To stem nature loss, start by ending harmful subsidies, economists say

Raising hundreds of billions of dollars in new “nature” finance will achieve little unless current incentives for environmental destruction are removed, analysts say.

logs cut from the Bom Retiro deforestation area
A truck is seen loaded with logs cut from the Bom Retiro deforestation area on the right side of the BR 319 highway near Humaita, Amazonas state, Brazil. Image: Reuters/ Bruno Kelly

Raising huge new sums of “nature” finance to better protect the planet’s ailing biodiversity will have no significant impact unless the underlying economic rules now driving environmental losses are shifted, economists warned on Tuesday.

Raising and spending the hundreds of billions of dollars needed each year to protect and repair natural systems would have only a “trivial” impact compared to reforming economic incentives - including ditching agricultural and related subsidies, said Cambridge University economist Partha Dasgupta.

In an online event, he urged governments and global financial institutions to focus more on eliminating fishing, logging and agricultural incentives that lead to nature loss than on raising vast sums to try to rebalance those impacts.

Governments between 2017 and 2019 provided more than $500 billion a year in agricultural subsidies alone, which distorted markets and harmed the environment, the Organisation for Economic Co-operation and Development (OECD) said in 2020.

Dasgupta, who released a landmark study in February on the economics of biodiversity, said ensuring businesses that profit from nature pay for the full value of the benefits they gain also could create a new source of income to protect the planet.

If commercial fishing trawlers or forest-fellers were “charged appropriate rent for using the global commons, we’re looking at a massive source of revenue that could be used for all sorts of purposes”, he said.

One way of doing that could be to expand “fair trade” certification systems that aim to ensure workers get a decent wage, so as to also secure just treatment for nature, he added.

Making that work, however, would depend on mandatory disclosures by businesses of their impacts on nature, with tough international monitoring systems, he and others said.

Andrea Meza Murillo, Costa Rica’s environment minister, agreed that new international funding for nature protection efforts could not be effective as long as governments kept incentives in place that encourage environmental damage.

“We cannot be doing one thing with this hand, and destroying it with this other hand,” she said during the event on investing in nature.

In a report released last year, US environmental groups and Cornell University estimated that protecting the planet’s plants, animals and ecosystems, and repairing the damage done by humans, would cost about $700 billion a year in extra funding from governments and business over the next decade.

But putting together that kind of money will be hugely difficult, not least as the Covid-19 pandemic hits government and company budgets.

A promise by richer nations to raise $100 billion a year from 2020 to help poorer ones grow cleanly and adapt to climate threats remains unmet, analysts noted - though countries are closing in on the target.

Henry Paulson, a former US treasury secretary and founder of the Chicago-based Paulson Institute, which focuses in part on conservation issues, said current economic rules neither penalise destruction of nature nor reward its protection.

But taking away subsidies “that promote bad behaviour” is a big political challenge, he said, with businesses and others that risk losing that long-held support quick to fight back.

To better protect biodiversity, “the biggest thing is government having the will to change some of these perverse incentives”, he added.

This story was published with permission from Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit

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