Wallis Greenslade and Elena Almeida set out how nature-related financial risks threaten fiscal and economic sustainability. They show why, at COP 17 and beyond, Ministries of Finance have a key role to play in both removing public funding and incentives for biodiversity-degrading activities and in financing biodiversity conservation.
Nature degradation is more than just an environmental policy concern; nature-related financial risks are increasingly recognised as relevant to the mandate of Ministries of Finance. More than half of global GDP (US$44 trillion) is estimated to come from sectors that depend highly or moderately on nature’s ecosystem services. Without these services, economic growth would be significantly constrained: the World Bank estimates that a partial collapse of wild pollination, marine fisheries and native timber could cut global GDP by US$2.7 trillion (2.3%) per year by 2030, with losses of up to 10% in low-income countries.
This is the context in which the Convention on Biological Diversity’s 17th meeting of the Conference of the Parties (CBD COP 17) will take place next week, hosted by the Armenian Presidency. The Presidency’s three stated priorities are the first comprehensive review of the implementation of the Kunming–Montreal Global Biodiversity Framework (GBF), the expansion of biodiversity finance (with an aim of mobilising US$30 billion annually by 2030) and the development of stronger synergies between multilateral environmental processes. Biodiversity finance is a headline priority, and finance ministers have been invited to play a central role in shaping the discussions.
The cost of inaction for fiscal policymakers
A 2022 report written for the Coalition of Finance Ministers for Climate Action identified key transmission channels through which nature-related risks affect public finances. These include lower tax revenues, higher borrowing costs, damage to infrastructure, larger disaster payouts, higher welfare spending, and more explicit and implicit contingent liabilities.
The evidence of the fiscal impact of nature degradation is already emerging. New research shows that biodiversity loss could decrease future sovereign creditworthiness and increase debt servicing costs. A separate study of 53 economies links nature vulnerability to a rise in sovereign borrowing costs of roughly 25–70 basis points. Post-disaster expenditure is also growing in the wake of increasingly frequent and severe nature shocks: Indonesia’s 2015 fires, driven by land clearing for agriculture, cost an estimated 1.9% of GDP (US$16.1 billion), while Brazil’s expenditure in response to the 2024 Rio Grande do Sul floods stood at around 0.6% of GDP.
The same public budgets often pay to both create and absorb these risks. Governments spend US$2.4 trillion per year subsidising economic activities that degrade nature, then absorb the costs when ecosystems break down.
What is the Kunming–Montreal Global Biodiversity Framework?
The GBF was adopted at CBD COP 15 in December 2022, establishing 23 action-oriented targets for 2030. The GBF is implemented through National Biodiversity Strategies and Action Plans (NBSAPs), which set each country’s biodiversity targets and its plans to achieve them. Countries were asked to submit updated, GBF-aligned NBSAPs by COP 16 in 2024 (CBD), but only 122 of 196 parties have done so.
In 2010, prior to the GBF, governments agreed on 20 Aichi Biodiversity Targets; but, by 2020, none of these targets had been fully achieved, and only six had been partially achieved. Harmful subsidies worth an estimated US$500 billion had not been removed, with only a few countries even identifying them. The Aichi Targets gave finance and subsidy reform far less weight than the GBF does, leaving this task largely with environment ministries. As a result, fiscal and economic ministries had limited involvement in the process. The GBF was designed to correct this through Targets 14 (integration), 15 (disclosure), 18 (harmful subsidies) and 19 (resource mobilisation), which place responsibility on economic, financial and fiscal actors.
The GBF Global Review takes stock of collective progress at the halfway point of the Framework’s implementation period (2022–30), and will be formally reviewed at COP 17. A draft of the Global Review shows that fewer than half of Parties report that they are currently on track to achieve any of the Framework’s global targets by 2030, and that national targets collectively still fall short of the ambition needed. Some of the largest gaps the review identified are in areas related to the policy decisions of Ministries of Finance: mobilising biodiversity finance, reforming harmful subsidies and addressing business impacts and dependencies.
Two key roles for Ministries of Finance
The task facing Ministries of Finance is, therefore, twofold. Firstly, stop funding the degradation of nature and, secondly, mobilise more money for its conservation.
