Vast dryland regions around the world are affected by the encroachment of woody vegetation, with important environmental and economical implications. Grassland-to-shrubland conversions are often triggered by disturbance of grassland vegetation, and the consequent formation of barren areas prone to erosion-induced nutrient losses. Inhibition of encroachment by erosion-induced depletion of soil nutrients contributes to the emergence of highly heterogeneous landscapes with shrub-dominated fertility islands surrounded by nutrient-poor bare soil. Here, we develop a process-based simplistic model thataccounts for the two competing processes of resource depletion and shrub encroachment by a non-linear diffusion mechanism. The proposed model is able to generate stable vegetation patterns with the same statistical properties as those observed in areas with well-developed fertility islands. We also show how a subsequent disturbance of shrubland vegetation can shift the dynamics toward states with smaller vegetation biomass. The process of land degradation may then occur through a number of irreversible intermediate transitions associated with losses in ecosystem function.