effects, but are costly to farmers. Unless farmers are able to recoup those costs, they are not going to undertake these environmentally beneficial activities. Governments could run programs that can provide incentives to farmers, but in the absence of such programs, or if programs are abolished, there is nothing to drive the change. This is where crowdfunding can possibly come in. Farmers can list environmental improvement projects on crowdfunding platforms, and attract in this way the funds that will help them finance those projects.
I found an interesting example of crowdfunding in an environmental context reported in a recent news article. The article also reports that the number of crowdfunding campaigns for environmental and conservation projects has grown significantly over the recent months. So, if crowdfunding can be used for variety of environmental and conservation projects, why not consider it as a viable option in the context of helping reduce agricultural pollution? There are several important issues that will need to be addressed to facilitate crowdfunding for on-farm environmental improvement projects, not the least being the certification of actual actions taken on farm. In other words, the crowdfunding donors will have to be assured that the environmental outcome that has been promised has indeed been delivered. This is not an easy ask, given the complexity of processes involved and difficulties of on-farm monitoring, but various new technologies associated with ‘big data’ might be helpful in this respect.
In addition, there will have to be some mechanism for justifying the costs of undertaking environmental improvement projects that farmers are claiming. Put differently, there should be a way to differentiate among environmental improvement projects across farms based on their cost-effectiveness.
These are obviously important questions that need answering, but I think the very concept of crowdfunding for environmental improvement projects is very promising. Let’s hope that the new digital technologies that facilitate funding and sharing of information can find their way towards helping improve environmental management on farms!

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.