With up to 40 per cent of the world’s land degraded, and recovery or restoration providing solutions to help solve the climate and biodiversity crises, the economic and environmental case for restoration is clear. However, the cost of returning land to a healthy state is high and there is currently an annual financing gap of US$278 billion¹. In August, governments, civil society and business met in Mongolia to discuss how to tackle land degradation, desertification and drought.

The 17th Conference of the Parties (COP17) to the United Nations Convention to Combat Desertification (UNCCD), closed in Ulaanbaatar, Mongolia, with an important message for the finance sector: land degradation and water scarcity are material macroeconomic and portfolio risks running through agricultural supply chains, food systems and energy security.

This article outlines the key takeaways for financial institutions from this conference whose mission is to combat desertification, mitigate the effects of drought in affected countries – particularly in Africa – and achieve Land Degradation Neutrality in those countries experiencing serious drought and/or desertification, particularly in Africa.

   

What was delivered – and what was deferred – at UNCCD COP17

A US$1.3 billion investment package for land restoration: The headline output was a US$1.3 billion package covering land restoration, watershed management and drought resilience across 23 countries, anchored by the Rangelands Flagship Initiative, a US$1.2 billion, 45-project portfolio and the largest targeted mobilization for rangelands the UNCCD has seen. For private financial institutions, the package creates a pipeline of investable restoration and resilience projects that can be unlocked through blended finance structures, helping de-risk private capital while strengthening the resilience of land-, water- and agriculture-dependent portfolios.

A new platform to build resilience to drought and desertification: Private capital still accounts for only around six per cent of global financing for land restoration and drought resilience. To help address this, the UNCCD launched the Business4Land platform to embed environmental, social and water risk standards into corporate operations, supply chains and financial products, with national hubs established in Mongolia, Russia, Germany and Luxembourg.

A new toolbox to help find out who owns land: Ownership of land is important as it determines whether investment can be attracted. The Land Tenure Toolbox provides easy access to resources on land tenure – how people, individuals, or groups hold, use, and manage land and its natural resources – including information and case studies on accountability and grievance mechanisms related to land tenure.

Consensus on a binding Global Drought Framework deferred to COP18 in 2028: The result of this delay is that comparable drought and hydrological disclosures remain years away, while the exposure sits where the UNCCD’s founding emphasis pointed – in African drylands and other water-stressed basins. For private financial institutions, the absence of a common global framework increases the likelihood of inconsistent data, underpriced drought-related risks and delayed market signals, making proactive water-risk assessment and adaptation planning essential to protect portfolio resilience and long-term asset value.

   

How financial institutions can help accelerate finance to combat desertification

Structure at landscape and watershed scale: The UNCCD Global Mechanism was explicit about moving away from fragmented project-by-project funding. Financiers and development finance institutions should design blended facilities that integrate restoration with catchment-level water management, using catalytic capital to de-risk community-led solutions to the point where commercial investors can participate.

Use the valuation evidence in underwriting: A joint assessment released at COP17 estimates that global rangelands generate between US$21 trillion and US$47 trillion annually in ecosystem services and yield an estimated US$4 to US$6 for every US$1 invested in sustainable land management². For insurers, a product question follows: how to design cover that recognizes farmers adopting regenerative practices rather than pricing them against a degraded baseline.

Acknowledge farmers and pastoralists as investors in resilience, not (only) beneficiaries: Their knowledge, institutions and management practices are what sustain restoration and returns. Finance should recognize communities as partners and investment counterparties and assess the quality of local institutions as seriously as any other credit factor.

 

With this COP feeding into the Convention on Biological Diversity (CBD) COP17 and the United Nations Framework Convention on Climate Change (UNFCCC) COP31 in October and November respectively, land and water are no longer a separate conversation from climate and nature considerations. The vision articulated a decade ago was that drylands could be a site of investment rather than of loss. The instruments to test that now exist, and so does the evidence from the people who manage the land every day.

UNEP FI members looking to act on land and water can find relevant sessions on our CBD COP17 and UNFCCC COP31 events pages.

 

¹UNCCD COP17 advances new pathways for land restoration, drought resilience and implementation, UNCCD, 28 August 2026

²Rangelands Rising: Investing in Sustainable Management and Restoration, International Livestock Research Institute, August 2026