Firstly, public incentives are grossly misaligned with Target 18, with subsidies that harm nature outweighing those that explicitly protect it by a ratio of 200:1. The UN Environment Programme estimates that US$7.3 trillion, including US$2.4 trillion of public subsidies, flowed to nature-degrading activities in 2023, compared to US$220 billion to nature-based solutions. To achieve Target 18, countries will need to reduce harmful incentives (such as agricultural and fisheries subsidies) by at least US$500 billion per year by 2030.
Secondly, global biodiversity finance from all sources amounts to an estimated US$74.9 billion–92.4 billion per year (2023–25 average), or around 0.07–0.08% of global GDP. This falls far short of the minimum of US$200 billion per year by 2030 set out in Target 19.
The Organisation for Economic Co-operation and Development stresses that the two sides of the task reinforce each other: subsidy reform both redirects financial flows and frees up funds that can be reallocated to nature, while an increase in funding will be insufficient by itself if the wider financial system continues to support key drivers of loss.
To understand the tools that they can use in these two roles, Ministries of Finance need to familiarise themselves with the relevant GBF targets:
- Target 8: minimising the compounding effects of climate change and biodiversity loss. Ministries of Finance can demonstrate a leadership role across government by broadening existing climate language to cover a wider climate–nature nexus. This framing will illustrate the interconnected and interdependent crises of climate change and nature degradation.
- Target 14: integrating biodiversity into decision-making. Ministries of Finance can use not only their direct policy toolkit but also their role in budgetary decision-making and debt frameworks, as well as their broader influence on coordination across government, to ensure that biodiversity considerations are included in economic and fiscal policymaking.
- Target 15: biodiversity-related assessment and disclosure in business and finance. Ministries of Finance can work towards this target by establishing nature-related disclosures and taxonomies that incorporate biodiversity alongside climate, as Colombia has.
- Target 18: harmful incentives and subsidies. Ministries of Finance can play a key role in tilting the playing field to both remove incentives for resource extraction, including through international debt architecture, and encourage private finance to support economic activities that align with the GBF’s goals.
- Target 19: resource mobilisation. Ministries of Finance have multiple levers to help scale up both public and private financial flows to implement NBSAPs.
- Target 21: knowledge availability. Alongside other financial policymakers such as central banks and financial supervisors, Ministries of Finance have a role to play in sharing the best available data and knowledge to guide effective governance and support the implementation of Targets 8, 14, 15, 18 and 19. They can also do so through active participation in networks such as the Coalition of Finance Ministers for Climate Action and the Forest & Climate Leaders’ Partnership.
National biodiversity finance plans are a particularly strong vehicle for addressing both sides of the challenge. Target 19 calls for countries to significantly increase domestic resource mobilisation through National Biodiversity Finance Plans or similar instruments. As the BIOFIN Workbook notes, achieving the GBF’s finance targets will often require joint leadership between finance and environment ministries, while plans that are costed, tied to the budget cycle and aligned with the NBSAP will be best placed to ensure that financial flows align with the goals of the GBF.
Opportunities for policy coordination at COP 17 and beyond
The Aichi Targets, agreed at COP 10, failed in part because finance and subsidy reform were largely left to environment ministries alone. COP 17 provides an opportunity for stronger policy coordination between ministries.
Ministries of Finance can strengthen their influence by working directly with environment ministries, including by joining or being represented in national COP 17 delegations. Their practical views on how biodiversity finance plans, subsidy reform and debt treatment could work would be valuable in discussions on resource mobilisation and debt, the two areas in which COP 17’s negotiated outcomes will have the greatest direct fiscal consequences.
This engagement will not end in Yerevan: the resource mobilisation strategy agreed in Rome in 2025 calls on the CBD Secretariat to facilitate a dialogue between environment and finance ministers to accelerate progress towards Target 19, and the 2027 Spring Meetings are a possible next touchpoint. Building these relationships now will lay the groundwork for that dialogue, and for developing the NBSAP-aligned finance plans that are vital to achieving the GBF’s goals.