Landholders across the Murray–Darling Basin are making significant investments in sustainable land management — but too often they are carrying the cost and risk themselves. Now, a new research project funded by the One Basin CRC and supported by Wine Australia is being undertaken by researchers from Charles Sturt University to explore how emerging green finance markets could help change that.

Bridging the gap between growers and investors

At present, many of the practices that improve Basin health — including boosting water efficiency, reducing emissions, and protecting, enhancing, or restoring biodiversity  — are funded directly by farmers. While grants are sometimes available, they are often complex to access and not always designed around the realities of farm businesses.

At the same time, there is growing global interest from investors looking to fund projects that deliver environmental outcomes. Yet much of that potential investment has not yet reached agriculture.

“Our starting point was recognising a gap,” said project researcher Dr. Nick Pawsey, CSU. “Landholders are already delivering environmental benefits, but they often don’t have access to the financial tools that could reward those outcomes. Meanwhile investors are looking for sustainable projects, but they’re not always sure where to invest in the Basin.”

Through interviews with growers, financiers and policy experts, the research team has identified several key barriers preventing green finance from flowing into Basin agriculture.

One of the biggest challenges is awareness. “On the investor side there’s strong interest in supporting sustainable land management,” Nick explained. “But there’s often limited awareness of the kinds of environmental outcomes Basin landholders can deliver — whether that’s emissions reductions, water efficiency or biodiversity improvements.”  Investors also want reliable ways to measure and verify environmental outcomes, alongside clear evidence that projects can deliver a financial return.

Another challenge is scale. Typically, green finance investors look for projects worth $100 million or more, which is far larger than most individual farm investments.

“That means we need to think about ways to aggregate projects,” Nick said. “Co-operatives or grower groups could potentially combine multiple landholders into a single, larger opportunity that attracts investment.”

Building capacity on farms

While green finance opportunities are growing, many farmers are still unfamiliar with the range of financial instruments emerging in sustainability markets.

These can include carbon credits, biodiversity credits, sustainable bonds, sustainability-linked loans or other mechanisms designed to reward environmental performance.

“From the landholder side there’s still a general lack of awareness about how these instruments work and how to participate,” Nick said.

One of the project’s next steps will focus on capacity building, helping landholders better understand the opportunities available and what participation might involve.

“We need to provide clear, practical information about what these contracts require, what practices might qualify, and importantly — what the benefits are for landholders.”

Infrastructure opportunities across the Basin

One of the most promising opportunities identified so far is the potential for green bonds to fund irrigation infrastructure upgrades.

Across the Murray–Darling Basin, irrigation utilities are planning major capital works programs over the next decade — worth hundreds of millions of dollars.

“These projects deliver outcomes that investors are interested in — improved water efficiency, food security and environmental sustainability,” Nick said.

Because irrigation utilities are often government-backed, they also represent relatively low-risk investments.

“Green bonds could potentially fund these infrastructure upgrades at lower interest rates than traditional government debt. That could ultimately reduce costs for water users.”

A growing market for environmental outcomes

Alongside carbon markets, new initiatives such as Australia’s Nature Repair Market aim to create financial incentives for biodiversity restoration. However, these markets are still in their early stages.

“It will take time for these markets to mature,” said Dr. Nicola Thomas, another member of the research team. “We’ve seen internationally that building confidence in environmental markets can take 10 to 15 years.”

The team is also exploring how environmental investments across the Basin could align with the United Nations Sustainable Development Goals, which many global investors now use to guide their portfolios.

“There is significant international demand for sustainable investments,” Nicola said. “If Basin projects can align with those global sustainability goals, there’s real potential to unlock private capital.”

Connecting science, finance and landholders

A key goal of the research is to strengthen communication between environmental researchers, investors and landholders — groups that do not often interact directly.

“Scientists might focus on environmental outcomes, while financiers focus on investment returns,” Nick said. “But we need to bring those perspectives together.”

By identifying projects that deliver measurable environmental benefits alongside viable financial returns, the team hopes to create a pathway for more investment into Basin sustainability.

“We’re in a unique position to act as a bridge,” Nicola added. “If we can connect the science, the economics and the landholders, we can unlock new solutions that benefit the Basin.”

What happens next

The project will now focus on developing practical resources for both landholders and investors. This includes guidance to help growers understand sustainability finance options, as well as investment prospectuses highlighting opportunities for green finance in the Basin.

“We’re also keen to work with grower groups and industry networks,” Nick said. “Ultimately this is about finding scalable solutions that reward landholders for the environmental outcomes they’re already delivering.”