Ahead of the last round of CBD negotiations before the UN Biodiversity Conference COP15, The B Team and Business for Nature launch a joint brief called “Financing Our Survival: Building a Nature-Positive Economy through Subsidy Reform”. It summarizes the key messages from a study by subsidy experts Doug Koplow and Ronald Steenblik and aims to inform government and business decision making on Environmentally Harmful Subsidy (EHS) reform.

The study provides a breakdown of EHS across the economy; including agriculture, construction, forestry, fossil fuels, marine capture fisheries, transport and water - sectors that are responsible for the majority of global greenhouse gas emissions. It links subsidies, provided by public money, to impacts on the environment, global inequalities and climate.
● $640 billion of support a year is received by the fossil fuel industry, contributing to climate change, air and water pollution, and land subsidence.1
● $520 billion of subsidies a year finances the agriculture industry. The environmental damage of unsustainable agricultural activities includes soil erosion, water pollution, commodity- driven deforestation, greenhouse gas emissions, conversion of natural habitats and consequent biodiversity loss.
● $350 billion a year flows to the unsustainable use of freshwater and the management of water and wastewater infrastructure, contributing to water pollution and risks to ecosystems in waterways and the ocean.

Breakdown of EHS across sectors:
● Fossil fuels - $640 billion a year.9
● Agriculture – $520 billion a year.10
● Forestry - $155 billion a year

Government subsidies are created to benefit socioeconomic development, but what if they end up driving the destruction of nature, which our society and economy depend upon to survive and thrive?

Unfortunately, this is the very challenge we face today. A new study commissioned by The B Team and supported by Business for Nature reviewed a wide range of environmentally harmful subsidies (EHS) across sectors and estimates that the world is spending at least $1.8 trillion a year, equivalent to 2% of global GDP, on subsidies that are driving the destruction of ecosystems and species extinction. In other words, public money is financing our own extinction.

However, with political determination and radical public-private sector collaboration, we can reform these harmful subsidies and create opportunities for an equitable, nature-positive and net-zero economy. To do so, we must bring awareness, transparency and disclosure on subsidies from both governments and business. The UN Biodiversity Conference COP15, taking place later this year in Kunming, China, is our best chance to adopt an ambitious Post-2020 Global Biodiversity Framework that includes clear language on subsidy reform and accelerates business action.

What are Environmentally Harmful Subsidies?

Environmentally Harmful Subsidies (EHS) are government programs that encourage unsustainable production or consumption and harm nature by exhausting natural resources, degrading global ecosystems, and damaging planetary health. These subsidies exist in various forms, from cash payments to government provision of credit, liability caps, special tax breaks or regulatory exemptions, or below-market provision of publicly owned goods or services.

EHS are prevalent in a wide range of sectors, including agriculture, construction/housing, forestry, fossil fuels, marine capture fisheries, transport, and water. These sectors account for the vast majority of GHG emissions and impact ecosystems.

Why should we reform EHS?

EHS exacerbates the environmental and social crises that threaten our society, economy and health. The World Economic Forum ranks climate action failure, extreme weather and biodiversity loss as the top three threats facing humanity, fueled in part by the large scale of public money flowing to harmful industries and practices. These environmental challenges in turn worsen social inequalities since the most vulnerable populations are often most impacted by natural disasters.

The scale and nature of EHS demonstrate the size of the challenge and the potential opportunities reform provides, particularly in scaling up sustainable finance.