Economics, Trade and Incentive Measures

Harmful Incentives and their Elimination, Phase Out, or Reform


Some measures, policies or practices induce behavior that is harmful for biodiversity, often as unanticipated side effects as policies are designed to attain other objectives. The Convention refers to harmful incentives or 'perverse' incentives. Such “policy failures” can include government subsidies or other measures which fail to take into account the existence of environmental externalities, as well as laws or customary practice governing resource use. In order to ensure the conservation of biodiversity and the sustainable use of its components, it is therefore important to identify policies and practices that generate harmful incentives and to consider their removal, phase out, or reform, for instance by mitigating their negative impacts through appropriate means.

Overview of CBD Activities

Target 18 of the Kunming-Montreal Global Biodiversity Framework seeks to "identify by 2025, and eliminate, phase out or reform incentives, including subsidies, harmful for biodiversity, in a proportionate, just, fair, effective and equitable way, while susbstantially and progressively reducing them by at least 500 billion US-dollars by 2030, starting with the most harmful incentives, and scale up positive incentives for the conservation and sustainable use of biodiversity."

Earlier work of the Convention under the predecessor Aichi Biodiveristy Target 3 of the Strategic Plan for Biodiversity for the 2011-2020 included the adoption, by COP-12, of milestones for implementing Aichi Biodiversity Target 3 (see Annex I of the decision) as well as modalities for its effective implementation, as contained in the pertinent document.

The modalities reflect, to considerable extent, earlier consensus found on incentive measures. The Conference of the Parties recognized that 'perverse' incentives harmful for biodiversity are frequently not cost-efficient and/or not effective in meeting social objectives while in some cases use scarce public funds, and urged Parties and other Governments to prioritize and significantly increase their efforts in actively identifying, eliminating, phasing out, or reforming, with a view to minimizing or avoiding negative impacts from, existing harmful incentives for sectors that can potentially affect biodiversity. The Conference of the Parties also acknowledged that identifying, eliminating, phasing out, or reforming existing harmful incentives requires:
  • the conduct of careful analyses of available data and
  • enhanced transparency, through ongoing and transparent communication mechanisms on
    • the amounts and the distribution of perverse incentives provided, as well as of
    • the consequences of doing so, including for the livelihoods of indigenous and local communities.

CBD Technical Series no. 56 provides earlier lessons learned and good practices cases in identifying and removing or mitigating incentive measures that are harmful for biodiversity.