Harmful Subsidies Research Articles

Transformative changes are needed to support socio-bioeconomies for people and ecosystems in the Amazon.

Current social-technical and political conditions threaten the integrity of the Amazon biome. Overcoming these lock-ins requires structural transformations away from conventional economies towards 'socio-bioeconomies' (SBEs). SBEs are economies based on the sustainable use and restoration of Amazonian ecosystems, as well as Indigenous and rural livelihood systems in the region. They include sustainable eco-tourism as well as diversified production and innovative processing of fruits, nuts, oils, medicines, fish and other products deriving from socio-biodiversity. Using a sustainability transitions perspective, we argue for multi-scalar policy changes to sustain, enhance and scale-out and scale-up SBE initiatives. To nurture niche SBE acitivities, we advocate for improvements in infrastructure, value chains and social organizations. To dismantle structural barriers, we call for an end to harmful subsidies, greater representation of marginalized communities in territorial planning, enhanced rural-urban and intersectoral linkages, international collaboration, shifts in demand, and changes in conservation and production narratives. Policies for SBEs must also use clear definitions, participatory processes and a multi-biome approach to avoid perverse outcomes.

Global Power Shifts and the Cotton Subsidy Problem: How Emerging Powers Became the New Kings of Cotton Subsidies

Abstract Cotton is one of the most contentious issues in the global trading system. Subsidies provided by richer countries have had a devastating impact on the welfare of poor cotton farmers in the developing world. Cotton subsidies have long been seen as a symbol of the injustices of the trading system—a harm perpetrated by the rich countries of the Global North against the poor countries of the Global South. This conception of the global cotton subsidy problem is deeply entrenched and has profoundly shaped contemporary debates about power and fairness in the multilateral trading system. As this article shows, however, the prevailing view of the global cotton subsidy problem is now simply outdated and inaccurate. Today, the biggest providers of cotton subsidies are no longer the United States and EU but emerging economic powers like China and India. These major developing countries are providing large volume of subsidies, which are distorting global production and trade, and harming some of the world’s poorest and most vulnerable farmers in other developing countries. The cotton subsidy problem is no longer simply a North–South issue. Addressing the problem requires tackling all harmful subsidies, including those from large emerging economies.

A new approach to combating illegal, unreported, and unregulated fishing: analysis of the WTO Agreement on Fisheries Subsidies

Harmful subsidies awarded by states facilitate illegal, unreported, and unregulated (IUU) fishing, which causes negative impacts on ocean ecosystems, seafood value chains, society, and global food security. The World Trade Organization Agreement on Fisheries Subsidies, adopted on June 17, 2022, aims to improve global fishery governance through trade measures and is regarded as a major step toward the achievement of the United Nations 2030 Sustainable Development Goals. The objective of this study is to offer a better insight into the interpretation and future implementation of the WTO Agreement on Fisheries Subsidies. Based on the status quo of international and regional fishery governance legal systems and management regimes in the regulation of IUU fishing, this study reviews the legislative process of the WTO Agreement on Fisheries Subsidies, analyzes five main controversial issues, and explores the conflicts of interests of different countries during the discussion. In the future, states should promote the transformation of the fisheries sector by reducing harmful subsidies for IUU fishing and enhancing cooperation among coastal states, flag states, port states and relevant RFMOs.

Transversal policy between the protection of marine fishery resources and fisheries subsidies to address overfishing in Indonesia

If the Indonesian Government continues to provide harmful subsidies to its fishing industry, then the occurrence of overfishing, which leads to the overfished and destruction of marine ecosystems, is an inevitable consequence. Thus, eliminating fishery subsidies that exert detrimental effects on aquatic life is imperative for the government. Unfortunately, Indonesia frequently implements social protection in the form of a subsidy policy to support fishing activities, particularly those undertaken by small-scale fisheries. Upholding and preserving the sustainability of marine fishery resources is incumbent upon the government by implementing marine protection policies. Therefore, the policy to protect marine fishery resources and fishery subsidies needs to be convergent. The study aims to analyse how Indonesia formulates a transversal policy and a coherence strategy between the protection of marine fishery resources and subsidies to support fisheries. The methodology involves a descriptive and analytical legal examination that identifies two policies and elaborates efforts to protect marine fishery resources and support fishermen in achieving better lives. The objective is to determine the interdependent functions of the protection of marine fishery resources and subsidy policies to address overfishing in Indonesia.

International economic law and the reinvention of industrial policy: Opportunities, limitations and risks

BACKGROUND: Many studies are focused on traditional (old) or modern (new) industrial policy. There are insufficient studies linking the emergence of the knowledge economy and the institutional requirements to underpin inclusive social and economic development in developed or developing countries. OBJECTIVE: This study aims to analyze the characteristics of the knowledge economy and the institutional requirements for more inclusive and sustainable socio-economic developments. Constraints of the international economic law in its current form for more inclusive and sustainable industrial policy in developed and developing countries will be put forward. The inclusive knowledge economy requires not only innovative advanced firms but also innovative and creative public sector employees capable of supporting and disseminating opportunities of the knowledge economy to the entire society. Moreover, the inclusive knowledge economy requires lifelong learning processes of the workforce in developed and developing economies. Therefore, a human dimension, broad participation, and shaping of modern development strategies a key to developing an inclusive and sustainable knowledge economy. Institutional constraints of the international economic framework are currently not adequately supportive of such a structural shift. The objective of this study is to show the possible adjustments at the international and national levels to support the development of an inclusive knowledge economy. The human dimension (participation, creativity, imagination) of the public and private sector goes hand in hand with institutional innovations. METHODS: The normative and institutional analysis, embedded in the historical context of industrialization patterns in the selected countries, will provide insights into the institutional requirements for an inclusive knowledge economy. RESULTS: The result of the conceptual and normative as well as empirical comparative analysis will provide insights into the possibilities and needs for institutional innovations at the regional, national, and supranational levels of polity while embracing the need for a more supportive international normative context. Several possible institutional innovations at the national levels, such as regional public venture funds, decentralized support, and training centers, are provided. A reform of the Agreement on Subsidies and Countervailing Measures to better delineate between potentially productive and harmful subsidies at the international level can be seen as a reform proposal at the international level. CONCLUSIONS: Industrial policies in developed and developing countries will not be able to address the social and economic divides between advanced and stagnating sectors of the economy without addressing the requirements for institutional innovations at all levels of the international polity.

