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The purpose of the paper is to show that land degradation and desertification are threatening the livelihood of more than a billion dryland inhabitants. The paper aims to present traditional and novel approaches for sustainable agricultural exploitation of the arid drylands in Southern Israel and similar climatic zones, and their potential for rehabilitating degraded drylands and increasing agricultural productivity.

The paper analyses the current agricultural activities on the Abu Rabia farm as well as developing experimental approaches and discusses the expected impact on ecological, economic and social sustainability.

The farm investigated consists of about 120 hectares of semi‐desert land 30 km east of Beer Sheva, divided about 50:50 between rocky hill country and plains with deep loess soil. The area receives an average 200 mm of rain per year. The land is used for raising livestock (about 120 head of sheep and goats), wheat cultivation on high quality soil, and agroforestry, mainly olive cultivation in terraces designed to collect runoff water of seasonal streams. These activities provide a basic income and cover a significant amount of the families' food requirements, but can not provide a full income for a family head in a developed country like Israel. Improving the quality of the grazing land by silvipasture, further investments into high value dryland tree crops and simultaneous production of wood for industry and energy can dramatically increase the farm's income, its resilience to drought and ecological sustainability.

This analysis demonstrates the potential of dryland agroforestry for sustainable development while solving a number of economic and social problems of poor dryland inhabitants, and it contributes to fighting desertification and global warming.

This case study demonstrates that sustainable dryland exploitation by agroforestry can establish significant agricultural production potentials on marginal lands often considered worthless. Because of the establishment of significant and permanent carbon sinks, carbon trading may be mobilized to cover the required investments creating a classical win‐win situation.