Government subsidies directed towards major economic sectors—such as agriculture, fossil fuels, fisheries, and mining—play a significant role in the accelerating degradation of ecosystems and the erosion of global biodiversity. This is the central finding of a recent study conducted by the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB). The research exposes a stark contradiction: vast public funds are being channelled into activities that directly contribute to environmental harm, thus undermining global efforts to combat climate change and halt biodiversity loss. As financial support perpetuates these destructive practices, the ecological foundations of human society are increasingly at risk.
Nature is the bedrock of human life, providing essential services such as food production, climate regulation, water purification, and carbon cycling. These ecological functions sustain public health and livelihoods and the wider economic system. It is estimated that over half of the global economy depends to some degree on these natural systems. Despite this, human activity continues to drive widespread ecological degradation. Unsustainable industrial practices, fuelled in part by public subsidies, are placing immense strain on planetary systems and exacerbating biodiversity loss at a pace unprecedented in human history.
The ICTA-UAB study, led by researcher Victoria Reyes-García and published in the journal Ambio, analysed the flow of public financial aid to six crucial sectors: agriculture, fossil fuels, forestry, infrastructure, fisheries and aquaculture, and mining. The study found that these sectors collectively receive subsidies between US$1.7 trillion and US$3.2 trillion annually. However, the indirect environmental damage caused by their activities is vastly more costly, estimated at between US$10.5 trillion and US$22.6 trillion each year. This imbalance illustrates the unsustainable nature of current economic systems, where short-term economic benefits are prioritised over long-term ecological and financial stability.
Moreover, the environmental consequences of these subsidies are not abstract projections but tangible harms with real economic implications. The World Bank warns that the continued loss of ecosystem services—such as pollination, fish stocks, and timber—could reduce global GDP by US$2.7 trillion by 2030. In the UK alone, biodiversity loss could diminish GDP by 6% to 12% in the same period. These figures highlight the economic folly of funding environmentally damaging industries, whose degradation of natural capital threatens to undermine future prosperity and societal resilience.
Sector-specific data offers further insight into the scale of the problem. In 2022, fossil fuel subsidies totalled a staggering US$7 trillion. Eliminating such subsidies could reduce global carbon emissions by 43% and prevent up to 1.6 million premature deaths annually due to improved air quality. Agriculture, while essential, contributes significantly to greenhouse gas emissions, soil degradation, and water pollution due to intensive farming methods incentivised by current subsidy schemes. Forestry activities, supported by US$175 billion in 2024, continue to drive deforestation, with over 6 million hectares of forest lost in 2023 alone. Infrastructure projects, which received US$2.3 trillion in 2015, frequently destroy habitats and deplete water resources. Similarly, subsidies for fisheries and aquaculture (US$55 billion in 2023) often encourage overfishing and illegal practices. Mining, which received at least US$40 billion, has its most damaging operations in biodiversity-rich areas yet suffers from serious transparency issues regarding subsidy reporting.
A primary concern highlighted by the study is the lack of transparency in subsidy allocation. According to Reyes-García, one of the most troubling findings is the absence of a systematic method to monitor which industries receive public funds and for what purposes. This opacity makes it difficult to assess the accurate scale of environmentally harmful subsidies and limits the ability of governments and civil society to hold stakeholders accountable. Given the severe ecological consequences of these subsidies, greater transparency and accountability are essential if public finances are to be aligned with environmental objectives. Without such oversight, public money will continue to be used to undermine climate and conservation goals.
Yet, promising examples of reform illustrate how change is possible. In New Zealand, the government has eliminated fishing subsidies and replaced them with incentives focused on sustainable practices. Zambia has begun redirecting agricultural subsidies towards approaches that benefit biodiversity and climate resilience. England, meanwhile, has introduced a payment system for ecosystem services in agriculture, rewarding farmers for environmentally responsible stewardship. These initiatives demonstrate that reallocating public funds is feasible and can support both ecological integrity and human well-being. The ICTA-UAB study ultimately calls for a transformation of the global economic model that prioritises sustainability, transparency, and the long-term viability of natural systems on which all life depends.
More information: Victoria Reyes-García et al, The costs of subsidies and externalities of economic activities driving nature decline, AMBIO. DOI: 10.1007/s13280-025-02147-3
Journal information: AMBIO Provided by Universitat Autonoma de Barcelona