The UN Development Programme (UNDP) has released a set of guidelines to enable governments to redesign subsidies harmful to biodiversity.
The guidelines were developed by the UNDP’s Biodiversity Finance (BIOFIN) Initiative, a team of experts currently supporting 41 countries worldwide in aligning finance flows with biodiversity targets, published in report “The nature of subsidies”.
“The report offers a blueprint for governments and stakeholders to navigate a path towards a more sustainable future,” said Midori Paxton, director of the UNDP Nature Hub.
Subsidies can negatively impact the environment by under-pricing the use of natural resources, leading to over-consumption, or incentivising an increase in production, the report said.
Recent studies have identified energy and agriculture as the sectors accounting for the largest shares of harmful subsidies, leading to species and habitat loss, over-exploitation of natural resources, land degradation, and pollution.
The Organisation for Economic Co-operation and Development (OECD) has estimated that a total of $500 billion currently supporting agricultural production in 54 countries could harm the environment, while total public spending on biodiversity ranges from $78-91 bln annually. Investors have urged G20 to reform the sector’s subsidies to meet climate and nature targets.
In the fishery sector, harmful subsidies amount to up to $35 bln, fuelling pollution and over-exploitation, while the fossil fuel sector in G20 countries alone receives $610 bln per year in production and consumption subsidies.
“These examples highlight some of the inefficiencies in current policy frameworks such as the lack of solid screening processes for negative impacts on nature, resulting in a significant loss of species and irreparable damage to ecosystems,” BIOFIN said in the report.
A FIVE-STEP APPROACH
BIOFIN developed a five-step approach to assist governments in addressing these inefficiencies and delivering biodiversity positive outcomes:
- Scoping stage
- Research stage
- Validation stage
- Reform option design
- Redesign scenarios and action plans
Under this approach, governments should first map the major subsidies and assess their impacts on biodiversity, engaging with key stakeholders.
At least two or three redesign options for these subsidies should be developed and compared to business as usual scenario, considering not only environmental but also social, gender equality, economic, and political economy concerns, according to the guidelines.
Action plans should then outline how the transformation of harmful subsidies would be achieved, including details on timeline, budget, and potential supporters. After the plan is implemented, monitoring should be carried out to measure financial and biodiversity performances.
“Using these guidelines, countries can scan the full spectrum of their subsidies to determine to what extent they may be at risk of harming nature and create plans to redesign them to become more nature-positive,” the BIOFIN report said.
Over 25 countries worldwide have implemented these guidelines to date, added Hervé Barois, senior technical advisor at BIOFIN.
“They are all at different stages of implementation. Some results are now coming up, and we can see that it’s very challenging, but not impossible,” he said, stressing that more countries need to step up.
“Without a substantial change, it will be arguably impossible to achieve the goals of the Kunming-Montreal Global Biodiversity Framework (GBF),” the report concluded.
Under target 18 of the GBF, agreed in 2022 at the COP15 UN biodiversity summit, countries are required to “eliminate, phase out, or reform incentives, including subsidies harmful for biodiversity … and scale up positive incentives for the conservation and sustainable use of biodiversity”.
By Sergio Colombo – sergio@carbon-pulse.com
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