During the 1970s and 1980s the environmental agenda moved to prominent position among legal considerations in agriculture. One element of this agenda involves farmer and lender liability for cleanup cost under CERCLA as amended by SARA. This study examines the potential liability for lenders under this legislation. Next, the study investigates some potential actions and consequences for intermediaries from a theoretical finance perspective. Specifically, the paper addresses changes in credit risk resulting from the emerging agenda. In addition, the adverse selection problem in credit is examined for potential insights into the credit decision. Finally, the study concludes with practical advise for financial intermediaries in agriculture.


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