The priority area of German–Madagascan development cooperation is the environment. This includes environmental policy, as well as the protection and sustainable use of natural resources.

Madagascar is famous for its unique flora and fauna, which are characterised by a large number of different animal and plant species in varied habitats (biodiversity). Many of these species are endemic to Madagascar, which reinforces the uniqueness of Madagascar’s natural environment.

Rapid population growth, severe poverty and unsustainable production methods in agriculture and forestry have caused a sustained threat to the country's natural resources. The high demand for firewood and arable land is often met by destroying the forest, which is home to the great Madagascan biodiversity. This destruction causes the loss of habitats and species, soil erosion, the release of greenhouse gases, damage to the water system and other adverse impacts. The forests can no longer perform their regulating functions, or they only do so to a limited extent. In return, this is causing a decline in agricultural productivity, with a worsening of poverty in rural areas and decreasing self-sufficiency.

For this reason, German–Madagascan cooperation concentrates on the sustainable use – and with it the protection – of natural resources, especially of the forests which provide natural livelihoods for two-thirds of the population. The German–Madagascan environmental programme (Programme Germano-Malgache pour l’Environnement - PGM-E) is being implemented collectively by GIZ, KfW Entwicklungsbank and their Madagascan partners, which include actors from the public and private sectors as well s civil society.