Ministerial dialogue on innovative financial mechanisms for healthy land and drought resilience

Background

Land degradation, desertification and drought are no longer only environmental concerns but also economic and security challenges. They erode the productive base of economies, threaten food and water security, undermine rural livelihoods and increasingly contribute to forced migration and fragility. Yet land continues to be financed as a niche issue at the margins of climate, development and macroeconomic decision-making.

The UNCCD financial needs assessment launched at COP16 estimates that approximately USD 355 billion is required annually between 2025 and 2030 to meet land restoration targets and address land degradation, desertification and drought. Annual investment is estimated at around USD 77 billion, leaving a financing gap of about USD 278 billion per year. The cost of inaction is estimated at USD 878 billion annually, while the required investment could generate USD 1.8 trillion in annual benefits — an eight-to-one return.

Closing this gap cannot be achieved through business as usual. Strained public finances, high sovereign debt, weak institutional coordination and persistent challenges in engaging the private sector mean that incremental grants and project-by-project deals will not be enough.

Closing the gap will require finance ministries, central banks, multilateral development banks, development finance institutions and private investors to view land not as a sectoral cost but as a strategic asset underpinning economic stability, food security, climate resilience and social cohesion.

This ministerial dialogue opens Finance Day at COP17. Designed as a high-level, interactive conversation rather than a sequence of formal panels, it will explore how finance for land and drought resilience can be mobilized and allocated more effectively. It will also provide a platform for countries to present ambitious ideas and set the stage for pledges, partnerships and initiatives to be announced throughout the day.

Objectives

The ministerial dialogue will provide a platform for high-level political exchange and set the agenda for Finance Day. Specifically, it aims to:

• Reframe land restoration and drought resilience as strategic economic and financial priorities, shifting perceptions of land from a cost to an investment opportunity
• Build political momentum to integrate land and drought resilience into the portfolios of multilateral development banks, development finance institutions and institutional investors. This includes using public and concessional resources, guarantees and insurance more strategically to attract greater private investment
• Highlight national fiscal and policy approaches that can shift capital flows at scale, including repurposing harmful subsidies, applying environmental taxes and land degradation fees and expanding sustainability-linked bonds, loans and sovereign instruments tied to land outcomes
• Create space for concrete pledges, partnerships and initiatives, including through Business4Land, that connect consumption, production and finance through greener value chains, environmental, social and governance standards and nature-positive financial products

Expected outcomes

The ministerial dialogue is expected to contribute to:

• Greater visibility for national innovations in land finance and stronger peer learning
• Momentum for new and expanded pledges
• A platform for launching specific financing initiatives during Finance Day, including the Rangelands Flagship Initiative and discussions on finance for fragility and European Commission grant finance
• Expansion of the Business4Land Coalition