The summit

The last days have been a rush in Colombia.

Leaders have intensified discussions, as the stakes in order to take decisions are high.

With an alarming 38% of global tree species threatened, governments are under pressure to achieve the ambitious 30-by-30 conservation target, calls for 30% of the earth’s land and sea to be conserved through the establishment of protected areas (PAs) and other area-based conservation measures (OECMs).

The Colombian president told AFP on Monday that the loss of biodiversity is "on an equal footing" with the climate emergency. The conference has drawn 1,200 media and a record 23,000 registered delegates to Cali, according to organizers.

Perverse Subsidies on the run

Incorporating insights from research, it’s evident that “perverse subsidies” in international trade are a significant driver of environmental degradation and economic distortion, a key focus at COP16.

These subsidies, like the $640 billion annually funneled into fossil fuels, create what economists call “lock-ins”, where the economic system becomes dependent on environmentally damaging practices, inhibiting the shift toward sustainable alternatives. 🌍

Basically, those subsidies contribute to environmental externalities by lowering production costs in ways that:

1. Incentivize resource depletion

2. Weaken ecosystem resilience

3. Distort trade.

For example, fossil fuel subsidies reduce the relative cost of carbon-intensive industries, impacting everything from energy to agriculture and transport, which creates a misallocation of resources that could otherwise support sustainable alternatives.

According to the U.N. Emissions Gap Report, the continuation of such subsidies risks pushing global temperatures beyond the 1.5°C Paris Agreement threshold, leading to biodiversity losses and ecosystem collapse.

Additionally, the long-term economic impacts are severe, as environmental economists note: degraded ecosystems not only destabilize natural resources but ultimately threaten market stability. 📉

British MP Barry Gardiner captures this paradox: “We use nature because it’s valuable; we abuse it because it’s free.”

Investors with holdings in sectors like fossil fuels, industrial agriculture, or resource-extractive industries could face considerable instability as subsidy reforms emerge on the policy horizon.

The Economic case for biodiversity protection

• As said, one of COP16’s major objectives is the “30 by 30” goal: protecting 30% of Earth’s land and seas by 2030 to halt biodiversity loss.

• 🌎 Current Conservation Challenge: Only 17% of land and 8% of ocean areas are currently protected🌱.

• 🔺 Risk of Inaction: Failure to meet this target could lead to severe biodiversity losses, impacting global supply chains, increasing commodity prices, and ultimately shaking market stability ⚠️.

• 💸 Financial Reform at COP16: The summit has underscored the urgent need for global financial reform to address biodiversity loss 🌿. Organizations like the World Bank and the International Monetary Fund are backing these reforms, noting that 🌐 around 38% of loans from major banks finance environmentally harmful subsidies. 🌍

Conclusion 📊🌐

COP16 highlights the urgent call to rethink “perverse subsidies” 🌍—shifting focus from short-term gains to policies that build ecological resilience 🌿.

For investors, this transition offers both challenges and unique opportunities to align with sustainable markets, helping mitigate the risks of biodiversity loss and resource scarcity 📉.

Reforming subsidies is key to a future where both nature and the economy thrive 💼✨

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