The amount of risk that water problems currently impose spotlights the need for an in-depth understanding of real, on-the-ground situations. The more granular the data, the more representative the data configurations are.
What comes next is the presentation or interface of that data. A winning combination of these factors equals a truthful understanding of a situation and the ability to identify, understand, monitor, and mitigate risk.
GIS, which stands for “geographic information system,” has applications in a wide range of industries, from urban planning to agriculture. GIS tools can turn complex datasets into easy-to-understand visualizations – often in the form of maps with multiple layers that can be presented in explorable, interactive formats.
When it comes to GIS in agriculture, it can be used to analyze:
- Water rights
- Regulatory boundaries
- Crop type
- Flood and drought risk areas with risk gradients
- Water districts
- Water levels
- Soil quality
- Weather patterns
- Evapotranspiration data
- Much more
This guide explains why GIS is needed in agriculture now, more than ever, including how it can be used to perform water risk assessments for investments and land deals.
It will be updated regularly with up-to-date insights, so check back often or sign up for our newsletter to stay in the loop on the trend of GIS in agriculture and other water-related news.
Why Water GIS Matters to Ag Professionals
The versatility of water GIS is part of what makes it so useful to ag professionals. Instead of relying on complex charts, or switching between multiple datasets to understand a given issue, GIS presents data in a congregated, easily-digestible format that can be understood by stakeholders at all levels of the supply chain, from lenders to growers.
Most importantly, GIS allows for a granular approach to data analysis that’s especially significant when striving toward water security. After all, water is local, and it affects every region and farming operation uniquely.
In order to better understand water risk and mitigate the effects of water stress in agriculture, ag professionals need to be able to interpret a combination of small data and macro-level water trends.
As water expert Peter Williams explains,
“Not long ago in California, if you wanted to understand water risk for a given land parcel, you were faced with a mish-mash of Federal, state, and local records… Data on groundwater levels at a given location might simply not have been available as there was no legal requirement for a landowner to provide it.”
With new regulations that require growers to monitor water use, water GIS can compile many layers of complex datasets and allows for a closer analysis of water data at the local, parcel-by-parcel level, allowing lenders to better assess a loan’s water risk.
This gives ag professionals a competitive edge in an era of increased water risk. As some of the country’s most important growing regions face extended droughts and periods of water stress, being able to navigate each state’s system of water rights, regulations, and weather conditions will be key to longevity and sustainability.
Read more about how water GIS can help agriculture finance professionals here.
Water Risk Assessment and GIS Go Hand in Hand
The Federal Reserve has recently warned that “Agriculture is among the most at-risk sectors to climate change as it depends on natural resources, such as soil and water, and predictable weather, such as temperature and precipitation.” Growers in affected regions could find themselves paying more for water, or unable to grow crops due to unexpected water shortages and increased competition for water.
Water risk isn’t just a concern for growers, however: the impacts of population growth, climate change, and other stressors will increase uncertainty up and down the supply chain, affecting food producers, investors, and ag bankers alike. Lenders may spend more time assessing the water risk of a given property before approving a loan, and investors may need to perform additional due diligence before closing a land deal.
In the 2019 ASFMRA’s Trends Report, AQUAOSO outlines four key steps that ag professionals can take to perform a water risk assessment:
GIS technology can be an indispensable aid in the process because its characteristics mirror the steps. Ag professionals may find it easier to identify and understand water-related issues when they can view all of their datasets on a single map. GIS can be used to track runoff patterns, soil moisture levels, evapotranspiration data, and more. Because it’s easy to update datasets over time, growers can use the same tools to monitor changes over time.
Another key benefit of GIS in agriculture is that it can help provide a single system of record that all stakeholders can rely on. Instead of working from different points of reference with siloed data and information, growers, lenders, and investors can share datasets with each other to get on the same page about water risk and mitigation strategies.
Other uses of GIS in agriculture can include identifying the feasibility of a conservation project or assessing the impact of an investment in infrastructure.
Learn more about how GIS can help with water risk assessments here.
The Benefits of GIS in Banking
GIS presents additional opportunities in the field of banking and ag lending. Many banks are already using GIS tools, for example, by layering “employment status, income, [and] residential status of residents” onto maps, based on U.S. Census data. Ag lenders can further expand this analysis by adding data on land use, water rights, drought patterns and forecasts, flood zones, water districts, and more to identify and understand water risk.
According to a BlackRock Sustainability Survey, lack of data “remains a key challenge” for investors who want to support ESG initiatives. Sustainable agriculture has been linked to improved ROI, but without the right data, ag lenders and investors may struggle to identify properties and farm operations that carry water risk invest in.
Four of the key concerns that GIS in agriculture can help with include:
- Access to Water Risk Information: Instead of relying on a patchwork of regional datasets or local consultants to assemble maps by hand, lenders can use GIS tools to aggregate water data and perform water risk assessments.
- New Customer Acquisition: Ag lenders need to stay ahead of the curve in order to attract and retain borrowers in the face of increasing competition. They can use GIS technology to gain insight into water rights, land use, pumping restrictions, and more, strengthening their relationships with borrowers.
- Geographic Expansion: Since water rights and regulations vary so widely from state to state, GIS tools make it easier to expand into new regions while staying on top of any water use regulations or pumping restrictions that apply there.
- Reporting: As reporting requirements become commonplace in many regions, GIS tools can streamline and even automate parts of the reporting process by digitizing water use data and other key performance metrics.
- Borrower Relationships: The shareability of the data and analyses gained from GIS technology give a common ground to stakeholders throughout the supply chain – from lenders to borrowers.
These are just a few of the ways that GIS tools can help agricultural professionals in the banking sector. Other applications include monitoring water risk across a loan portfolio by tracking parcels of land individually or as a group. With better data, ag lenders can do their part to encourage more sustainable water use in the agricultural sector
You can read more about the benefits of GIS in banking here.
Protecting Against Stranded Assets Due To Water Risk
Because water stress is expected to increase around the world in the coming decade, assets that depend on water – including farmland and other agricultural investments – can be put at risk.
This article explores the link between stranded assets and water stress and how GIS data can help investors protect their portfolios against these impacts.
You can read more about how GIS can aid in protection against stranded assets here
How California Water Districts GIS Correlates with A Deep Understanding of Them
Navigating state-specific regulations is another key challenge facing ag professionals. For example, California’s SGMA regulations require individual groundwater basins in the state to develop their own Groundwater Sustainability Plans (GSPs). This means that even within the state, access to water can vary widely based on local weather conditions, pumping restrictions, and water rights situations.
Ag professionals may need to be able to look up the boundaries of CA water districts, view basin-specific GSPs, and research the validity of a water rights claim, all before approving a loan or closing a land deal. GIS tools can make this process easier, allowing users to view multiple layers of data on a single map.
In addition to data on water and watershed boundaries, ag professionals can download information related to geology, wildlife, land use, the environment, and more.
GIS resources can provide stakeholders throughout the supply chain with a toolkit with which to navigate the state’s complex water situation and better understand water risk.
Coming soon, learn more about California water districts GIS data here.