Fallen leaves are recycled. After a leave has reached the ground, it begins to break down (with the help of animals, bacteria, and fungi), creating a layer of decaying organic material at the base of the tree. The leaf matter is converted back into simple carbon dioxide and water. This is just one of the fundamental parts of the carbon cycle.
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This new layer also acts as a protective blanket and sponge. It absorbs dew and rainfall, and acts as a continued source of nutrients and water for the tree roots through the winter.