by International Institute for Sustainable Development (IISD)
October 21, 2026
Governments worldwide spend at least USD 2 trillion a year on subsidies and other incentives that harm the environment. Under the Global Biodiversity Framework, countries have committed to reducing harmful incentives by at least USD 500 billion annually by 2030 and increasing positive incentives that protect biodiversity. But how much progress have they made, and what needs to happen next?
What are biodiversity-harmful incentives?
Governments often introduce subsidies and other incentives to achieve specific policy priorities, such as promoting economic stability or improving food security. However, they can have negative impacts and incentivize activities that damage ecosystems, increase pollution, distort markets, and strain public budgets, unintentionally creating longer-term vulnerabilities.
For example, fossil fuel subsidies can deepen countries’ dependence on volatile energy markets, while other harmful incentives across sectors such as agriculture, forestry, fisheries, water, transport, and plastics can contribute to deforestation and the degradation of soils, fish stocks, and water resources that economies and communities rely on.
The consequences extend beyond the environment. Estimates suggest that the degradation of natural systems could cut global GDP by USD 2.7 trillion a year by 2030.
How do biodiversity-harmful incentives create long-term economic risks?
Biodiversity-harmful incentives, including subsidies, can create an economic trap. Public funds used to support activities that damage nature are not being invested in alternatives that can make economies more resilient and sustainable.
Recent energy crises have illustrated some of these challenges. After Russia’s invasion of Ukraine, governments significantly increased support for fossil fuels to shield households and businesses from rising energy costs. However, such subsidies and other incentives can prove difficult to unwind, even as prices decline.
Reforming harmful incentives is therefore not only about protecting biodiversity—it is also about making better use of public finances, reducing longer-term vulnerabilities, and supporting more resilient economies.
What have governments committed to doing?
Under Target 18 of the Kunming–Montreal Global Biodiversity Framework (KMGBF), adopted in 2022, countries committed to identifying harmful incentives, including subsidies, by 2025 and eliminating, phasing out, or reforming them in a just and equitable way.
The target calls for reducing harmful incentives by at least USD 500 billion a year by 2030, starting with the most harmful, while scaling up positive incentives for nature.
Unlike many other international commitments, Target 18 does not necessarily ask governments to spend more. It asks them to spend better. The challenge now is turning these commitments into action.
How much progress have countries made?
Progress remains limited.
The 2025 deadline for identifying harmful incentives has passed and was not met. IISD’s forthcoming review of reports from 135 countries on progress toward the KMGBF finds that around two thirds of countries reported on Target 18, but only 44% mentioned harmful subsidies. Fewer than half of those named even one type of harmful support they provide.
Identifying these biodiversity-harmful incentives is a crucial first step. Governments need to understand how much they spend, on what, and to whose benefit before they can develop effective reform measures.
Without this information, it is difficult to determine which incentives are causing the most harm, assess the potential impacts of reform, or track progress toward the 2030 target.
Are any countries already taking action?
Yes. Several countries are demonstrating how governments can begin identifying and reforming biodiversity-harmful incentives.
The Netherlands screened 102 major subsidy programs against the recognized drivers of biodiversity loss. Switzerland mapped potentially harmful support across sectors, while identifying what could not be measured. Cameroon, starting with limited data, produced an estimate of biodiversity-harmful incentives, and identified what is needed next to build a stronger basis for reform. And the United Kingdom is demonstrating what reform can look like, redirecting GBP 2.2 billion of land-based farm payments into schemes that reward farmers for environmental improvements.
These examples show that countries can make progress even with incomplete data. They also demonstrate that reform can take different forms depending on national circumstances.
The next step is to translate this work into reforms that are transparent, inclusive, and predictable, while ensuring that affected communities and sectors are supported through the transition.
What role will the 17th UN Biodiversity Conference (COP 17) play in advancing subsidy reform?
In October 2026, governments will meet in Yerevan, Armenia, for COP 17 and the first global review of progress under the KMGBF.
The Armenian Presidency has identified Target 18 as one of its priorities and will launch the Friends of Target 18, a government-led initiative to help countries identify and measure harmful incentives, including subsidies, share what works in terms of reform pathways, and build support across governments and society for successful implementation.
COP 17 provides an opportunity to take stock of progress, identify remaining gaps, and accelerate implementation toward 2030.
The task ahead is clear: governments need to get a more detailed picture of what they are spending and who it affects, so they can prioritize reforms that deliver the greatest benefits for biodiversity.
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This article was originally published by the International Institute for Sustainable Development (IISD) and is republished here as part of an editorial collaboration with the IISD. It was authored by Farooq Ullah and Paulina Resich.
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This article was originally published on IMPAKTER. Read the original article.
