Land degradation is a priority for business – here’s why

Land provides us with our material needs such as food, clothing, shelter and infrastructure. Unfortunately, while rapid human development has lifted millions out of poverty and disease, the way we consume natural resources has left 40% of Earth’s land degraded.

Every year, we continue to consign another 100 million hectares of healthy and productive lands – double the size of Spain – to the same fate. Human development has led to a continuous deterioration of our lands and other systems critical for supporting all life on Earth – water, climate and biodiversity.

The importance of land has been at the top of the global environmental agenda as Saudi Arabia hosts the last of three United Nations (UN) conference of parties (COP): COP16 of the UN Convention to Combat Desertification, which aims to achieve land degradation neutrality by 2030, including restoring 1.5 billion hectares of land.

Our degrading of lands and forests is disrupting the “green water” hydrological cycle that is responsible for half of all rain falling over land. As soils deteriorate, rainwater runs off, groundwater cannot recharge, and safe water gets scarcer.

By 2030, it is expected that demand for freshwater will outstrip supply by 40% as the world’s water systems come under “unprecedented stress”. More than half of world food production is threatened unless urgent action is taken to conserve water and end the destruction of ecosystems on which freshwater depends.

Unsustainable land use accounts for 22% of global emissions – mainly from agriculture and deforestation. Together, barren land and higher temperatures are pushing the planet closer to critical tipping points – indeed, the Amazon could soon tip from carbon sink to source.

Land conversion – especially along shorelines – multiplies the impacts of climate hazards. As many as 300 million people are at increased risk of floods and hurricanes, due to the loss of coastal habitats acting as natural buffers.

Biodiversity is one of our greatest allies to combat climate change. Land conversion, the largest cause of deforestation, is decimating terrestrial habitats and causing biodiversity loss.

Land’s capacity to store carbon, harbour freshwater and feed 9.8 billion people by 2050 depends on soil fertility, ecosystem integrity and standing forests, peatlands and mangroves.

We need biodiversity to power our crops and help them adapt to climate change, yet ecosystem services worth $10.6 trillion a year are being lost to land degradation.

Left unchecked, the shocks to Earth’s climate, freshwater and biodiversity from irresponsible land use could prove seismic to multiple industries and their value chains.

Some $58 trillion – 55% of global GDP – is highly or moderately dependent on nature and especially on land, with some sectors at particular high risk:

These sectoral impacts are dwarfed by the potential transboundary shocks of degraded land and ecosystem services on markets and value chains. More than half the market capitalization (~$45 trillion) listed on 19 major stock exchanges is exposed to material nature risks.

Economic models often fail to capture the effect of spillover climate risks to integrated global supply chains. For example, heat stress could cost up to $25 trillion by 2060, through excess mortality, lost labour productivity and market stagnation from faltering supply and demand.

Companies also have to contend with policy, legal and reputational risks. National policies to halt nature loss and deforestation doubled in the year to March 2024, leaving unprepared investors exposed.

Company directors could be legally liable for failing to properly account for nature and climate-related risks and for their impacts on land degradation. Put these risks together and boards will face mounting investor and consumer scrutiny of how they manage their impacts and dependencies on land and nature.

As in every crisis, however, there is opportunity. Transitioning to a sustainable "nature economy" could unlock $10 trillion in business opportunities and 395 million jobs by 2030. Every dollar invested in restoring degraded lands brings between $7-30 in economic returns.

In addition, coordinated action on land can help unlock solutions for climate, water, pollution and biodiversity. For example, half of global emission reductions by 2035 could come from the land-use sector while also reversing deforestation, preserving critical habitats, lowering agricultural emissions, reducing food waste, restoring degraded ecosystems and scaling-up nature-based solutions.

Reforming food systems offers both a major opportunity and a critical risk mitigation factor. Agricultural practices are responsible for 80% of deforestation and 60% of biodiversity loss, as well as the consumption of more than 70% of freshwater, while driving one-third of anthropogenic greenhouse gas emissions. Prevalent practices are also eroding soils globally 100 times faster than natural processes can replenish them.

Switching to regenerative land management could deliver up to $1.4 trillion in increased crop production. What is more, research on the potential impacts of restoring an ambitious 5 billion hectares of land by 2050, found that the benefits could enhance crop yields by up to 10%, increase carbon storage of 17 gigatonnes and decrease biodiversity decline by 11% within the same period.

The World Economic Forum’s Sector Transitions to Nature Positive initiative provides a roadmap for companies to navigate this transition. It identifies the most material impacts and dependencies businesses have on nature – such as through land use or value chain practices – and sets out five priority actions for reducing negative impacts while unlocking opportunities.

These include adopting regenerative agriculture, preserving biodiversity and scaling nature-based solutions across sectors like food, forestry and construction. By leveraging insights from the initiative’s frameworks, businesses can take practical steps to integrate land-positive approaches into their operations and value chains.

While some businesses that are directly affected and highly exposed to land degradation are aware of the issues and risks, many industries and businesses still lack adequate understanding of how the degradation of land and freshwater systems directly – and indirectly – affect their supply chains and profitability.

As these impacts and dependencies are often upstream in the value chains, they are more complex to identify, assess and manage.

The Forum’s Land Degradation Neutrality Transformation Map, curated by the UNCCD Business for Land initiative, helps address these interconnected risks and opportunities, by offering businesses a comprehensive view of the complexities surrounding land degradation and drought, and their interconnection with a range of nature and climate challenges and opportunities in areas such as agriculture, freshwater systems and land management.

By using the transformation map as an interactive guide, businesses can better understand their impacts and dependencies on land and the ripple effects of degraded ecosystems, explore opportunities for mitigation and adaptation, and contribute to global goals with a focus on achieving land degradation neutrality and drought resilience.

Integrated action across land, climate and nature is crucial to breaking the vicious cycle of environmental degradation. Investing in land go hand in hand with climate action and reversing biodiversity loss.

It is therefore important to generate more investment flows to and financing for land and nature. While global climate finance reached $1.3 trillion in 2021-22, the majority went to energy (44%) and transport (29%), with agriculture, forestry and other land use receiving just 4%. There is an urgent need for more financial institutions to innovate on financing arrangements, pool capital and help mitigate risks.

Businesses can also play their part by innovating on business models and scaling land restoration and regenerative efforts, knowing that these efforts not only protect business viability but also contribute to broader goals for communities, climate and biodiversity, and sustained economic growth and development.

This requires a comprehensive strategy and systematic approach:

Tackling land degradation is an economic imperative. Businesses that integrate land-positive practices into their operations and value chains will minimize risks, safeguard resources, and position themselves well in a global economy that can only thrive with a healthy planet.

The next 12 months provide an opportunity for businesses to align their strategies with global efforts to tackle land degradation and scale up nature-positive action in the run up to COP30. Key upcoming milestones include:

By taking steps today to understand their impacts and dependencies on land, assess risks, and transform toward nature-positive approaches, businesses can lead the way in shaping a sustainable and resilient future.

Land restoration and sustainable management are not just pathways to compliance with emerging policies – they are key to driving innovation, resilience and long-term growth for a strong and vibrant economy.