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Deforestation outlook: Challenges and solutions

Reforestation plays a key role in addressing long-term climate change challenges, yet ten million hectares (or around 40% of the size of the UK) of forests are lost each year. Worse still, most of the loss occurs in areas where the carbon storage capacity of trees is high. With the rate of new forest expansion declining and demand for deforestation-related commodities rising, action is needed.

Effects of tropical deforestation on climate change

At present, 45% of the world’s forests are in tropical areas and tropical forests store more carbon than any other forest type. The fact that deforestation is currently largely taking place in tropical areas has significant downside effects for climate change.

Another driver for deforestation is the fact that rising average consumer spending power has led to an increase in per capita consumption of key commodities associated with deforestation.

Deforestation-related commodities

The commodities most significant in driving tropical deforestation include beef, palm oil, corn, rice, and soybeans1. Demand for these commodities could increase by up to 279% if consumption patterns across the developed world become the norm, requiring an increase in agricultural land of 114%.

As well as commodity-related deforestation, global warming is affecting the ability of farmers in many countries to grow crops on their existing land due to drought or flooding. We need solutions to help reduce future deforestation pressures.

Deforestation solutions


1. Support for smallholder farmers
Smallholder farms account for 84% of total farms2, produce 35% of the world’s food3, and are located mostly in areas where future consumer demand is likely to grow fastest. Smallholder farmers need financial tools to transition their operations to a more sustainable setting – for example, domestic credit lines from banks, longer-term loans from companies across the supply chain, and opportunities related to carbon finance.

2. Tighter regulation
Stricter regulation of the entire supply chain for key deforestation-related commodities is needed. Progress has been made in nature-related regulatory developments across key regions, but enforcement rules and punishments for breaching them need to be clearer. The Taskforce on Nature-related Financial Disclosures (TNFD), launched in 2021, aims to create more awareness about the risks and opportunities that exist around the natural ecosystem and ensure financial flows are shifted from nature-negative to nature-positive activities.

3. Smart agriculture and vertical farming
The widescale adoption of smart agriculture and crop science technologies, as well as the development of vertical farming, are key to addressing growing demand. Compared to traditional land-based crop production, vertical farming is more stable as weather variability plays no role and yields can be up to 30x higher. Land requirements are much lower, water usage can be 90% lower, and there is no need for pesticides.

4. Eliminating food waste and changing consumer behavior
Given that food loss and waste combined account for 30% of the world’s total food production, addressing this issue could reduce the need to make more land available and thus reduce deforestation. Changing consumer behavior – for example, buying only what is needed – would reduce food waste; and cooling/storing technologies alongside smart packaging solutions would prevent food loss. Reducing the consumption of beef is critical as its production has the greatest impact on deforestation of all key commodities.

1. According to “Agricultural and forestry trade drives large share of tropical deforestation emissions” - ScienceDirect
2. According to estimates from the International Fund for Agricultural Development (IFAD)
3. According to estimates from the Food and Agricultural Organization of the United Nations (FAO)