Trillions of Dollars in Government Subsidies Drive Ecosystem Collapse and the Extinction of Species

As reported by “Beyond Pesticides”, the world’s governments spend US$1.8 trillion annually on subsidies that drive the destruction of ecosystems, the extinction of species and exacerbate the climate crisis. This news comes from a study commissioned by The B Team and Business for Nature (BFN), and published in a joint report titled “Financing Our Survival: Building a Nature-Positive Economy through Subsidy Reform”.

With a great level of importance, a remedy to this entropy is offered on the BFN website:

• “With political determination and radical collaboration between the public and private sectors, we can reform these harmful subsidies and create opportunities for an equitable and nature-positive economy”.

To achieve that end, the 2 organizations have issued calls to action to multiple sectors, including governments participating in the upcoming UN Biodiversity Conference (COP15):

• “Adopt a clear and ambitious target within the Global Biodiversity Framework that commits governments to redirect, redirect or eliminate all environmentally harmful subsidies by 2030 and increase positive incentives to enable an equitable, net zero and positive world for nature”.

Over 80% of SPAs target fossil fuels, agriculture, and water

A press release from The B Team reports that the fossil fuel, agriculture and water sectors are the recipients of more than 80% of all environmentally harmful subsidies (SPA or EHN) annually, which “depletes the natural resources, degrades global ecosystems and perpetuates unsustainable levels of production and consumption, in addition to exacerbating global inequalities”.

Other significant subsidy recipients include the forestry, construction, marine capture fisheries, and transportation sectors. For BFN, “publicmoneyisfinancingourownextinction”.

The publication is timely, given the meeting of the COP15 Working Group of the UN Convention on Biological Diversity (CBD) in Geneva. The United Nations Biodiversity Follow-up Conference (COP15) scheduled for April 25th to May 8th in Kunming, China and the upcoming UN Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt (rescheduled for November 2022).

The study hopes to inform decision-makers in government and business about the case and how to reform these environmentally harmful subsidies. SPAs are government support programs that, although often established to solve socio-economic problems, ultimately encourage unsustainable patterns of production and consumption. This is largely because they were implemented without considering environmental impacts.

Preventive and holistic approaches can avoid damaging impacts

Many of the health and environmental crises we face have arisen from an isolated approach to problems. Generally speaking, preventative and holistic approaches can avoid such unwanted and damaging impacts.

The World Economic Forum considers a lack of forceful action on the climate – resulting in extreme weather events and loss of biodiversity -to be the main threats to humanity, catalyzed in part by the enormous amounts of money that governments give to support harmful industries and practices.

The research finds that, globally, the fossil fuel industry receives US$640 billion in SPA annually; the agricultural sector US$520 billion; water US$350 billion; forestry US$155 billion; construction US$90 billion; transport US$ 85 billion; and marine capture fisheries US$50 billion. (The report also mentions that although no metrics are available on SPAs, illegal gold mining accounts for billions of dollars in damage each year.)

Subsidies harmful to the environment (SPA or EHS)

These subsidies contribute significantly to many of the crises the world faces: a warming climate, loss of ecosystems and biodiversity, air and water pollution, land degradation, and social and economic inequality.

A report by the United Nations Development Program (UNDP) and the Food and Agriculture Organization of the United Nations (FAO) suggests, for example, that of the subsidies provided to farmers, almost 90% distort the prices or causes other damage, and that most fossil fuel subsidies hamper the critical and urgent need to transition to a clean world.

The report also scolds governments for following through on promises made, then ignored or not kept. For example, “during the 2010 UN CBD Summit, 190 countries committed to eliminating or reforming biodiversity-harmful subsidies by 2020 as part of the Aichi targets. The governments missed the mark and we cannot allow history to repeat itself”.

“This is due not only to the power of vested interests, but also because both governments and beneficiaries, including companies, are unaware of the full scale of the subsidies and their impacts. Companies often put pressure on the government to continue or increase, which often has unintended negative environmental consequences”.

Among their observations are the needs for greater public awareness and visibility of subsidies, and much more transparency and disclosure about subsidies from governments and recipient companies. In the US, such subsidies tend to be “worked out” behind semi-closed doors between legislators, federal agencies, lobbyists, and private business entities, and sometimes reported on by a journalist, which is not part of open government, democratic and responsible.

Preventive and holistic approaches can avoid damaging impacts

Many of the health and environmental crises we face have arisen from an isolated approach to problems. Generally speaking, preventative and holistic approaches can avoid such unwanted and damaging impacts.

