UNCCD COP17

I would like to begin with a simple proposition:

Healthy land is not an environmental luxury. It is productive capital. And drought resilience is not a sectoral concern. It is a sustainable, inclusive, economic growth.

That distinction matters — because how we define the challenges determine how we will find the durable solutions.

When land degrades and has been exhausted, we see the consequences in farmers’ and herders' incomes and household poverty. But we also see them in food-price inflation, declining agricultural productivity, lost jobs and export earnings. More importantly, pressure on water and energy systems, we see rising insurance losses, displacement and migration, and greater demands on already constrained public budgets.

And when drought takes hold, governments pay an increasing price— through emergency responses, food and energy subsidies, reconstruction, lost tax revenues and, too often, additional borrowing.

So, this is simultaneously a fiscal issue, a livelihood issue, a productivity issue, and a macroeconomic stability challenge, an environment crisis, and ultimately, we see development exacerbated.

And yet our financial architecture still largely treats land degradation as an environmental externality — rather than as a deterioration of the productive asset base of an economy. As Environment Minister I experienced this firsthand in my country. 

That must change.

The economics should compel us to act.

On current trends, we are on course to invest only around $77 billion a year of the $355 billion that is needed annually. That gap gives us annually $278 billion. But here is the thing that should concern every finance minister; the estimated cost of inaction is already at least $878 billion a year, and that doesn't account for the lives that have been lost.

The other side of that equation should interest every investor. Investments in restoration could generate approximately $1.8 trillion in annual benefits. For every dollar invested, the estimated economic return ranges between 7 and 30 dollars. So perhaps, as Yasmin said earlier this morning, we are asking the wrong question.

The question is not, "Can we afford to finance sustainable land use?" It's more likely that we should be asking the question, "How much longer can economies afford not to?

First, countries can make land and drought resilience a sovereign economic priority.

That means moving it from the margins of environment ministries into national development strategies, medium-term fiscal frameworks, public investment plans and sovereign financing strategies.

Finance ministries should know the value of their natural capital — and the fiscal exposure created by its degradation.

Countries can begin to identify and phase out or repurpose subsidies that incentivize land degradation, inefficient water use and unsustainable agricultural practices — and redirect those resources towards farmers, herders, pastoralists and businesses investing in sustainable production.

They can use environmental taxes, land-degradation charges and payment-for-ecosystem-services schemes to change incentives.

And they can develop sovereign green and sustainability-linked bonds, resilience bonds and debt instruments whose financing terms are linked to measurable land, water and resilience outcomes.

This is not simply about finding new money.

It is also about making the trillions already flowing through national economies work differently.

Second, we must turn investable potential into investable opportunities.

There is private capital looking for long-term returns. There are farmers, SMEs and communities with viable solutions. Too often, however, the two do not meet.

Projects are too small. Risks are perceived to be too high. Tenures are too short. Currency risk is too great, and revenue streams from ecosystem services remain uncertain.

This is precisely where innovative finance has a role.

We need blended-finance platforms that use concessional resources strategically to absorb risks rather than simply finance individual projects.

We need guarantees and first-loss instruments that can crowd in institutional investors.

We also need aggregation vehicles capable of bringing thousands of small farms and restoration investments together into portfolios of sufficient scale.

We need greater use of drought insurance, parametric insurance and other risk-transfer instruments — connected to investments in prevention and resilience rather than simply paying after disaster strikes.

And we need to build revenue models around the multiple benefits that healthy land produces — food, water, carbon, biodiversity, livelihoods and resilience — rather than expecting a land-restoration project to survive on a single revenue stream.

Third, our multilateral development banks and international financial institutions must be bolder and more responsive.

We should ask ourselves a difficult question.

If land degradation threatens sovereign balance sheets, why is financing land restoration still largely organized project by project, grant by grant?

MDBs have powerful balance sheets. The challenge is to use them with greater catalytic effect.

That means using guarantees, risk-sharing instruments and concessional capital much more systematically to mobilize private finance.

It also means using concessional resources where they have the greatest multiplier effect — to take risks that commercial investors cannot, rather than financing what markets can already finance.

It means expanding local-currency financing, because farmers and local businesses should not bear foreign-exchange risks they cannot manage.

It means moving from isolated projects towards country platforms and portfolio approaches, where governments, MDBs, development finance institutions, philanthropies and private investors can combine capital around nationally determined land and drought-resilience priorities.

And it means recognizing investments in natural capital and resilience as part of the MDBs’ core development mandate — connected to food security, jobs, infrastructure, fiscal resilience and economic transformation.

The objective should not simply be to increase the amount of concessional finance available.

It should be to increase the amount of total finance that every concessional dollar mobilizes — while ensuring that finance reaches the communities and producers managing the land itself.

COP17 gives us an opportunity to change the economics of this agenda.

Imagine if we leave Ulaanbaatar and are committed to three things:

Quantifying the economic and fiscal cost of land degradation and drought — and reflect it in national economic planning.

Identify the public expenditures, subsidies and financial regulations that can be reformed to shift domestic capital towards healthy land.

To work with MDBs and international financial institutions on national investment platforms capable of using concessional finance and balance sheets to mobilize capital at scale.

Because ultimately, innovative finance is not primarily about inventing ever more sophisticated financial instruments,

It is about changing where risk sits, changing the incentives that shape investment, and changing our understanding of what constitutes economic infrastructure.

Soil is infrastructure.

Watersheds are infrastructure.

Rangelands are productive assets.

And resilience is an investment in the future productive capacity of an economy.

The countries that understand this earliest will build economies that are more productive, more resilient, more food-secure and less vulnerable to the shocks that increasingly define our age.

The economics are compelling.

The instruments increasingly exist.

What we now need is the political and financial ambition and courage to deploy them at scale.

I thank you.