The UN’s land summit closed in Ulaanbaatar on Friday with a familiar split verdict: real money on the table, no deal on the hardest file. But for carbon market participants, the most consequential signal from UNCCD COP17 came from the sidelines, where the idea of land credits, a dedicated market instrument for financing the restoration of degraded land, gained visible traction. If the concept matures, environmental markets would gain a third asset class alongside carbon and biodiversity credits, built on the same project land and aimed at the same buyers.
What COP17 Actually Delivered
The 17th Conference of the Parties to the UN Convention to Combat Desertification ran from August 17 to 28 in Mongolia’s capital, under the theme “Restoring Land. Restoring Hope.”, bringing together delegates from the Convention’s 197 Parties. The host country framed the stakes with its own numbers: nearly 77 percent of Mongolian territory is already degraded.
On finance, the summit produced two concrete outcomes. The first is the Drought Resilience Investment Facility, launched at COP17 as what backers describe as the world’s first global finance instrument dedicated to drought resilience, designed to shift countries from responding to drought crises to preparing for them. The second is a round of pledges: Carbon Pulse counted nearly $650 million in new financial commitments over the two weeks, while The Nature Conservancy’s closing statement cites approximately $1.3 billion in new and pipeline financing for land restoration and drought resilience across 23 countries, announced by governments, development banks, investment funds and companies.
Mongolia’s presidency also launched the Steppe Action Agenda, including a Rangelands Flagship Initiative, and Brazil presented a voluntary Land Degradation Neutrality target to protect or restore 3.67 million square kilometers, 43.1 percent of its territory, by 2030, including areas in the Cerrado and Caatinga.
Land Credits: The Sideline Story That Matters
The funding gap these announcements address is enormous. The Nature Conservancy puts the annual shortfall for restoring land and strengthening drought resilience at $278 billion, with more than three billion people already living with the consequences of land degradation. Public pledges of the size seen in Ulaanbaatar do not close that gap, which is precisely why a market instrument entered the conversation.
The land credit idea, as discussed on the summit’s sidelines, is straightforward in concept: create a tradable unit that channels private finance to projects restoring degraded areas, the way carbon credits channel finance to emission reductions and biodiversity credits to habitat outcomes. No methodology, registry or standard exists yet, and COP17 did not formally adopt the instrument. What changed is that the concept is now circulating inside a UN process with 197 Parties, at a moment when the neighboring carbon and biodiversity credit markets are both searching for demand.
The Drought Impasse and the Alignment Problem
The formal negotiations were less productive. Parties left Ulaanbaatar without agreement on the summit’s key drought file, deferring a decision. The Nature Conservancy’s assessment was blunt: the pace of progress failed to mirror the rate of environmental change, and discussions revealed continued differences among Parties.
One proposal aims at the coordination layer rather than at money. A voluntary, country-led initiative was tabled to help governments align action on climate change, biodiversity and land policy, an acknowledgment that the three Rio Conventions still run on separate tracks even though the projects, the land and increasingly the credit instruments overlap. COP17 was the first of the three Rio Convention COPs in 2026, so the alignment question now carries into the biodiversity and climate negotiations later this year.
What It Means for Carbon Market Participants
For project developers, land credits would arrive on terrain they already operate. Restoration projects in drylands and rangelands frequently stack carbon sequestration, biodiversity outcomes and community benefits on the same hectares. A third credit class raises the revenue potential of that stacking, but it also raises the accounting stakes: every additional instrument layered onto a project multiplies the double counting and double claiming questions that buyers now ask as standard due diligence.
For buyers, the early signal is about claim integrity rather than supply. There is nothing to buy yet. But if land credits advance, expect the same governance stack that now shapes carbon procurement, registries, methodologies, verification and corresponding-adjustment-style safeguards, to be rebuilt, contested and eventually imported into this market. Companies with land footprints in degradation hotspots should watch how claims about “restored hectares” would interact with existing carbon and biodiversity claims on the same land.
For investors, the interesting number is not the $650 million in pledges but the $278 billion annual gap. Instruments like the Drought Resilience Investment Facility and any future land credit market are attempts to convert that gap from a grant problem into an investable pipeline. Whether they succeed depends on the unglamorous infrastructure, measurement standards, registries and enforceable claims, that took carbon markets two decades to build and is still contested there.
What to Watch
Three markers will show whether land credits become a market or remain a conference idea. First, whether any standard-setter or registry begins work on a land restoration methodology with tradable units. Second, whether the proposed country-led alignment initiative attracts enough members to coordinate carbon, biodiversity and land claims rather than leaving three parallel systems. Third, how quickly the Drought Resilience Investment Facility is capitalized and whether its projects start demanding credit-style revenue to crowd in private capital. The biodiversity and climate COPs later in 2026 are the next venues where all three threads meet.
