Presentation from OECD-UNDP Global Conference on Biodiversity Finance, 22 April 2020

1. Virtual Global Conference on Biodiversity Finance, 22.04.2020
Identifying
Biodiversity Harmful Subsidies (BHS) in the frame
of Environmentally Harmful Subsidies (EHS):
Italy
Aldo Ravazzi Douvan – University of Roma 2
ravazzi.aldo@minambiente.it
Greti Lucaroni – University of Siena
lucaroni.greti@minambiente.it
working for Sogesid T.A. at Italian Ministry of Environment, Land and Sea
(opinions expressed do not necessarily represent the position of the Ministry)

2. 2
Definitions that perhaps come closest to the provisions of the
legislator are by OECD:
"… a State action providing an advantage in terms of revenue (income
or minor cost)"
“...a measure that either keeps prices for consumers below market
levels, or keeps prices for producers above market levels, or reduces
costs for producers and consumers, through direct or indirect support”
EFS
(Environmentally Friendly Subsidies)
EHS
(Environmentally Harmful Subsidies)
Definition of subsidies - the approach of the Italian
Catalogue of Environmental Subsidies
International commitments: G20 FFS - G7 FFS - Aichi Target 3
Italian law on Green Economy establishing the Catalogue of EHS and EFS
provides a very broad definition of subsidy, which includes inter alia
"incentives, tax benefits, tax credits and exemptions".

3. 3
The procedure for the environmental assessment of
BHS and BFS (Biodiversity Harmful & Friendly Subsidies)
The evaluation involves the following steps:
1. Definition of Subsidies to Biodiversity
◦ BHS and BFS are subsidies that cause pressure on biodiversity, both negative and
positive
◦ They are a subset, respectively, of EHS and EFS
2. The review and selection of subsidies of potential environmental relevance, present
in the existing legislative system, in particular by : a) examining budget laws, b) annual
tax expenditure report, c) consultation with other ministries, public agencies,
independent authorities, sub-national and local authorities, d) consultation with
research centres, think-tanks and universities, e) stakeholders (firms, unions,
NGOs,…).
3. Analysis of the effects on the environment, including any externalities, positive or
negative (impacts of direct environmental effects, such as human well-being and health,
ecosystems, economic activities), and the final assessment by classification (BHS, BFS,
uncertain).
4. Description & estimation/quantification of the financial effect of the subsidy.
5. Description & estimation/quantification of environmental impact of the subsidy.

4. Overview of the main results CSA 2
4
 Estimated 19,3 billion Euros of EHS.
 (Estimated 16,8 billion Euros of FFS)
 (Estimated ...... billion Euros of BHS) [tbc in next editions]
 Estimated 15,2 billion Euros of EFS.
 (Estimated ….. billion Euros of BFS) [tbc in next editions]
Subsidy
Sector
EHS
(mln €)
EFS
(mln €)
Uncert
ain
Total
(mln €)
Total
(%)
Agriculture 279 1.336 4.322 5.937 14,5%
Energy 12.237 12.116 76 24.429 59,5%
Trasport 1.435 38 64 1.537 3,7%
Other sectors 655 1.675 694 3.024 7,4%
VAT 4.685 27 1.416 6.127 14,9%
Total (mln €) 19.292 15.191 6.572 41.054 100,0%
Total (%) 47,0% 37,0% 16,0% 100,0%
 161 measures identified and estimated at 41 billion Euro.
 100 tax expenditures, 61 direct subsidies

5. 5
Reforming BFS and eliminating BHS remains in the hands of political will, as
does reusing revenues. Transforming BHS in BFS an interesting option.
BHS and BFS
BHS and BFS in the frame of EHS and FFS
BHS as a subset of EHS
Sainteny-Marcus Report for France is a reference, wide interpretation of BHS,
almost equal to EHS. German Report on BHS is also a reference.
Common methodology at OECD is key for advancing, producing figures in
parallel mutually strengthens national and global teams.
Aichi Target 3 (zero draft CBD Target 12 might be a step back, we need ample
definition and common work).
Poverty reduction subsidies seem more efficient when direct and transparent, not
through subsidies which harm biodiversity and environment.
Conclusions

6. Catalogo dei Sussidi Ambientalmente Dannosi e dei Sussidi Ambientalmente
Favorevoli 2017
Italian Catalogue of Environmentally Harmful Subsidies and Environmentally
Friendly Subsidies
https://www.minambiente.it/pagina/economia-ambientale
G20 Peer Review of Fossil Fuels Subsidies (FFSs)
https://www.minambiente.it/pagina/economia-ambientale
https://www.oecd.org/fossil-fuels/publication/
OECD, Tracking Economic Instruments and Finance for Biodiversity
2020https://www.oecd.org/environment/resources/biodiversityfinance.htm
Sources:

7. 7
Reserve slides

8. 8
The procedure for the environmental assessment of BHS and BFS
Our assumptions:
A. choices of production and consumption cause an impact on
biodiversity;
B. causal relationship between the subsidy and a change in biodiversity
status evolves through the variation of production and consumption
behaviour by individuals;
C. variation in individual behaviours translates into a change in pressure;
D. impact of the economic instrument is assessed in terms of
conservation or reduction of biodiversity, as an indicator of ecosystems’
health;
E. impact of a subsidy is to be understood without considering the
interactions with all the other economic and social variables.

9. 9
The procedure for the environmental assessment of BHS and BFS (2)
The first step is to identify the pressures that negatively act on the state of
conservation of biodiversity at all levels (genetics, species and ecosystems):
◦ Climate change and greenhouse gases
◦ Land use change
◦ Pollution
◦ Over-exploitation of resources
◦ Standardised preferences
◦ Invasive alien species
It is essential to highlight the direct causal links between pressure and its
impact on ecological functionality
Pressures are triggered, strengthened or relaxed by a subsidy that activates a
series of behaviours in direct or inverse relationship with them.

10. The pressures define the mechanism by which they impact biodiversity at
various levels.
Drivers are primary reactions to an incentive such as a subsidy:
• drivers define whether the pressure on biodiversity increases or
decreases;
• change in economic incentives activates the direction of these
drivers.
Drivers are:
• Demographic
• Spatial
• Technological
• Economic
• Institutional
• Socio-cultural
10
The procedure for the environmental assessment of BHS and BFS (3)

11. 11
The impact in terms of tightening (↗) or slackening (↘) of the pressure
Pressure is triggered by the driver:
◦ Soil = change in land use
◦ Inq = pollution
◦ Sfr = overexploitation of resources
◦ Prf Stand = standardized preferences
◦ Invasive = invasive alien species
description of the link and the impact
BHS or BFS for different levels of biodiversity (E = Ecosystem; S = Species;
G = Genetics).
So, for example …
… indicates that the subsidy affects the driver "Agricultural technology" by increasing
the pressure "pollution" and is therefore harmful to biodiversity.
The procedure for the environmental assessment of BHS and BFS (4)