Healthy Soils: Solutions and Economic Opportunities for a Future-Fit Food System

With agriculture responsible for ~25% of global greenhouse emissions and crop production projected to grow by ~60% by 2050 to meet the demands of a growing population,¹ 1 World Economic Forum (2023): Focusing on soil health can help us feed the world’s growing population without harming the planet: Here’s how the agri-food industry has to rethink its approach to ensure long-term viability. The solution lies beneath our feet: healthy soil. Global corporate frontrunners must focus on soil health solutions to unlock and monetize carbon sequestration, improve financials, and create resilient food supply chains less vulnerable to adverse weather events. To unlock the full potential, innovations in policy, finance, and Measurement, Monitoring, Reporting and Verification (MMRV) are needed.

The immense value of healthy soils

Investing in creating healthy soils—earth that is rich in organic matter, microbial life, and nutrients—can unlock a triple-win: carbon sequestration, farmer economics, and crop yield resilience to adverse weather events.

Carbon sequestration: Improved soil health increases soil carbon sequestration (~4.2 tCO2e/hectare/year) by increasing plants’ uptake of nutrients, reducing the need for synthetic fertilizer and its related CO₂e emissions. Using Denmark as an example, our analysis of regenerative agriculture’s potential suggests widespread implementation of these practices across the country could have an abatement potential of 4 megatons of CO₂e p.a. by 2035—roughly 10% of Denmark’s total 2022 emissions,² 2 BCG (2024): The Potential of Regenerative Agriculture in Denmark which would create a monetary benefit of 6Bn DKK per year using the Danish Council on Climate Change’s social cost of carbon.³ 3 The social cost of carbon is the total damage that an additional ton of carbon has on outcomes, converted into monetary terms.

Farmer economics: If Danish farmers monetize that 4 megatons of CO₂e through quality carbon offset markets at an average price of ~435-580 DKK / tCO2e,⁴ 4 Based on carbon credit price of Indigo they would gain a revenue uplift of ~1.7-2.3Bn DKK per year, approximately 60.000-77.000 DKK revenue upside per year per Danish farmer.

Moreover, our analysis finds that farmers can expect a ~20-40% EBIT margin uplift by restoring soil health via regenerative farming practices compared to conventional farming, despite a medium-term drop in profitability from shifting practices.⁵ 5 BCG (2024): The Potential of Regenerative Agriculture in Denmark While these specific numbers are derived from our study of Denmark.

Crop resilience: Finally, healthy soils provide critical resilience against droughts by improving water retention, with studies suggesting that crops grown via regenerative practices hold ~30-40% higher yields in years with severe weather events compared to crops cultivated through conventional farming practices. Soil health will be even more critical in a hotter world experiencing longer and more severe periods of drought.

The role of regenerative agricultural practices

Regenerative agriculture practices are key to cultivating healthy soils. Practices such as cover cropping, no-till, crop rotation, composting, and agroforestry all help optimize the six critical ingredients that determine soil health: adequate moisture, proper soil texture and structure, a healthy microbiome, continuous biomass buildup, balanced pH levels, and stable temperatures. Each of these factors contributes to the formation and maintenance of soil organic matter (SOM) and microbial life.⁶ 6 BCG (2024): Healthy Soil Grows Healthy Food— and Stronger Economies

Bridging the transition: Farmers will need support

The creation of healthy soil takes time and requires a costly and complex transition period. During this time, typically between 3-6 years, farmers often experience lower yields and profits due to the upfront investments necessary for rebuilding soil health. Farmers will have to invest time and money to upskill regenerative agricultural practices and implement new systems for soil and carbon MMRV systems.

To catalyze change and help overcome these challenges, it is imperative that the Agri-ecosystem, including regulators, banks, FMCGs, and input providers, support farmers with access to finance, knowledge/resources, and risk-sharing mechanisms during this transition period.

The time to act is now: Overcoming key challenges to scaling healthy soils

To reach scale and unlock value generation, leaders and innovators are developing new approaches and solutions to four key challenges.

Unclear financing pathways: New innovative approaches to finance are needed. The buildup of soil organic matter takes time. Innovators such as Agreena are leveraging global carbon markets to finance the farmer transition to sustainable practices, while downstream players like FMCCs are de-risking the farmer transition through long-term off-take agreements and cost-sharing programs. Finally, banks will play a crucial role through lending programs that offer specialized terms such as reduced rates or optimized term length tied to regenerative agriculture outcomes. This play also benefits banks by reducing financed emissions and building more climate-resilient asset portfolios that are less vulnerable to the risks associated with adverse weather events.

Policies and incentives: New regulations are needed to support and unlock the value creation from healthy soils. Looking toward Denmark, the Danish Tripartite Agreement promotes a large-scale transformation of agriculture landscapes toward nature, creating new commercial opportunities. With subsidies such as the fertilizer reduction subsidy of 750 DKK per ton CO₂e avoided, farmers are incentivized to move toward regenerative practices.

Advancement is also needed on the EU level, an area BCG recently explored with Carlsberg and One Planet Business for Biodiversity (OP2B).⁷ 7 BCG (2025): Sowing change: EU Policy opportunities to Scale Regenerative Agriculture Progressive initiatives, such as creating an Agri-Transition Fund and incorporating outcome-based criteria in CAP Pillar payments to enable farmers to receive practice-based payments during their transition to regenerative agriculture—as well as outcome-based rewards after the changeover—would speed up progress.

Insufficiently standardized cost-effective MMRV: Current Measurement, Monitoring, Reporting and Validation (MMRV) systems used to measure soil health are often too costly to scale or too imprecise to validate regenerative agriculture outcomes, obstructing the monetization of healthy soils.⁸ 8 BCG (2024): Climate-Smart Agriculture Needs a Better Yardstick By creating an EU-wide MMRV program to standardize outcome measurement methodologies, data collection, and reporting, the EU could lower costs drastically while ensuring scalability and credibility.

Missing partnerships and coordination: To scale regenerative landscapes requires systemic change that no single actor can meaningfully create alone. New partnerships across the Agri-value chain are paramount. Large-scale coalitions of farmers, off-takers and financiers, rooted in an understanding of how each entity’s business model is impacted by the transition, can align incentives to share costs and risks and unlock scale advantages.

This rationale underpins the COP28 Action Agenda on Regenerative Landscapes (AARL), which BCG co-leads together with WBCSD, COP28 UAE and High-Level Climate Champions. By moving the unit of transformation from the individual farm to the entire Agri value chain, the coalition is driving systemic change. In 2024, the AARL saw a collective investment in regenerative agriculture surpass 6B USD—a 300% increase since last year—spanning over 300 projects and 280M hectares.

Healthy soils represent an exciting new opportunity in agriculture as leaders and innovators eye the triple win from increased carbon sequestration and monetization, improved financials, and enhanced crop resilience in a warmer and wetter world. However, unlocking its full transformative potential will require new coalitions and advancements in transition finance, policy, and MMRV.