The World Economic Forum considers a lack of forceful action on the climate – resulting in extreme weather events and loss of biodiversity – to be the main threats to humanity, catalyzed in part by the enormous amounts of money that governments give to support harmful industries and practices.

The research finds that, globally, the fossil fuel industry receives US$640 billion in SPA annually; the agricultural sector US$520 billion; water US$350 billion; forestry $155 billion; construction $90 billion; transport US$ 85 billion; and marine capture fisheries US$50 billion. (The report also mentions that although no metrics are available on SPAs, illegal gold mining accounts for billions of dollars in damage each year.)

Subsidies become harmful to the environment (SPA or EHS)

These subsidies contribute significantly to face many of the crises the world: a warming climate, loss of ecosystems and biodiversity, air and water pollution, land degradation, and social and economic inequality.

A report by the United Nations Development Program (UNDP) and the Food and Agriculture Organization of the United Nations (FAO) suggests, for example, that of the subsidies provided to farmers, almost 90% distort the prices or causes other damage, and that most fossil fuel subsidies hamper the critical and urgent need to transition to a clean world.

The report also scolds governments for following through on promises made, then ignored or not kept. For example, “during the 2010 UN CBD Summit, 190 countries committed to eliminating or reforming biodiversity-harmful subsidies by 2020 as part of the Aichi targets. The governments missed the mark and we cannot allow history to repeat itself”.

“This is due not only to the power of vested interests, but also because both governments and beneficiaries, including companies, are unaware of the full scale of the subsidies and their impacts. Companies often put pressure on the government to continue or increase, which often has unintended negative environmental consequences”.

Among their observations are the needs for greater public awareness and visibility of subsidies, and much more transparency and disclosure about subsidies from governments and recipient companies. In the US, such subsidies tend to be “worked out” behind semi-closed doors between legislators, federal agencies, lobbyists, and private business entities, and sometimes reported on by a journalist, which is not part of an open government, being democratic and responsible.

The report asks that companies:

• Collaborate widely to raise awareness of the reputational, competitive, and investor benefits of subsidy disclosure, and support the development of international standards, frameworks, and guidelines for mandatory disclosures, including subsidies.

• SPAs distort prices, investment decisions and resource allocation. Therefore, promoting unsustainable production and consumption and unfair competition creates risks in the supply chain, reputation and operations.

• Opportunities would be opened up by SPA reform and the redirection of funding towards nature-positive goals. There would be a greater competitive position, a greater interest of investors in the environment, society, and governance, there would be a reduction in the risks mentioned above and progress in the “ambitions of the Paris Climate Agreement”.

• Informed subsidy reform could boost business and investment opportunities, create jobs, reverse nature loss, and help ensure a sustainable future for our planet. Companies can mobilize and implement change quickly (often faster than policymakers), setting a precedent for improvement across the industry.

Investors are beginning to recognize the financial and sustainability risks of environmentally harmful subsidies, and forward-thinking companies recognize that they must prepare for subsidy reform. The report ends with a series of supporting comments from members of Team B, business leaders and advocacy groups:

• “It is time to stop self-serving and short-sighted lobbying instead of directing public money to support the transition of responsible companies to nature-positive business models”. —Paul Polman, business leader and member of The B Team.

• “It is more important than ever to set ambitious goals to reverse nature loss and redirect, reuse or eliminate all subsidies that harm our natural world.” —Marco Lambertini, CEO of World Wildlife Fund International.

• “We must end the isolated approach that has led to subsidies without taking into account their long-term environmental costs.” —Jennifer Morris, executive director of The Nature Conservancy.

• “Climate action is at a crossroads, in part due to the large scale of public money flowing into harmful industries and practices. We need to see comprehensive subsidy reform by governments and companies, with social and environmental considerations at the core, to ensure a just and equitable transition for all.” —Mary Robinson, former President of Ireland and member of The B Team

• It would add to the ambitious scope of this report and its sponsors that the reform of SPAs and the implicit reform of supply chains should directly address the toxicity of much of the global flow of materials, in particular, synthetic pesticides and fertilizers, plastics and chemicals, ingredients in industrial and consumer products (see, for example, this Daily News Blog article on PFAS and other toxicants).

Companies must clean their supply chains, especially from pesticides and from any product that impacts the ecosystem with toxic chemicals due to its damage to biodiversity. Beyond Pesticides encourages the report to be taken seriously and its influence to lead to genuine change in the global business community towards nature-positive goals: redirecting policies and investments to repair and restore, rather than devastate, the climate and the natural systems of the world.