Biodiversity harmful food & agricultural subsidies

Through a synthesis study, Nature^Squared, on behalf of the Food Transition Coalition, outlines what we already know about biodiversity harmful subsidies in the Dutch agricultural system and identifies what is needed to develop a more comprehensive understanding. The study also provides key leverage points and opportunities to transform biodiversity harmful agricultural subsidies.

Biodiversity harmful subsidies: why do we need to address them?

As the Netherlands, we have committed to eliminating incentives harmful for biodiversity by 2030 and to scale up positive incentives for the conservation and sustainable use of biodiversity. By 2025, the Netherlands must have reviewed national policies, including all subsidy schemes, to assess their potential harmful effects on biodiversity. This aligns with Target 18 of the Kunming-Montreal Global Biodiversity Framework (KM-GBF), which as adopted at COP15 in Montreal.

However, at present, the signals point in the wrong direction. There are agricultural subsidies aimed at advancing agricultural development but, as an unintended and unwanted side effect, also bring negative consequences, such as biodiversity loss. This is the case globally, but also in the Netherlands.

To maintain and strengthen an economically healthy situation, it is important that the financial rules of the game evolve, and that we use limited financial resources wisely to reward farmers who are taking steps toward sustainable practices. By redirecting budgets, funds can be freed up for a future-proof agricultural system with prospects for farmers, animals, the environment, and our health. In this way, frontrunners are given opportunities, and sustainability is rewarded.

Download the report

The assignment

In 2023, RVO made an initial estimate of agricultural subsidies in the Netherlands that are potentially harmful to biodiversity. There are also estimates at European and global level. Through a synthesis study, we provide an interpretation on biodiversity harmful agricultural subsidies that the Dutch government directly and indirectly influences and indicate what is needed to arrive at a more complete picture.

The findings of this study contribute to raising public awareness about the constraining role of harmful subsidies within our agricultural system and the opportunities that phasing out and reforming these subsidies could offer.

In the report, we answer the following research questions:

What exactly are harmful subsidies?
What is already known about the amount of money spent annually on subsidies that are (potentially) harmful to biodiversity in the Dutch agricultural system?
Which subsidies have the largest budgets with potentially harmful effects?
What is needed to better assess the extent of subsidies harmful to biodiversity? What are the blind spots?
What are the key levers for reversing agricultural subsidies harmful to biodiversity?

How can a subsidy lead to biodiversity loss?

Subsidies come in various forms, and not all subsidies are equally harmful to biodiversity, with often only part of the subsidy having negative effects. To assess the impact of a specific subsidy on biodiversity, it is important to consider: the proportion of the subsidy that is harmful, the way in which the subsidy affects biodiversity (impact mechanism), and the extent of the impact.

Key take-aways

Biodiversity harmful subsidies are increasing worldwide, despite commitments to reduce them

In 2023, it was estimated that $2.7 trillion per year was spent on harmful subsidies globally (2.5% of global GDP). This amount has been rising for years and has further increased since the signing of the KM-GBF. A significant portion of these harmful subsidies is directed towards the agricultural sector (over 22%, or $610 billion per year).

The €1 billion in biodiversity harmful agricultural subsidies estimated by RVO in the Netherlands is an initial estimate and is likely an underestimation

An initial study by RVO in 2023 on the financial incentives of the Ministry of Agriculture, Nature and Fisheries (now LVVN) shows that over €1 billion in agricultural subsidies are provided that may be harmful to biodiversity, with the CAP basic payment being the largest scheme (€447 million). A significant portion of agricultural subsidies is directed towards the production of animal proteins, which, due to intensification, often leads to negative environmental effects.

The financial rules of the game need to change to maintain a good agricultural position

To preserve and strengthen an economically sound sector, it is essential that the financial rules of the game evolve, allowing limited financial resources to be used effectively to reward farmers who are taking steps toward sustainability.

From biodiversity harmful subsidies to effective funding for agriculture and nature

The agricultural sector has an impact on biodiversity and natural resources while being strongly dependent on rich biodiversity. There is a significant funding gap for nature and for achieving healthy and resilient farmland. By phasing out or repurposing biodiversity harmful subsidies, the government can use limited resources more effectively and create a level playing field to realize positive impacts on biodiversity.

The extent of harmful subsidies depends on the definition and scope

What we currently know about biodiversity harmful agricultural subsidies in the Netherlands is likely an underestimation. On the one hand, perhaps not the entire €1 billion is harmful, as it is still unclear which part of the subsidies leads to negative effects. On the other hand, many subsidies have not yet been included (such as implicit subsidies, subsidies from other ministries and government levels, and inefficient subsidies).

Gaining more insight into the impact of subsidies provides opportunities for targeted reforms

The actual impact on biodiversity of the agricultural subsidies studied has not yet been assessed in the RVO quickscan. Not all subsidies are equally harmful, and often, only part of a subsidy is harmful. By investigating which part of the subsidy causes what type of harm, we can gain a clearer understanding of the actual impact. This can help determine which subsidy schemes should be phased out or repurposed (first) and can help propose and implement more targeted subsidy reforms.