The costs of subsidies and externalities of economic activities driving nature decline

Abstract

Economic sectors that drive nature decline are heavily subsidized and produce large environmental externalities. Calls are increasing to reform or eliminate subsidies and internalize the environmental costs of these sectors. We compile data on subsidies and externalities across six sectors driving biodiversity loss—agriculture, fossil fuels, forestry, infrastructure, fisheries and aquaculture, and mining. The most updated estimates suggest that subsidies to these sectors total between US$1.7 and US$3.2 trillion annually, while environmental externalities range between US$10.5 and US$22.6 trillion annually. Moreover, data gaps suggest that these figures underestimate the global magnitude of subsidies and externalities. We discuss the need and opportunities of building a baseline to account for the costs of subsidies and externalities of economic activities driving nature decline. A better understanding of the complexity, size, design, and effects of subsidies and externalities of such economic sectors could facilitate and expedite discussions to strengthen multilateral rules for their reform.