Repost: Reforming harmful subsidies to protect biodiversity: an interview with Eva Zabey, CEO of Business for Nature
This article was originally published by the Planetary Responsibility Foundation
This article is part of a series by the Planetary Responsibility Foundation (PRF) on Nature Finance - various approaches to investing in the natural world. Nature finance is crucial in solving the combined climate and biodiversity crises. At least USD 200 billion must flow into nature every year to meet the Kunming-Montreal Global Biodiversity Framework and its goals, agreed by almost 200 countries. In 2022, USD15.4 billion was allocated for the purpose, according to OECD.
In recent years, reports from leading organizations, including the OECD and WWF, have illuminated the staggering scale of harmful public subsidies that fuel environmental degradation. The latest updated research, launched in September by Earth Track, and supported by Business for Nature, estimates that these subsidies total at least $2.6 trillion annually, predominantly supporting industries and practices that contribute to air and water pollution, biodiversity loss and climate change.
The Planetary Responsible Foundation had the opportunity to speak with Eva Zabey, CEO of Business for Nature, about this pressing issue and explore potential pathways for reform.
Counterproductive subsidy schemes: the case of agriculture, fossil fuels and water
According to Eva Zabey, subsidies in sectors such as fossil fuels, agriculture and water can be counterproductive to biodiversity and climate goals. "Agricultural subsidies," Zabey explains, "often support monoculture practices, excessive fertilizer use, and deforestation, all of which severely impact biodiversity." Similarly, subsidies for fossil fuels continue to incentivize high carbon emissions, while water subsidies often lead to water overuse and water stress on habitats. Of course, the impact of these subsidies varies depending on the country, region and type of subsidy.
These subsidies, intended to boost economic growth and support critical industries, unintentionally encourage unsustainable production or carbon-intensive consumption, the depletion of natural resources, or the degradation of global ecosystems. The impact is global: degraded soils, polluted waterways, and deforestation extend beyond individual countries, contributing to a planetary biodiversity crisis. "These subsidies don't just harm nature," Zabey points out, "they also compromise the future stability of the industries they were meant to support by eroding the natural resources on which they depend."
The persistence of harmful subsidies: understanding the barriers
Why do these subsidies persist, despite growing awareness of their detrimental effects? For Zabey, the answer lies in a complex web of historical precedent, entrenched economic interests, and political inertia.
"Many of these subsidies are so deeply embedded in our economies that attempts to define, measure and track them often struggle to be comprehensive, and progress to reform them has been slow." she says. Moreover, Zabey explains that the latest report found that the annual total of environmentally harmful subsidies had actually increased significantly since an earlier report in 2022. A combination of improved data - including estimates for non-energy mining and plastics production for the first time, inflation, and rising subsidies particularly to fossil fuels was behind the increase.
Policy reforms and the path to nature-positive subsidies
To address these challenges, Business for Nature advocates for targeted policy reforms that could redirect public funds toward nature-positive outcomes.
At CBD COP15 in December 2022, 196 governments agreed to identify by 2025, and then eliminate, phase out or reform incentives and subsidies harmful for biodiversity by at least $500 billion per year by 2030, as enshrined in Target 18 of the Global Biodiversity Framework. And ahead of the more recent UN CBD COP16 in Colombia through a set of detailed policy asks developed by Business for Nature calling on governments to reform EHS by eliminating or redirecting them, starting by conducting a national assessment to identify existing EHS, then developing a robust reform roadmap that ensures a just transition, supported by strong accountability and governance processes.
"Redirecting subsidies from harmful practices to sustainable alternatives can transform a wide range of sectors to protect and restore biodiversity, rather than harm it, while maintaining their intended economic and social goals." Zabey asserts. She also stresses the importance of reevaluating subsidies based on their alignment with biodiversity and climate goals, calling for robust assessment frameworks to measure the impact on both people and the environment.
But how can these reforms be achieved in practice? Zabey highlights that we have seen some evidence of progress at a national level, particularly in beginning to track relevant metrics and developing data collection approaches. For instance, in February 2024, the Netherlands published a report on national policy incentives and subsidies on Food and Nature and their impacts on biodiversity, and The EU has formulated an EHS working group and produced a draft EU methodology for EHS Reform to aid in the identification of EHS by 2025.
