Nature-harming subsidies and investments close to $7trn per year, UN reveals

Pictured: Deforestation near Stutterheim, South Africa

That is according to a major new report, ‘Finance For Nature’, released today (Saturday 9 December) by the UN Environment Programme. The timing of the release coincides with the nature, land-use and oceans themed day at COP28, the UN-led climate conference currently underway in Dubai.

The report confirms that, in 2022, almost $7trn in government subsidies and private investment flowed to sectors that directly harm nature, such as tobacco production, oil and gas extraction and construction. This is equivalent to 7% of GDP.

The majority of this funding, $5trn, came from private sources. Governments, meanwhile, were most likely to subsidise intensive agriculture, fossil fuels, logging and fishing.

According to the UNEP, financial flows to nature destruction in 2022 were more than 30 times higher than support for nature-based solutions. Nature-based solutions attracted $200bn, of which 82% was provided by governments.

UNEP’s executive director Inger Andersen said: “Nature-based solutions are dramatically underfunded. Annual nature-negative investments are over 30 times larger than financing for nature-based solutions that promote a stable climate, and healthy land and nature.

“To have any chance of meeting the Sustainable Development Goals, these numbers must be flipped – with true custodians of the land, such as Indigenous Peoples, among the chief beneficiaries.”

A pledge made in December 2022 may change this trend in years to come. Last year ended with nations ratifying a new UN Biodiversity Treaty with a headline vision of ending nature’s destruction and degradation this decade.

The Treaty stipulates that countries should collectively phase out or reform subsidies that harm biodiversity at a rate of at least $500bn annually. They should also mobilise at least $200bn per year to support biodiversity conservation and restoration, of which at least $30bn of public funding should go to developing nations.

Private investment

In terms of private sector investment, the report states that this accounted for a minority (18%) of backing for nature-based solutions made last year.

But it outlines how there is a potential for businesses and investors to account for at least one-third of this financing by mid-century. By this point, the market will be more mature and the cost-effectiveness of investments will have been proven.

At present, private investment has been low because capital will need to be patient. Moreover, some of the multiple benefits of nature investments will not impact a business’s bottom line in the near term.

Related feature: Are we on the brink of a nature finance breakthrough?