Author: Tania Strauss, Head, Food and Water, World Economic Forum.
As published on The Global Governance Project.
The global food system is at a critical juncture, contributing to and suffering from the impacts of climate change. A key driver, agriculture is responsible for 37% of global greenhouse gas emissions and uses 70% of the world’s water resources.
Soils are being depleted at an alarming rate, with around 12 million hectares turning to desert each year – an area the size of Iceland. This land degradation lowers agricultural productivity and releases stored carbon, worsening climate change.
The United Nations Convention to Combat Desertification warns that unchecked, 90% of the world’s soils could be degraded by 2050, further destabilising food systems as well as increasing poverty and hunger. To reverse this, we must urgently finance a just transition that restores soil health, captures carbon, and strengthens water and climate resilience.
Despite being highly vulnerable to resource degradation, soil erosion and water variability – which can lead to floods, droughts and pollution – agriculture can be part of the solution. Regenerative practices can sequester carbon, improve water retention and boost biodiversity.
The upcoming Conferences of the Parties to the conventions on biodiversity, climate change and desertification in late 2024 are opportunities to promote regenerative agriculture globally and unite actors across the value chain to support farmers.
Regenerative agriculture’s impact
By adopting no-till farming, agro-forestry, crop rotation and cover cropping, farmers can help restore soil health, sequester carbon and increase biodiversity.
According to the Intergovernmental Panel on Climate Change, enhancing soil carbon sequestration through regenerative agriculture could sequester up to 23 gigatons of carbon dioxide by 2050, a substantial portion of the mitigation required to limit global warming to 1.5°C.
Regenerative agriculture also builds resilience to climate impacts by improving water retention, increasing biodiversity and creating healthier ecosystems.
Where climate change is already wreaking havoc on agriculture, as in sub-Saharan Africa, Latin America and South Asia, regenerative practices can help farmers increase yields, reduce dependency on expensive inputs such as synthetic fertilisers, and protect their livelihoods from extreme weather events.
Studies from the Rodale Institute show that by improving soil health and water retention, farmers practising regenerative agriculture can increase productivity under drought conditions, compared to conventional methods.
Addressing the climate finance gap
Over the past decade, climate finance has nearly doubled. However, funding at the project level for the agrifood system remains low, constituting only 3% of total global climate finance for both mitigation and adaptation. Mitigation finance for the agrifood sector was just $14.4 billion during 2019–2020 – a mere 2.2% of total climate finance and 2.4% of overall mitigation finance. By contrast, the renewable energy sector garners 51% of climate financing, while low-carbon transportation receives 26%.
To reduce emissions from food systems by half by 2030, annual investments in agrifood emissions must increase to $260 billion. Additionally, the International Food Policy Research Institute suggests that an annual investment of up to $350 billion will be required by 2030 to transform global food systems, align with climate goals, enhance adaptation, and fulfil other Sustainable Development Goals. This financial investment is critical to implementing the necessary changes in the food sector to tackle both environmental sustainability and social equity challenges.
One solution is to develop innovative financial instruments to support regenerative agriculture. Nature-based climate bonds and blended finance models can mobilise large-scale investments by linking financial returns to verified sustainability outcomes. To accelerate sustainable food system transformation, the finance sector must develop and scale innovative financial products that provide capital access and mitigate the risks associated with the shift to climate-smart and equitable practices throughout the food value chain.
Blended finance leverages public, philanthropic and private capital to de-risk investments, making it easier to fund projects otherwise considered too risky or unprofitable. This approach helps restore degraded lands and support sustainable agricultural practices.
The 100 Million Farmers: Breakthrough Models for Financing a Sustainability Transition report proposes a capital stack that combines innovative and blended finance mechanisms with cross-value chain support to help 100 million farmers adopt regenerative practices, enhancing productivity while reducing environmental impacts.
By fostering partnerships between governments, financial institutions and agricultural stakeholders, these models provide farmers with access to the capital, knowledge and resources needed to implement sustainable practices. Such initiatives, backed by targeted investments and risk mitigation strategies, aim to create a tipping point for sustainable food systems by 2030, delivering long-term benefits for soil health, biodiversity, water conservation and farmers’ livelihoods.
Partnerships for systemic change
Achieving a just transition requires coordinated efforts across sectors. Public-private partnerships, like those led by the Food Action Alliance, align governments, businesses and civil society to drive systemic change. The alliance supports 30 flagship initiatives across Africa, Asia and Latin America, demonstrating effective food value chain models.
These partnerships are already yielding results. Financial institutions are offering tailored products – such as low-interest loans, crop insurance and credits for ecosystem services – reducing financial risks for farmers adopting regenerative practices.
Meanwhile, businesses commit to sustainable sourcing, encouraging shifts to methods that improve soil health, sequester carbon and enhance biodiversity. Governments play a key role by supporting the transition with policies and subsidies.
Philanthropic and multilateral support is crucial for de-risking investments and scaling pilots. Philanthropy has funded regenerative agriculture programmes in sub-Saharan Africa, where smallholder farmers are most vulnerable to climate impacts.
These initiatives enhance productivity and resilience and ensure climate finance reaches the most affected communities.
The fight against desertification and soil degradation
The UNCCD COP has placed soil health and land restoration at the heart of the global climate agenda. Rapid desertification severely threatens global food security and climate resilience as degraded soils lose their ability to store carbon and support life.
At the upcoming COP in Riyadh, the international community will discuss how to scale up land restoration efforts, including integrating regenerative agriculture into national climate action plans.
By ensuring that agriculture is recognised as a key pillar of climate adaptation and mitigation, the desertification COP can drive more significant commitments from governments and financial institutions to support the transition to sustainable farming systems.
For a just transition
Financing a just transition to regenerative agriculture is a moral and economic necessity. As climate change accelerates, the degradation of the world’s soils threatens the very foundation of our food systems. Without immediate action, we risk deepening the climate crisis, increasing food insecurity, and driving more people into poverty.
But there is hope. Investing in regenerative agriculture can restore degraded lands, sequester carbon, and build resilient farming systems that feed a growing global population.
The 100 Million Farmers Initiative and the Food Action Alliance offer blueprints for mobilising capital and resources to empower farmers as agents of change.
As we approach the climate change and desertification COPs, we must prioritise agriculture in climate finance strategies and ensure that farmers are at the centre of these efforts.
Investing in regenerative agriculture can create a sustainable food system that mitigates climate change and provides a pathway to a more equitable and resilient future.