Environmentally damaging subsidies in the United Kingdom

Abstract

It is widely understood that many subsidies have the unintended effect of promoting activities associated with environmental degradation. But the sheer size of the implicit subsidies which various sectors receive is often not appreciated. Neither is it realised that the practice of estimating the extent of subsidies is far from straightforward, that there are good and bad reasons for subsidies and that in any case the link between subsidies and environmental degradation is often an indirect one. This paper analyses the hypothesised linkages between environmental degradation and the subsidies offered to certain activities and offers a quantitative estimate of the size of environmentally damaging subsidies which currently exist in the United Kingdom. It is found that environmentally damaging subsidies at present exceed 20 billion with the largest single subsidy going to users of transport infrastructure. © 1997 John Wiley & Sons, Ltd and ERP Environment.