Just transition pathways for CBD’s COP 16 and beyond
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Target 18 of the Convention for Biological Diversity’s Global Biodiversity Framework calls for the elimination, phasing out, or reform of environmentally and socially harmful subsidies, and a scaling up of positive incentives for the conservation and sustainable use of biodiversity, with a target of reducing harmful subsidies by USD 500 billion annually by 2030.
In the face of severe shortfalls in the funding of environmental protection, including biodiversity, reorienting harmful subsidies is one possible source of funds. However, the issue is highly complex, as subsidies can be differentiated into those that subsidise corporate profit and those that subsidise access to essential goods and services, such as energy or food, for marginalised individuals and groups.
This briefing provides an overview of some of the structural obstacles to effectively fund environmental protection, as well as the threats and opportunities. It becomes clear that solutions for financing environmental protection cannot be considered separately from systemic reform of the international financial architecture or an end to African debt peonage.
Harmful subsidies have been estimated to be over USD 2.6 trillion per year, with the bulk going to fossil fuels (40%) and agriculture (23%). On top of this, another estimated USD 2.6 trillion to USD 5 trillion of environmentally harmful private investments are made annually. These amounts far outweigh both the funding requirements for comprehensive biodiversity protection – estimated at USD 722 billion to USD 967 billion a year – and the actual funding flows to environmental and biodiversity protection. The latter are estimated at around USD 124 billion to USD 165 billion a year, resulting in a shortfall of 83% or more. Most of the current funding comes from the domestic public sector, with only a trickle from international public finance or the private sector.
African governments are caught in a bind of having to foot the bill for environmental and social damage that was and is primarily caused by wealthier countries, amid a debt crisis and imposed austerity as a condition for receiving loans. African governments are also compelled into subsidising corporate activity, especially in extractive industries, to try to generate foreign exchange for the import of essential goods. This is a product of global structural inequalities which keep African economies in a subordinate position in the global order.
Illicit financial flows (IFFs), onerous debt repayments, and ‘repatriation’ of profits all result in net wealth extraction from Africa year after year, despite the mainstream narrative that Africa is a drain on global wealth.
Environmental and social protection cannot be separated from writing off odious and unjust debts, a fundamental reorganisation and democratisation of the global financial architecture, and an end to tax avoidance and IFFs. Reparations for centuries of violent dispossession and extraction from Africa should be funding the continent’s endogenous development, rather than debt.
Harmful subsidies to corporate producers that are fully capable of funding their operations should be removed. Subsidies for energy and food production should be reoriented towards environmentally- and biodiversity-friendly practices. Consumer subsidies to resource-poor individuals and households should be defended and secured as a key element of a just transition towards more equitable and environmentally-friendly production systems.
