Subsidies to sectors such as agriculture, fossil fuels, fishing, and mining are helping to ‘perpetuate environmental degradation’ a new study by the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB) has claimed.
The study, The costs of subsidies and externalities of economic activities driving nature decline, which was published in the AMBIO journal, examined public subsidies that were granted to six economic sectors, including agriculture, fossil fuels, forestry, infrastructure, fisheries and aquaculture, and mining, and their corresponding impact on the environment.
These six sectors receive between $1.7 trillion and $3.2 trillion annually in public subsidies, the study found, with the environmental damage caused by their indirect activities estimated to cost between $10.5 trillion and $22.6 trillion each year.
As an example, the study notes that in 2022, subsidies to the fossil fuel sector totalled $7 trillion, adding that eliminating these subsides could reduce global CO₂ emissions by 43%. Elsewhere, forestry activities received $175 billion in subsidies in 2024, despite gross deforestation totalling 6.37 million hectares the previous year.
‘Greater transparency’
“One of the main messages of the study is that there is no system to monitor how many subsidies are given, to which industry, and in support of which activities,” commented lead author Victoria Reyes-García. “This information is difficult to obtain, and this study advocates for greater transparency from governments in providing this information.”
Economic losses linked to environmental degradation are already substantial, the report notes, with the World Bank recently warning that the loss of vital ecosystem services, such as pollination and fisheries, could reduce global GDP by $2.7 trillion by 2030.
Subsidy reform
The report also notes a couple of positive examples, where subsidy reform has helped to support environmental protection. This includes New Zealand’s elimination of fishing subsidies, replacing them with incentives based on sustainability criteria, and Zambia’s shift toward climate-friendly agricultural funding.
‘These experiences demonstrate that it is possible to redirect public resources toward development models that protect biodiversity and ensure the well-being of present and future generations,’ the report notes. Read more here.
