Picture two fields that share a fenceline; they have the same soil type, the same crop and the same weather. A heavy storm with excessive rainfall passes through. On one field, water ponds, runs off, and erodes portions of it. The other field absorbs the rain and is able to utilize it in periods of heat and drought.
Soil function determines response to and recovery from stress events, impacting production volumes and operating costs. In this illustrative example, the first field may lose 25% of its yield with reductions the following year, while the second field may only lose 5% of its yield and be back to full productivity the following year.
Two Fields, TERRX’s research initiative, is developing ways to quantify dynamic soil function and its financial materiality. We are designing this to be incorporated into agricultural risk models across ag finance, including those used by lenders, insurers, reinsurers, farmland investors, and commodity buyers.
Soil classifications are used extensively in ag finance and describe characteristics such as texture and drainage. This is what soil IS.
Management, however, can impact soil structure and affect water infiltration, holding capacity and availability. This is what soil DOES, and is largely absent from current financial risk analyses.
An infiltration test by the Montana NRCS compares the infiltration rates on the same soil type under two different management systems. The tests demonstrate dramatically different infiltration rates.
Tilled wheat/fallow: 3.1 in/hourNo-till continuous wheat: 50.4 in/hour
Our research challenge is to measure differences in soil function across fields and seasons, then test their consequences for agricultural production and financial risk.
We are investigating how satellite and aerial observations of crop stress and recovery can reveal differences in soil function. Comparing observed crop development with its expected growth curve could help identify how strongly a field responds to a weather event and how quickly it recovers. Water use, soil moisture and visible erosion provide additional candidate indicators.
Our goal is to measure soil's physical performance directly.
The financial research examines how production disruptions could affect income, costs and portfolio losses. How severe and widespread must yield losses be to materially affect a lender, farmland fund or commodity buyer? How does geographic concentration change the result?
We can model these sensitivities before a field-level soil indicator is fully validated. The two research tracks proceed alongside one another, with the eventual aim of testing whether measured differences in soil function predict financially significant outcomes.
Soil science expertise and groundtruth measurements are essential to this research.
Our partnership with the Soil Health Institute centers worldclass soil science and groundtruth data that represents more than 19M acres of U.S. cropland in our research. Determining which indicators to examine and then comparing satellite-based visible, infrared, and microwave observations with on-the-ground soil tests is key to establishing high integrity and high fidelity results.
Peer-reviewed publication is included in the program, and will provide a basis for others to examine the methods, findings and their limits.
We welcome conversations with research funders, scientific collaborators, and organizations that can contribute field observations or relevant financial data.
We’re prioritizing financial collaborators interested in conducting portfolio sensitivity analyses to determine how disruptions from hazards and changing conditions affect aggregated portfolio outcomes.