UN report urges investment in nature to reduce global drought costs

UN report urges investment in nature to reduce global drought costs
by Erica Marchand
Paris, France (SPX) Dec 06, 2024

As droughts driven by environmental degradation and climate change threaten to impact three-quarters of the global population by 2050, a new report presented at COP16 of the United Nations Convention to Combat Desertification (UNCCD) highlights the economic importance of sustainable land and water management. The report estimates that droughts already cost over $307 billion annually worldwide, urging immediate investment in nature-based solutions (NbS) to mitigate these impacts.

The publication, titled Economics of Drought: Investing in Nature-Based Solutions for Drought Resilience - Proaction Pays, is a collaborative effort by the United Nations University Institute for Water, Environment and Health (UNU-INWEH), the Economics of Land Degradation Initiative (ELD), and UNCCD, with funding from Germany's Federal Ministry for Economic Cooperation and Development, the International Drought Resilience Alliance (IDRA), and the European Union. It emphasizes strategies such as reforestation, grazing management, and watershed restoration to enhance water flow, storage, and supply.

"Managing our land and water sustainably is essential to unlock economic growth and build resilience for communities that are becoming locked into cycles of drought around the world," said UNCCD Deputy Executive Secretary Andrea Meza. She added that proactive and nature-based solutions are vital to securing human development while respecting planetary boundaries.

Addressing the root causes of drought

The report identifies unsustainable urbanization, deforestation, overuse of water resources, and climate change as major contributors to increasing drought risk. By implementing policies and investments focused on preserving natural capital, countries can manage water shortages and prevent the cyclical disasters of droughts and floods.

Long-term costs associated with droughts are significantly underestimated, as their effects ripple through critical sectors such as agriculture, energy, and health, impacting national economies and livelihoods. Proactive measures, as outlined in many countries' national drought plans, would cost only a fraction of current drought-related damages.

Triple dividends of nature-based solutions

Nature-based solutions offer substantial economic and environmental benefits, with estimates suggesting that an economy aligned with natural systems could generate up to $10.1 trillion annually and create nearly 395 million jobs by 2030. Investing in these solutions could also yield a triple dividend by reducing drought losses, increasing land-user income, and supporting broader goals such as food and water security, climate resilience, and sustainable development.

"Every dollar invested in nature-based solutions not only reduces drought impacts but can generate benefits of up to $27," explained German Parliamentary Secretary Niels Annen. "This includes higher farmer incomes, resilient value chains, and lower long-term economic costs."

Recommendations for proactive drought management

The report underscores the importance of embedding NbS into national drought strategies, strengthening local governance, and ensuring land tenure and water rights to implement sustainable practices effectively. Public-private partnerships and repurposing harmful subsidies are also highlighted as critical avenues for financing NbS initiatives.

Professor Kaveh Madani, Director of UNU-INWEH and a lead author of the report, emphasized the far-reaching economic and social impacts of drought: "The economic cost of drought extends beyond immediate agricultural losses. Effective management and investment in nature are crucial to mitigate these effects."

The report calls for a whole-of-society approach, involving collaboration between authorities, farmers, businesses, civil society, and academics to bolster drought resilience. It concludes that preemptive and well-coordinated action is essential for survival and economic stability.

"Unsustainable land and water management practices and other human actions that increase the frequency and intensity of droughts must be replaced by pre-emptive, anticipatory action in favour of our survival," the report states.

Research Report:PDF: Economics of Drought: Investing in Nature-Based Solutions for Drought Resilience - Proaction Pays

Research Report:Economics of drought - investing in nature-based solutions for drought resilience