Redirecting Harmful Subsidies: OECD’s Roadmap for Global Biodiversity Targets

The OECD’s 2025 report warns that governments spend vastly more on subsidies harming biodiversity than on positive incentives, jeopardizing global goals under the Kunming-Montreal Framework. It calls for urgent reform of harmful subsidies, scaling up of conservation incentives, and transparent, measurable policies to align economies with nature.

A report by OECD, developed with inputs from leading institutes such as the International Institute for Environment and Development and the World Resources Institute. Approved in 2025 by the OECD’s Environment Policy Committee, delivers a clear warning: unless the global economic system is reshaped, incentives will continue to undermine rather than safeguard biodiversity. Governments still direct hundreds of billions of dollars annually to subsidies that harm ecosystems, far outweighing the positive measures designed to conserve them. Target 18 of the Kunming-Montreal Global Biodiversity Framework, which commits to scaling up biodiversity-positive incentives by 2030, risks becoming another unfulfilled pledge if action does not accelerate.

Positive Incentives: Successes and Shortfalls

Biodiversity-positive incentives are broadly defined in the report as policies and programs that encourage conservation and sustainable use of ecosystems. These range from direct payments for ecosystem services to agri-environmental subsidies, biodiversity offset schemes, and tax breaks for sustainable practices. The European Union has pioneered agri-environmental measures under the Common Agricultural Policy, encouraging farmers to adopt eco-friendly land management. However, coverage and enforcement vary, and the scale is still insufficient to shift mainstream agricultural practices. In Latin America, Costa Rica’s payments for forest conservation remain a standout example, showing that long-term commitments can produce genuine results. Mexico and Colombia have followed with their own programs, but expanding them nationwide requires political stability and reliable financing. Asia-Pacific countries are testing biodiversity offsets and corporate disclosure regulations, yet these raise concerns about equity and whether offsets truly compensate for ecological damage elsewhere. The overall conclusion is that while promising models exist, none have yet reached the scale necessary to transform economic incentives globally.

Tackling Harmful Subsidies at the Core

The report devotes significant attention to the elephant in the room: subsidies that harm biodiversity. These include fossil fuel subsidies that encourage carbon-intensive energy systems, fertilizer and pesticide supports that drive overuse and pollute ecosystems, and fisheries subsidies that promote overcapacity and overexploitation. Such measures not only degrade the environment but also lock countries into unsustainable development pathways. Reforming or repurposing these subsidies is politically sensitive, as they are tied to powerful constituencies and entrenched policy frameworks. Still, the OECD argues that even partial reform could unleash vast resources for biodiversity-positive actions. Redirecting a fraction of harmful subsidies could create a game-changing source of financing for conservation while simultaneously reducing ecological harm. The report underscores that subsidy reform is not only an environmental necessity but also an economic opportunity, with potential co-benefits for fiscal sustainability and social equity if designed carefully.

Innovative Finance and the Transparency Test

Beyond subsidy reform, the OECD highlights the potential of innovative financing mechanisms such as biodiversity credits, green bonds, and blended finance models combining public and private capital. These tools could mobilize new resources at scale, but they come with risks. Without rigorous monitoring and enforcement, they may amount to little more than greenwashing. To avoid this, the report stresses that incentives must be tied to measurable outcomes, supported by clear indicators, and integrated into national accounting systems. Transparency is identified as a cornerstone of success. Citizens need to know how much public money is being spent on biodiversity, whether reforms are being implemented, and what tangible results are being achieved. Only with public trust and accountability, the report argues, will biodiversity-positive incentives gain the legitimacy and durability required to endure political shifts and economic cycles.

A Roadmap to 2030 and Beyond

Looking forward, the OECD sets out a practical roadmap. Governments should begin with a comprehensive inventory of subsidies, publish reform strategies, and expand positive incentives with a focus on communities, indigenous peoples, and smallholder groups that have historically been underfunded yet are critical for ecosystem stewardship. Performance-based transfers that reward local authorities for measurable conservation gains are highlighted as particularly promising. At the international level, financial institutions and private investors are urged to align their portfolios with the Global Biodiversity Framework, steering clear of projects that erode natural capital. Above all, the report calls for whole-of-government approaches that link environment ministries with those responsible for agriculture, energy, fisheries, finance, and trade. Biodiversity cannot be addressed in isolation; it must be mainstreamed into the heart of economic planning.

If governments stay on their current course, the global economy will continue to bankroll the destruction of the ecosystems that underpin life and prosperity. But the tools for change are already on the table. With bold reforms, transparent governance, and strong political resolve, the world can scale up biodiversity-positive incentives and deliver on Target 18 of the Global Biodiversity Framework. The OECD frames this not just as an environmental obligation but as a test of political courage: a chance to show that societies can transform incentives, align economies with nature, and halt biodiversity loss before it becomes irreversible.