Studies are also underway in 27 Global Biodiversity Finance Initiative (BIOFIN) countries to examine the harmful impacts of subsidies on biodiversity and create action plans to redesign them. A report by UNDP and BIOFIN called ‘The Nature of Subsidies’ provides additional insight and examples from developing countries of successful subsidy reform.
"These examples show that progress is being made," she says, "but it’s nowhere near the scale of action we need to see to meet the target of the Global Biodiversity Framework by 2030. We need urgent wide-scale reform. In turn this will reduce environmental degradation, redirect investments to close the biodiversity funding gap, and unlock social benefits.”
The role of business in subsidy reform
Zabey believes businesses have a crucial role to play in driving subsidy reform and fostering a nature-positive economy. "Businesses have a role to play in understanding their own dependencies on EHS and to advocate for subsidy redirection by setting an example in their own practices, shifting investments from extractive models to sustainable alternatives," she says. By leveraging their influence and publicly supporting policy changes, businesses can collaborate with governments to ensure successful reforms.
Investors and businesses have started to take a stance and support the reform of EHS. Financial institutions representing total assets under management of $7.2 trillion have called on G20 ministers to repurpose their agricultural subsidies. In addition, more than 260 companies, representing combined revenues of $1.6 trillion have called on governments to ramp up clean energy and phase out fossil fuels.
Transparency and public accountability: essential elements for reform
One of the most urgent needs in subsidy reform is greater transparency and accountability, which Zabey sees as essential for driving meaningful change. "A lack of transparency has allowed these harmful subsidies to persist.” Indeed the authors of the Earth Track research, Doug Koplow and Ronald Steenlick view their estimates as a floor value for EHS given the large data gaps and that the numbers are likely to be much higher. By making data on subsidy allocation and environmental impacts publicly accessible, governments can enable citizens and advocacy groups to hold policymakers accountable for harmful spending practices.
As well as underscoring the role of data-driven assessments in identifying which subsidies are most damaging to biodiversity and prioritizing them for reform, Zabey highlights the importance of ensuring a just transition. “The transition away from harmful subsidies needs to be planned and managed carefully to deliver its full potential and avoid any risk of unintended consequences, such as negative impacts on peoples’ livelihoods and on communities.”
Scaling up success stories and the future of global policy
Looking forward, Zabey envisions a future where international policy frameworks evolve to address the systemic challenges posed by harmful subsidies. She calls for global cooperation to scale up successful subsidy reforms and replicate best practices across borders. "Countries and regions that have successfully reformed subsidies offer valuable lessons in overcoming political, social and economic barriers," Zabey notes. To inspire global change, Business for Nature has developed a set of recommendations for governments to progress subsidy reform which focus on the need to engage stakeholders and enhance international cooperation.
A notable example is the European Union's Green Deal, which includes ambitious plans to reduce environmentally harmful subsidies as part of its broader sustainability agenda. By promoting such initiatives and encouraging other regions to follow suit, Zabey believes the international community can create a cumulative effect, steadily transforming the subsidy landscape to protect biodiversity.
A call to action: urgent reforms for a sustainable future
As our conversation with Eva Zabey draws to a close, her message is clear: subsidy reform is essential to ensure that public money serves the public good by supporting, not destroying, the natural world. Reforming EHS is no longer a taboo topic, even if it’s still complex and sensitive, we need to tackle it head on. With trillions of dollars at stake, redirecting these funds toward sustainable practices could have a transformative impact on biodiversity, climate stability, and economic resilience. And it is essential that governments place social considerations at the heart of reform, supporting the poorest households and most vulnerable communities.
But achieving this vision requires urgent action at both national and international levels. “ It’s about systems transformation underpinned by valuing nature in decision-making. We’ve got this vicious cycle: the more people are dependent on these subsidies, the more the subsidies will remain and we won’t be transitioning away.” "If we want to protect nature and achieve the ambitious subsidy reform target in the Global Biodiversity Framework," Zabey concludes: “We need to ensure that public funds are aligned with our biodiversity and climate commitments. Only through bold, collaborative action can we secure a sustainable future for all."