28 February 2022

$1.8 trillion climate-damaging subsidies support agriculture and other industries


B Team’s report: a huge mass of government subsidies promotes unsustainable production or emission-intensive consumption, harming nature and causing the degradation of global ecosystems. More than 500 million dollars support soil-damaging activities

by Matteo Cavallito


Every year, in the world, governments finance the destruction of the Planet by granting harmful public subsidies worth 1,800 billion dollars, a report launched by The B Team and Business for Nature in recent weeks has found. The study, prepared by the association Earth Track and promoted by the two associations representing “a global coalition of companies seeking to stop biodiversity loss and promote sustainability is the first in over a decade to estimate the total value of environmentally harmful subsidies,” writes Reuters.

Three sectors collect 80% of harmful subsidies

“Environmentally harmful subsidies are government programs that encourage unsustainable production or carbon-intensive consumption, harming nature through the depletion of natural resources and degradation of global ecosystems,” says B Team. “Moreover, they distort market prices, resource allocation and investment decisions; contribute to unfair competition; and create reputational risk for business.” The survey then calculated the value of support programs that negatively impact nature, climate and inequality.

At the top of the list, with $640 billion in government support is the fossil sector. Agricultural sector, which receives $520 billion each year to support unsustainable activities that damage soil, pollute water and encourage deforestation, ranks second.

In third place (350 billion) is the water resources and wastewater management sector. In addition to these three industries, which receive 80% of estimated contributions, there is also the forest services market. Which, according to the survey, receives 155 billion a year in support.

Unsustainable agriculture under fire

The data on agriculture are aligned with FAO estimates which, in September 2021, calculated the value of harmful subsidies for the sector at 470 billion (87% of total support to the industry). These subsidies “are inefficient, distort food prices, hurt people’s health, degrade the environment, and are often inequitable,” the U.N. organization said. FAO also estimated that the amount amount may triple to $1,759 billion by 2030.

With the support to prices and exports and import duties, the FAO also noted, governments would in fact “are putting big agri-business ahead of smallholder farmers, a large share of whom are women,”. Global agriculture employs a huge number of small farmers including foresters, shepherds and workersfrom indigenous communities. According to FAO estimates – which also include fishing – these economic players are responsible of 70% of global food production.

Global risk is worth 44 trillion dollars

The figures are probably underestimated due to the challenge of monitoring all sectors in depth and the lack of information on some countries. The stakes, in any case, are very high. “Businesses rely on nature at every stage of the value chain, yet more than half of the world’s total GDP—$44 trillion of economic value generation—is at moderate or severe risk due to nature loss” the association says.

Activists’ demands include the elimination of harmful subsidies and increased efforts to raise awareness of the issue in all sectors involved. As well as the development of international standards of transparency that require disclosure of support to market players. These topics will most likely be discussed at the next meeting of the UN Convention on Biological Diversity, that will take place in Kunming, China, from April 25 to May 8. The UN has called for the reshaping or elimination of all environmentally hazardous subsidies by 2030.