by Michelle Chong on 17 December 2020
- Funding for conservation has been decimated by the COVID-19 pandemic, from sharp dips in ecotourism to decreases in charitable donations.
- Rather than pursuing new sources of biodiversity funding, countries should consider eliminating taxpayer-funded subsidies for agriculture, forestry and fishing, which are the top industries driving species extinctions.
- In 2019, subsidies for these economic activities exceeded the global total spend on biodiversity conservation by a factor of at least two.
- This article is a commentary. The views expressed are those of the author, not necessarily Mongabay.
Amid the COVID-19 pandemic, biodiversity conservation funding from tourism and donations has dried up. Yet a new report published by The Paulson Institute, Cornell University, and The Nature Conservancy outlining the current state of conservation finance makes the case that the most powerful fiscal measure to halt species extinction need not require new funding, but rather the reallocation of existing funds, particularly agricultural, fishing and forestry subsidies that are harmful to biodiversity. The report highlights how taxpayers could be unknowingly subsidizing farming, fishing and logging practices that directly drive species to extinction.
Changes in land and sea use was the biggest cause of biodiversity loss in the last 50 years. It’s predicted that 70% of terrestrial and 50% of freshwater biodiversity loss will be attributable to unsustainable agricultural practices by 2050.
The report found that in 2019, farming, fishing and logging subsidies that degraded nature (US$ 273 – 542 billion) exceeded the global total spend on biodiversity conservation by two to four times.
The report estimates that in order to halt biodiversity decline by 2030, an extra US$ 711 billion in annual global finance is needed, but that 37% of the financing gap can be closed with subsidy reform.
So how do current food and timber subsidies threaten endangered species? Subsidies are government grants paid to producers in strategic sectors. Most subsidy models pay producers based on production levels, so the more a farmer produces, the higher the subsidy they’ll receive. This can encourage intensive farming that favors overproduction, even when there’s low market demand.
Meanwhile, pesticides under intensive farming techniques kill beneficial plants and insects such as pollinators, and fertilizer runoff increases eutrophication in nearby rivers and oceans. Price-based subsidies or income support, such as when governments compensate fishermen when fish prices, or income, falls below a certain threshold, can prop up economically unviable businesses, leading to overfishing through over-competition. Lastly, subsidies on inputs such as fertilizer, or price reduction for consumers, distorts the true cost of production, artificially making expensive products such as beef cheap, which has encouraged deforestation in favor of cattle ranching in Brazil.
The time is ripe for an overhaul of outdated subsidy policies. Lessons can be learned from regions such as the European Union, which developed the Common Agricultural Policy (CAP) for subsidy reform. CAP made subsidies contingent on the degree of environmentally friendly farming practices, or resource efficiency deployed. To ease changes, transition payments can be made to ensure equitable transition for poor and marginalized groups negatively impacted by reform.
Subsidy funding can also be re-invested into education for farmers to build knowledge of the latest technology and sustainable practices. Reform efforts should be targeted towards countries whose agricultural, fishing and forestry sectors have the biggest impacts on deforestation and overfishing.
The report projected that one third of biodiversity loss by 2040 could be avoided if 10 key countries switched to sustainable intensification and land use optimization, focusing on the most damaging commodities of beef, palm oil, soy and paper products. Sustainable intensification involves intensifying production in certain areas to maximize yields, leaving other areas spared for protection and biodiversity restoration. Subsidy reform can catalyze this shift by reducing incentives for overproduction.
Why has so little progress been made, and why is subsidy reform hard? The barriers to reform include entrenched interests, where subsidy beneficiaries can organize more effectively, such as via unions to lobby against reforms, compared to the general public. Another reason is that the monetary benefits are easy to measure, whereas nature takes longer to recover, with harder to measure benefits that can be communicated to politicians and their constituents. For example, eutrophication caused by fertilizer subsidies only decreases when phosphorus runoff is reduced by 40%.
Recent success stories have shown that reform is possible. Kyrgyzstan, a highly biodiverse area in Central Asia that’s home to the snow leopard, partnered with the UNDP’s Biodiversity Finance Initiative (BIOFIN) to launch a Biodiversity Finance Plan in 2019.
The plan commits to protecting 10% of land area and 65% of all endangered species in the country, by mainstreaming biodiversity protection into the nation’s economic policies in order to achieve these goals. The plan included the reform of six agricultural subsidies that were potentially harmful to biodiversity, including a tax exemption for fertilizers and pesticides. Kyrgyzstan now intends to re-appropriate such funds towards subsidies that would encourage organic agriculture and drip irrigation instead.
The next UN Biodiversity Conference (COP 15) is nearly upon us. In May 2021, 196 states will agree to 2050 biodiversity targets, with an opportunity to reimagine biodiversity finance in a post-COVID world. Saving our planet’s species is possible if we reverse harmful food and forestry subsidies, without which, any additional funds for conservation will struggle to make a difference.
Michelle Chong works in the finance and ‘fintech’ industry, specializing in Asia Pacific issues, and has worked for international banks such as Standard Chartered. She is currently pursuing a Sustainability Masters at the Harvard Extension School.
Banner image: The Rainbow Milkweed Locust (Phymateus saxosus) which lives in southern Madagascar. Photo by Rhett A. Butler