This economic instrument includes subsidies with a specific environmental remit such that the subsidies are intended to (directly or indirectly) reduce uses or practices that have a “proven and specific negative impact on the environment” or encourage activities that are positive for the environment. This can include either direct payment from government to producers or actors, tax credits or other preferential tax treatments to influence activities, or preferential financing, for example lower-interest loans, to influence good behavior. Some examples for nature include biodiversity friendly subsidies for environmentally-beneficial Best Management Practices, and tax credits for environmental programs that generate new jobs or for the donation of conservation easements. Subsidies can also be in-kind such as green government procurement.
Biodiversity friendly subsidies
Government subsidies that favor biodiversity by supporting individuals and organizations acting in biodiversity friendly ways. Subsidies can take many forms including tax relief, technical support, price support, etc. This can include biodiversity friendly businesses such as ecotourism, sustainable agriculture, non-timber forest products, reduced impact forestry, fisheries, etc.
In Hong Kong, starting from 1st January 2020, travel agencies will receive HK$100 for each customer they book on designated green tours. In addition, travel agencies can receive a government subsidy of up to HK$50,000 for organizing eco-tours. The travel agencies must observe green rules by ensuring that no plastic wares are provided to participants and encourage them to take their rubbish away after visiting green spots. Read more about the Hong Kong subsidy here.
Subsidies for organic agriculture
Government subsidies that support actors in the organic agriculture industry to encourage expansion of organic production or other sustainable agricultural system. Subsidies can take many forms including tax relief, technical support, price support and can support individuals, companies and organizations.
The German federal government subsidizes organic farming via the joint federal/regional state instrument ‘Gemeinschaftsaufgabe zur Verbesserung de Agrarstruktur und des Küstenschutzes”. Of these subsidies, 60 per cent are financed by the EU and federal government, while the remainder is financed by regional states. Read more about the subsidies that exist in Germany for organic agriculture here
Conservation Easement
A conservation easement is a restriction placed on a piece of property to protect its associated resources. The easement is voluntarily donated, can generate tax credits, or can be sold by the landowner. It limits certain types of uses or prevents development from taking place on the land in perpetuity while the land remains in private hands. Easements protect land for future generations while allowing owners to retain certain private property rights. Conservation easement are traditionally incentivized with tax breaks.
The national Conservation Easement Database (NCED) is the first effort to compile and standardize information about conservation easements throughout the United States in to a single online resource. The database works to provide a comprehensive picture of the estimated 40 million acres of conservation easement lands in the US. NCED currently contains over 130,000 easements totaling 24.7 million acres. An estimated 60% of all U.S easements are mapped, and the NCED is continuously updated as more organizations and agencies choose to share their data.
Reform Subsidies Harmful to Biodiversity
Reform, green or phase out a subsidy that directly or indirectly harms biodiversity. Subsidies can take the form of direct transfers, tax credits, and regulatory advantages that generate economic or financial benefits to the recipient. A wider definition may include implicit subsidies which are defined by the failure of internalize negative externalities to the environment (e.g. pollution). Subsidies are usually set and organized within economic sectors. Subsidies harmful to biodiversity include various measures in agriculture, fisheries, transport and infrastructure, construction, land used change, forestry and energy. Reforming or reducing these harmful subsidies can result in government savings and reduced future environmental costs.
In February 2012, a report by the Strategic Analysis Centre on public subsidies harmful to biodiversity was released in France. The report follows an important decision by the Grenelle Environment, at the initiative of conservation NGOs and the IUCN French National Committee, requesting a general audit of tax measures unfavourable to biodiversity and a sturdy on the feasibility of more favourable taxation.
This work contributes to the French National Strategy for Biodiversity 2011 – 2020, adopted in May 2011 and the European Commission’s efforts. Read the report here.
Incentives for Sustainable Business
Direct or indirect public transfer or other incentive to business for the adoption of sustainable business practices that help to improve biodiversity management. Explicit subsidies, financed either on-budget or off-budget (e.g. through a State Owned Enterprises), comprise monetary transfer -including income support (producer); market price support (consumer and producer); export subsidies (producer); public procurement above the market price; foregone taxation including reduced taxation, tax breaks, tax rebates, accelerated depreciation of assets; in-kind provision of inputs and services, including extension services; in-kind provision of infrastructure; provision of capital at concessional rates.
In the United States, several tax advantages are offered to businesses that go green. This includes tax breaks, rebates and other monetary enticements. These financial incentives are offered on both the state and federal levels. Some examples include:
Tax credits and grants of 10 and 30 percent for use of alternative energy properties
Tax credits for use of alternative vehicles that meet specific fuel-efficient standards
Bonus depreciation for qualified recycling and reuse of certain equipment or machinery
Read more here.
Conservation Incentives
Direct or indirect public transfer or other incentive to businesses for advancing conservation outcomes, e.g. investing in technology upgrades that consume less natural capital such as land or water.
Enhanced Land or Marine Stewardship
An informal or formal commitment by a community, private landowner, NGO or corporate landowner to sustainable manage and/or formally protect a specified land or marine area. Incentives are sometimes provided to encourage or support landowner participation.
Conservation Tax Credits
Tax credits can be offered to land owners in exchange for conservation and restoration activities on private land that contributes to established conservation objectives. Systems can be established at a national or local level. Tax credits may be transferable to other entities and thus hold a higher value for land owners lacking large tax liabilities.
Conservation Services for Private Landowners
Government supports conservation and restoration actions on private lands that decrease the costs of land management for private and communal land owners. This creates an incentive for land owners to pursue conservation actions through cost reduction and public private partnerships with government. An example is the Natural Resources programme in South Africa where support is provided for the removal of invasive alien species and land restoration.
Conservation Extension Services
Government or civil society extension services decrease the costs of improved management of marine and land resources for private individuals and groups. Extension services - especially in rural remote areas - have been decreased substantially in many countries and replaced with sales and marketing services for products harmful to the environment such as engineered seeds, fertilizers and pesticides - ultimately generating higher costs to government for environmental and health issues.