- A new analysis finds Australia spends tens of billions of dollars each year on subsidies that likely harm biodiversity — far more than it allocates to conservation.
- Most of the identified support flows to fossil fuels, transport infrastructure, and resource-intensive sectors such as agriculture, fisheries, and forestry, shaping land and sea use in ways that degrade ecosystems.
- These incentives can lower the cost of activities that drive habitat loss, overexploitation, and climate pressures, potentially undermining environmental policies intended to protect species and landscapes.
- Reforming harmful subsidies is now a global commitment under the Kunming-Montreal framework, but doing so will require balancing ecological goals with economic realities for affected industries and communities.
Australia has long struggled to reconcile its environmental ambitions with the structure of its economy. The country is both a global biodiversity stronghold and a major exporter of resources, agricultural commodities, and energy. A new study led by Paul Elton of the Australian National University suggests that this tension is embedded not only in land use but in fiscal policy. Public spending, the authors argue, continues to favor activities that degrade ecosystems at a scale far exceeding efforts to conserve them.
The paper, Biodiversity-harmful subsidies in Australia, offers the first systematic estimate of “biodiversity-harmful subsidies” at the federal level. Using a framework developed by the Organisation for Economic Co-operation and Development, the researchers examined direct payments and tax concessions in the 2022–23 budget. They identified A$26.3 billion in subsidies judged by experts to cause at least moderate harm to biodiversity. That amounts to about 1.1% of Australia’s GDP and, by their calculation, far exceeds current federal spending on conservation.
The idea of a harmful subsidy is broader than it may sound. Governments rarely pay explicitly to destroy habitats. Instead, they lower costs for activities that transform landscapes or intensify resource extraction. Subsidies can underprice energy, encourage land clearing, sustain fishing effort that would otherwise be uneconomic, or make transport cheaper in ways that expand infrastructure footprints. According to the study, the largest share of damaging support flows to fossil fuel production and consumption, followed by transport infrastructure and support for sectors such as agriculture, fisheries, and forestry.
The mechanism is economic rather than ideological. By reducing input costs or boosting returns, subsidies increase production relative to what would occur under market prices that fully reflect environmental damage. The authors note that such incentives can encourage “unsustainable ecosystem transformation” by promoting polluting inputs and resource overuse. They also distort competition by disadvantaging less damaging alternatives. In effect, conservation policy may operate in one direction while fiscal policy pulls in another.
Australia’s environmental context makes these findings particularly consequential. The continent contains about 7.8% of the world’s described species and high levels of endemism, yet biodiversity indicators have deteriorated for decades. The government’s own State of the Environment reporting finds that most measures show decline and that extinctions are likely to continue without substantial changes in management and investment. Habitat loss, invasive species, and climate change remain the dominant pressures. More than 1,900 species and ecological communities are formally listed as threatened, and the true number at risk is likely higher because many species are poorly documented.
Fiscal incentives interact with those pressures in concrete ways. Infrastructure subsidies can accelerate road building through intact habitats, fragmenting ecosystems and opening remote areas to development. Agricultural concessions can make pasture expansion viable in regions where biodiversity is concentrated. Energy subsidies can prolong reliance on fossil fuels, amplifying climate impacts that already threaten species through drought, fire, and extreme weather. Each intervention may appear modest in isolation, but cumulatively they shape the landscape in which conservation operates.
International commitments are beginning to focus attention on this problem. Under the Kunming-Montreal Global Biodiversity Framework, adopted in 2022, countries agreed to identify and reform harmful incentives by 2025 and reduce them substantially by 2030. Australia is a signatory but has not yet produced an official estimate of such subsidies. Elton’s study was motivated partly by this gap. As he told Mongabay’s Megan Strauss, “The urgency of the 2030 reform deadline, and the ongoing deterioration of Australia’s environment, made it clear that this work couldn’t wait.”
The researchers emphasize that their figure is conservative. It includes only explicit federal subsidies that could be quantified with available data. It excludes implicit subsidies, such as unpriced environmental damage, and omits spending by state and territory governments, which play a major role in land-use regulation and resource management. The true scale of incentives that harm biodiversity is therefore likely higher.
Reforming these subsidies is politically difficult. Many support industries that provide employment, export earnings, and regional development. Abrupt withdrawal could impose costs on communities already facing economic transition. The study suggests that reform should be gradual and paired with policies that assist affected workers and regions. Redirecting funds toward positive incentives, such as payments for ecosystem restoration or sustainable land management, could help offset losses while improving environmental outcomes.
There is also a conceptual shift underway. Conservation debates often focus on how much governments spend on protected areas or recovery programs. Elton’s work highlights the other side of the ledger: policies that undermine those efforts. If harmful subsidies exceed conservation funding by an order of magnitude, modest increases in environmental budgets may have limited effect. Aligning fiscal policy with biodiversity goals could yield larger gains than expanding protected areas alone.
Australia is not unique in facing this dilemma. Many advanced economies subsidize activities that degrade ecosystems while simultaneously funding conservation. The difference in Australia lies in the scale of its natural heritage and the vulnerability of its species. A continent with so many endemic plants and animals has less capacity to absorb habitat loss without irreversible consequences.
Whether the new findings translate into policy change remains uncertain. Governments tend to reform subsidies slowly, if at all, because beneficiaries are concentrated while costs are diffuse. Yet international agreements and domestic environmental decline are creating pressure for reassessment. The question is no longer simply how much to spend on protecting nature, but whether public money is quietly financing its erosion.
Banner image: Duck-billed platypus (Ornithorhynchus anatinus) in Scottsdale, Tasmania, Australia. Photo by Charles J. Sharp of Sharp Photography
Citations:
- Elton, P., Clement, S., Maron, M., & Ashby, L. (2026). Biodiversity-harmful subsidies in Australia. Australasian Journal of Environmental Management, 1–19. https://doi.org/10.1080/14486563.2026.2623910
- Murphy H & van Leeuwen S (2021). Australia state of the environment 2021: biodiversity, independent report to the Australian Government Minister for the Environment, Commonwealth of Australia, Canberra, DOI: 10.26194/ren9-3639.
Credits
