LocationsRedesigning Harmful Incentives for Nature-Positive Growth: Rewriting the Rules of Fiscal Policy for Biodiversity Conservation
July 31, 2026
Through the BIOFIN initiative, Uganda is turning subsidies that have the potential to harm nature into powerful tools for sustainable development; proving that economic progress and environmental protection can go hand in hand.
What if some of the policies designed to drive economic growth could also create unintended pressures on Uganda’s rich natural resources? For many years, subsidies and tax incentives aimed at supporting agriculture, industry, and exports have contributed significantly to national development and livelihoods. However, growing evidence has highlighted opportunities to better align these incentives with environmental sustainability goals. Today, through strong government leadership, under the National Environment Management Authority (NEMA), informed policy dialogue, and evidence-based reforms supported by the UNDP’s Biodiversity Finance Initiative (BIOFIN initiative), Uganda is taking important steps to ensure that fiscal policies promote both economic prosperity and the conservation of biodiversity for future generations.
The Hidden Cost of “Good” Intentions
Uganda is one of the most biodiverse countries in the world, home to over 18,000 species. Yet its natural wealth faces pressure from economic incentives that prioritize short-term gains over long-term sustainability.
A landmark BIOFIN-supported study on harmful subsidies revealed two such policy directions with potential to advance unintended negative impacts on biodiversity:
Tax exemptions on agricultural chemicals (pesticides and fungicides) intended to boost productivity but contributing to soil degradation, water pollution, and harm to non-target species.
Tax exemptions on packaging materials for exports particularly plastics - driving waste, pollution, and pressure on ecosystems.
The fiscal cost was substantial as has been identified by the report “Technical Brief: Uganda Identifies Harmful Subsidies for Possible Redesign Options”. Revenue losses from agricultural chemical subsidies rose from approximately UGX 30.9 billion in FY 2019/20 to UGX 37.8 billion in FY 2022/23. Plastic packaging incentives nearly doubled in one year, reaching UGX 13.7 billion in FY 2022/23.
These figures represent not just lost revenue, but real environmental costs borne by ecosystems, communities, and future generations. By better aligning fiscal policies with environmental sustainability objectives, the country can maximize economic returns while reducing pressures on ecosystems, strengthening community resilience, and safeguarding natural resources that support livelihoods and development for generations to come.
BIOFIN’s Role: From Evidence to Action
Working closely with government partners, under the BIOFIN initiative, the comprehensive Subsidy Redesign Action Plan (SRAP) was developed, which includes practical, balanced recommendations. These included shifting support toward organic and biopesticides, promoting Integrated Pest Management (IPM), introducing performance-based incentives, and encouraging sustainable, recyclable packaging.
The approach was collaborative, evidence-driven, and solutions-oriented — aligning economic competitiveness with biodiversity goals under Target 18 of the Kunming-Montreal Global Biodiversity Framework.
A Major Policy Breakthrough
The true test of any study is whether it influences real decisions. In Uganda, this study continues to inform various decisions and their implementation.
Drawing on the evidence and recommendations from this BIOFIN’s harmful subsidies work, policymakers took decisive action in the FY 2026/27 national budget. The excise duty on single-use plastics was increased from 2.5% to 25%, raising the tax burden from approximately USD 70 to USD 1,500 per tonne. A draft Bill proposing a complete ban on single-use plastics was also submitted to Parliament which presents a significant breakthrough for nature positive development.
These reforms represent a significant shift: moving from subsidizing harm to internalizing environmental costs and incentivizing sustainable alternatives.
Why This Matters: A Win-Win for People and Nature
By reforming harmful subsidies, Uganda is demonstrating that fiscal policy can be a powerful lever for nature-positive development. These changes protect vital ecosystems, reduce pollution, create space for green innovation, and strengthen long-term economic resilience.
Farmers gain access to safer, more sustainable inputs. Exporters can build stronger brands through responsible practices. The government frees up resources for priority investments. Communities benefit from healthier soils, cleaner water, and more resilient landscapes.
Uganda is Leading the Way
Uganda’s progress sends a powerful message across Africa and beyond: identifying and repurposing harmful incentives is possible and an essential part in achieving the Global Biodiversity Framework objectives and the Sustainable Development Goals.
BIOFIN’s technical leadership, evidence generation, and sustained policy engagement have contributed to catalyzing this momentum. The initiative continues to support government institutions in aligning public finance with biodiversity and climate objectives.
The Road Ahead
The journey is not over. Sustained implementation, monitoring, and further stakeholder engagement will be critical. But the foundation is strong.
When public finance works for nature, nature works for people, economies, and future generations.
Doreen Tukezibwa,
Project Management Specialist BIOFIN
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