Nature on the federal balance sheet: it’s time for bio-fiscal reform

Reforming subsidies is one of the simplest, clearest ways Canada can back up its promises on nature and keep an eye on Canada’s fiscal bottom line.

Download report, list of subsidies, and billet de blogue

Every year, the federal government puts about $13.2 billion into natural resource sectors like agriculture, fisheries, forestry, and mining — about 20% of their combined GDP. These subsidies help support rural jobs, regional economies, or competitiveness. But here’s the catch: most of the subsidies — about 86% — can unintentionally push more resource extraction, habitat loss, or pollution than would happen otherwise.

These potentially harmful subsidies work against Canada’s conservation commitments. Notably, Canada has committed to halt and reverse biodiversity loss by 2030 as part of the Kunming-Montreal Global Biodiversity Framework (GBF), signed in December 2022. These commitments aren’t just words on paper with specific targets like Targets 18 and 19 require countries to review, reform, and redirect subsidies that drive nature loss, and to increase funding for conservation. Canada’s 2030 Nature Strategy puts these targets into action, committing to scale up biodiversity finance in part through subsidy reform.

The new federal government has reiterated these commitments in its election platform and the Speech from the Throne, promising to protect 30 percent of Canada’s lands and 30 percent of its waters by 2030 and implement the GBF. The government has pledged to protect more of Canada’s nature than ever before through the creation of new national parks, urban parks, marine protected areas, and other conservation initiatives.

Most subsidies don’t deliver clear environmental value for public money

We wanted to know just how much federal support goes to natural resource sectors in ways that might undermine Canada’s nature goals. So, we developed a simple, practical framework that any government can use to get a clearer picture of subsidy costs and to identify priority actions for reform.

We focused on four major sectors identifying 119 federal subsidies, not all of which we could attached a fiscal cost:

• Agriculture receives about $9.8 billion a year — about 31% of the sector’s GDP.

• Fisheries and aquaculture: about $1.8 billion a year — roughly 89% of GDP. Note, many of these subsidies do not directly support the sector but are indirect subsidies that benefit the sector through enhanced fish stocks from to conversation initiatives or other oceans sector related subsidies.

• Forestry: around $619 million — about 18% of GDP.

• Mining: about $908 million — about 3% of GDP.

  
  

When we broke this down further, only 29 of 119 subsidies were clearly delivering nature-positive outcomes, with a total annual average of about $1.8 billion, or just 14% of total spending.

The fiscal stakes are real — reform is about better value, not just biodiversity

At a time when Canada’s federal budgets are to be cut 15 percent over the next three years, reviewing how more than $13 billion is spent each year is simply smart fiscal management. Reforming subsidies is about making sure public dollars support Canadians’ well-being while ensuring they aren’t wasted on practices that increase long-term environmental costs and risk. By targeting 76 subsidies identified as strong candidates for reform — worth about $5.7 billion annually — governments could free up funds to meet fiscal objectives or reprofile to support conservation finance.

Reform can be practical and phased in

Subsidy reform can be complex and politically challenging, since recipients naturally resist losing support. But it doesn’t have to be a one-time, all-or-nothing exercise. We laid out five practical steps that can help governments act:

1. Identify which sectors to look at first. Focus where subsidies contribute most to biodiversity loss and where reforms can make the biggest difference.

2. Map out what subsidies exist and what they cost. Bring together budget lines, tax measures, and direct program spending to see the full picture.

3. Categorize each subsidy as harmful, beneficial, or mixed. Assess whether each one drives unsustainable practices, protects ecosystems, or creates trade-offs that need clearer debate.

4. Evaluate and shortlist practical reform options. Weigh environmental, social, and economic risks. Start with changes that are feasible and where the upside is clear.

5. Develop and phase in a clear reform plan. Set realistic timelines, engage affected communities and sectors, and monitor progress so adjustments can be made as needed.

The path forward should start with short-term opportunities to tackle high-impact, low-risk areas, for example, tax breaks that drive unnecessary overinvestment, or incentives that keep older, less efficient production going longer than it should. More complex reforms — like changing major regional support programs or cost-shared funding with provinces — will take more time and careful planning. But governments can make steady progress if they have the right information and a clear plan.

Aligning subsidies is one of the clearest steps Canada can take now

Reforming subsidies is one of the simplest, clearest ways Canada can back up its promises to strengthen the Canadian economy, protect nature, and keep an eye on Canada’s fiscal bottom line. And at the end of the day, this isn’t about cutting for the sake of it — it’s about spending wisely to protect the places Canadians value most.