How Dirt Affects Your Money: A Look at Italian Farms

Soil is not just dirt. It's a big deal for farmers. When it washes away, it takes more than just the ground. It takes money and options. In Italy, farms losing too much soil are feeling the pinch. They make less profit. Their return on assets drops by 1. 20%. Their return on equity falls by 2. 10%. That's real money. But it's not just about profits. It's about getting money to run the farm. Farms with bad soil get less help from banks. They have 2. 00% less bank financing. They also have 3. 30% less short-term debt from suppliers. Instead, they rely more on equity financing, which is up by 4. 80%. That's a big shift.Credit risk is also a problem. These farms have a 4. 69% lower interest coverage ratio. That means they struggle more to pay their debts. It's a tough spot to be in. This isn't just an Italian problem. It's a global issue. The way soil loss hits a farm's finances is a wake-up call. It shows how environmental damage can hurt economies. The study gives a clear picture of the costs. It's a tool for policymakers worldwide. They can use this info to make better rules. Rules that protect soil and help farms. The method used here is solid. It mixes geospatial and financial data. This approach can be used elsewhere. Any country with soil problems can learn from this. It's a step towards sustainable farming. A step towards a more resilient agricultural sector.