Subsidies don’t help fight climate change, World Bank report finds
According to a recently released World Bank report, subsidies do not help fight climate change.
Key findings of report:
- The report highlights the negative consequences of ineffectively subsidizing the agriculture, fisheries and fossil fuel sectors.
- It has been said in this report that several trillion dollars of subsidies are being provided to these sectors indirectly and directly. These sectors, in turn, are exacerbating the negative effects of climate change.
- These subsidies amount to over 8% of global GDP.
- The distribution of subsidies across regions and countries is highly uneven and unequal.
Effects of Subsidies:
- Agricultural subsidies are responsible for the loss of 2.2 million hectares of forests per year, or 14% of global deforestation.
- The ever-increasing use of fossil fuels is encouraged in one way or another by subsidies. It is a major cause of 7 million premature deaths every year due to ever-increasing air pollution.
- More than $35 billion is being subsidized annually for fisheries. Due to this, the stock of fish is decreasing, and the number of big fishing vessels is increasing. Due to this, the profitability of the fishing sector is decreasing.
Guiding Principles for Successful Subsidy Reforms:
- Public acceptance has to be built and the credibility deficit addressed;
- Complementary measures have to be implemented to improve the effectiveness and reduce the cost of reforms;
- Short-term price shocks have to be mitigated through social security and compensation;
- Regressive subsidies must be phased out through careful and phased reduction;
- Revenue has to be redistributed through long-term reinvestment with equal or progressive returns.
Source – Down to Earth
