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

Aichi target three of the Strategic Plan for Biodiversity for the 2011-2020 period relates to incentives that are harmful for biodiversity:

Target 3: By 2020, at the latest, incentives, including subsidies, harmful to biodiversity are eliminated, phased out or reformed in order to minimize or avoid negative impacts, and positive incentives for the conservation and sustainable use of biodiversity are developed and applied, consistent and in harmony with the Convention and other relevant international obligations, taking into account national socio-economic conditions.

The twelfth meeting of the Conference of the Parties adopted milestones for implementing Aichi Biodiversity Target 3 (see Annex I of the decision) and also welcomed modalities for its effective implementation, as contained in the pertinent document.

The modalities reflect, to considerable extent, earlier consensus found on incentive measures. For instance, the Conference of the Parties already (COP) 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.

COP 13 called upon Parties to apply measures for the implementation of Aichi Biodiversity Target 3 taking into account, as a flexible framework, the milestones adopted by the Conference of the Parties at its twelfth meeting. The decision also requested the Executive Secretary to compile and analyse relevant information including relevant studies from international organizations and initiatives, including an analysis of how the implementation of Aichi Biodiversity Target 3 also contributes to the implementation of Aichi Biodiversity Target 20, and to submit the compilation and analysis to the Subsidiary Body on Implementation for consideration at its second meeting.

CBD Technical Series no. 56 provides earlier lessons learned and good practices cases in identifying and removing or mitigating perverse incentive measures.

According to the fifth edition of the Global Biodiversity Outlook Aichi Biodiversity Target 3 on incentive measures has not been achieved. In paragraph 14 of Decision 14/1, the Conference of the Parties identified this target as one of those for which progress needs to be accelerated, and urged Parties, invited other Governments, in accordance with national circumstances, and invited indigenous peoples and local communities, relevant organizations, including from the private sector, and other relevant stakeholders to take urgent action.