According to the BIOFIN catalogue of finance mechanisms, this can be defined as, to “reform, green or phase out a subsidy that directly or indirectly harms biodiversity.” Government subsidies can be direct or indirect and may take the form of direct transfers, tax credits, and regulatory advantages that generate economic or financial benefits to the recipient. A broad interpretation of the term is often used and includes implicit subsidies which are defined by the failure to internalize negative externalities to the environment (e.g. pollution). Subsidies harmful to biodiversity include various financial and tax incentives for agriculture, fisheries, forestry, transport and infrastructure, construction, land used change, and energy. In some cases, subsidies that are intended to achieve specific social outcomes may impact economic efficiency to such a degree as to be economically harmful to the country – these are termed “perverse subsidies”. The economic and environmental impact of harmful subsidies is well captured by the report from the IMF that global fossil fuel subsidies can be estimated at roughly $5.2 trillion in 2017 (6.3% of global GDP, IMF, 2019). Understandably, these levels of subsidies discourage renewable energy investments and are slowing the response to climate change. Subsidies in the global fishing industry have been estimated recently at $35.4 billion (in 2018) posing a continuing risk to fish stocks due to overharvesting (Sumaila et al. 2019).
Biodiversity Friendly Subsidies
Government subsidies that favor biodiversity by supporting individuals, companies 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.
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.
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.