The Cost of a Dying Planet: OECD Urges Governments to Transform How the World Finances Nature

The OECD warns that biodiversity loss is threatening economies and financial stability, while the global financing gap remains hundreds of billions of dollars annually. Governments must reform harmful subsidies, strengthen regulation and use public and private finance to build measurable, inclusive and investable nature-positive projects.

Biodiversity loss is becoming a serious economic and financial threat, affecting agriculture, water supplies, infrastructure, businesses and public budgets. An OECD report prepared by its Environment Directorate warns that governments cannot reverse this decline simply by issuing green bonds or creating nature markets. They must also reform subsidies, regulations and investment incentives that continue to make environmental destruction financially attractive.

The report finds that the global biodiversity financing shortfall remains in the hundreds of billions of dollars annually. Public spending will remain essential, but governments facing rising debt and competing development needs cannot bridge the gap alone. Private investment must increase, supported by credible policies, reliable environmental data and a stronger pipeline of investment-ready projects.

Nature's Decline Is Now an Economic Warning

Average monitored vertebrate populations declined by 73% between 1970 and 2020, while extinction rates are estimated to be 35 times higher than the natural background rate. Around 75% of the world's land has been significantly altered, 66% of ocean areas face growing pressures and more than 85% of wetlands have disappeared since 1700.

These losses weaken pollination, soil fertility, water purification, flood protection and carbon storage. The consequences can include lower agricultural output, higher food prices, water shortages, damaged infrastructure and declining rural incomes. Governments may also face rising expenditure on disaster response, land restoration and social protection.

Businesses in agriculture, fisheries, forestry, mining, tourism and infrastructure are particularly exposed. Environmental disruption can increase operating costs, interrupt supply chains and reduce asset values. Banks, investors and insurers may then face higher credit losses, weaker returns and larger insurance claims.

The OECD warns that ecosystems can collapse after crossing critical thresholds. A fishery may disappear, a forest can suffer irreversible dieback and a wetland may lose its ability to control floods. Preventing such damage is generally cheaper than financing restoration later.

The World Is Raising Too Little and Rewarding Too Much Harm

The Kunming–Montreal Global Biodiversity Framework calls for at least USD 200 billion in annual biodiversity finance by 2030. It also seeks to raise international finance for developing countries to USD 30 billion a year and reduce biodiversity-harmful incentives by at least USD 500 billion annually.

Progress remains uneven. By May 2026, only 101 parties to the Convention on Biological Diversity, around 51%, had submitted updated national biodiversity strategies. Many plans set broad ambitions without explaining how resources would be raised, which institutions would manage them or how results would be measured.

Private investment targeting both biodiversity benefits and financial returns exceeded USD 14 billion in 2025, but remains far below what is needed. More importantly, subsidies and financial incentives supporting unsustainable agriculture, fisheries, forestry, energy and extractive industries continue to outweigh nature-positive investment.

Governments must therefore both mobilise new finance and redirect existing flows. Subsidy reforms should be carefully designed to prevent sudden income or price shocks for small farmers, low-income households and vulnerable communities.

Green Finance Can Unlock Capital or Greenwashing

Biodiversity-related taxes and fees generate an estimated USD 10 billion annually. Governments can strengthen these instruments to make polluters pay more of the environmental costs they create. Revenues should be transparently tracked and, where appropriate, reinvested in conservation and restoration.

Payments for ecosystem services can compensate farmers and communities for protecting forests, watersheds and wildlife habitats. These programmes can support rural livelihoods, but require secure land rights, predictable funding and measurable environmental outcomes.

Voluntary biodiversity credits remain at an early stage, with recorded sales of only around USD 6 million by April 2026. Fragmented standards and weak verification create risks of greenwashing, double counting and exaggerated conservation claims. Biodiversity offsets also require strict rules to ensure developers avoid and minimise damage before using compensation for unavoidable impacts.

Debt markets offer greater scale. Bonds listing biodiversity as an eligible use of proceeds reached approximately USD 317 billion in 2024. After adjusting for bonds covering several environmental categories, the estimated biodiversity-related share fell to around USD 36 billion. One assessment found that only 3.7% of proceeds from relevant bonds issued in 2021 and 2022 actually went to biodiversity projects.

Clear taxonomies, independent reviews and public reporting are therefore essential. Financial products should be judged by verified environmental improvements, not by their labels.

A Practical Road Map for Governments and Investors

Governments must integrate biodiversity targets into national budgets, infrastructure approvals, public procurement and financial regulation. Finance ministries, central banks, environment agencies and sectoral authorities need common targets and clearly divided responsibilities.

International development partners can finance feasibility studies, improve biodiversity data and strengthen institutions. Multilateral development banks and donors can use grants, guarantees, insurance, concessional loans and first-loss capital to reduce risks and attract investors. Such assistance should be transparent and used only where it mobilises finance that would not otherwise be available.

A shortage of bankable projects remains a major obstacle. Development institutions can help aggregate small initiatives, standardise contracts and connect local conservation projects with investors. Grants may support research and community consultation, concessional finance can fund pilot projects, and commercial capital can enter once risks decline and revenues become more predictable.

Private-sector opportunities are emerging in sustainable agriculture, ecological restoration, water management, nature-based tourism, insurance and environmental monitoring. However, investors must consider uncertain revenues, long time horizons, regulatory weaknesses and community rights.

Satellite imagery, drones, environmental DNA and artificial intelligence can improve monitoring, but cannot replace scientific standards or independent verification. The OECD's central message is clear: finance can support nature only when governments remove harmful incentives, enforce environmental rules and ensure that every investment delivers measurable, inclusive and lasting biodiversity gains.