Fisheries subsidies exacerbate inequities in accessing seafood nutrients in the Indian Ocean

Harmful, capacity-enhancing subsidies distort fishing activities and lead to overfishing and perverse outcomes for food security and conservation. We investigated the provision and spatial distribution of fisheries subsidies in the Indian Ocean. Total fisheries subsidies in the Indian Ocean, estimated at USD 3.2 billion in 2018, were mostly harmful subsidies (60%), provided to the large-scale industrial sector by mainly a few subsidising countries, including Distant Water Fishing countries. We also explored possible socio-economic drivers of the composition of subsidies, and show that the extent of harmful subsidies provided by Indian Ocean Rim (IOR) countries to their industrial sector can be predicted by the seafood export quantities of these countries. These results illustrate the inequity in accessing fisheries resources for the small-scale sector of nutrient insecure and ocean-dependant IOR countries. The present study can benchmark future assessments and implementation of fisheries subsidy disciplines in the region following the World Trade Organisation Agreement on Fisheries Subsidies.

Sechs Ansatzpunkte für eine nachhaltige und sozialverträgliche grüne Transformation

Abstract Germany wants to achieve carbon neutrality by 2045, which requires a substantial acceleration in emission reduction. The OECD suggests six levers for a successful sustainability transformation. More comprehensive and coherent greenhouse gas pricing, involving a phase out of environmentally harmful subsidies would set better incentives to switch consumption, production and innovation to climate­friendlier products and technologies. Direct revenue refunds to households would avoid overburdening lower­income groups. Furthermore, there are a number of costly and poorly targeted subsidies for the deployment of renewables that can be reduced gradually. This would make room to offer more support for expediting development of green energy technologies and infrastructure. Workers in energy­intensive industries will need support to retrain and potentially move to other industries or places.

Spatializing oil and gas subsidies in endangered caribou habitat: Identifying political‐economic drivers of defaunation

AbstractReforming environmentally harmful subsidies is an international priority under the UN Convention on Biological Diversity. Research that links industrial subsidies to negative ecological impacts, however, is limited. This paper contributes to the emerging agenda of global “subsidy accountability” research by linking oil and gas subsidies to the decline of endangered caribou herds in British Columbia, Canada. While existing research concretely attributes the decline of caribou herds to industrial activity, including oil and gas development, we suggest there is a need to identify the political‐economic structures which drive ongoing industrial development in caribou habitat, including public subsidies. We use government data to map oil and gas wells in critical caribou habitat and determine how many are run by operators receiving provincial fossil fuel “royalty credits”. Ultimately, we find that 1678, or 54%, of oil and gas wells located within critical caribou habitat are run by companies that have received benefits from one or both of BC's largest royalty credit programs. This paper points to the need for further analysis of subsidies as indirect drivers of biodiversity loss on a global scale, as well as increased emphasis on political‐economic drivers in conservation research. It also highlights the obstacles to implementing appropriate conservation solutions in political‐economic contexts dominated by resource extraction.

Fisheries subsidies reform in China

Subsidies are widely criticized in fisheries management for promoting global fishing capacity growth and overharvesting. Scientists worldwide have thus called for a ban on "harmful" subsidies that artificially increase fishing profits, resulting in the recent agreement among members of the World Trade Organization to eliminate such subsidies. The argument for banning harmful subsidies relies on the assumption that fishing will be unprofitable after eliminating subsidies, incentivizing some fishermen to exit and others to refrain from entering. These arguments follow from open-access governance regimes where entry has driven profits to zero. Yet many modern-day fisheries are conducted under limited-access regimes that limit capacity and maintain economic profits, even without subsidies. In these settings, subsidy removal will reduce profits but perhaps without any discernable effect on capacity. Importantly, until now, there have been no empirical studies of subsidy reductions to inform us about their likely quantitative impacts. In this paper, we evaluate a policy reform that reduced fisheries subsidies in China. We find that China's subsidy reductions accelerated the rate at which fishermen retired their vessels, resulting in reduced fleet capacity, particularly among older and smaller vessels. Notably, the reduction of harmful subsidies was only partly responsible for reducing fleet capacity; an increase in vessel retirement subsidies was also a necessary driver of capacity reduction. Our study demonstrates that the efficacy of removing harmful subsidies depends on the policy environment in which removals occur.

Everything comes at a price: The impact of eliminating harmful subsidies in the Spanish marine resources industry

One of the objectives for the European Horizon 2021–2027 is completely eliminating harmful fishery subsidies. Spain was the country that received the greatest amount of the previous European Marine Fishery Funds framed within EU horizon-2020. We explore the potential impacts of eliminating these harmful subsidies in the sectors related to marine resources in Spain. We address it with the novelty of applying an input–output model, disaggregating marine resource activities into three sectors (fishing, aquaculture and seafood processing sector). Our results show that the subtraction of these harmful subsidies will entail significant reductions in the value-added of the analysed sectors, which will impact their supply and demand of inputs affecting the rest of the sectors of the economy. It will affect the final demand for their outputs and the sectors linked to them. We derive policy recommendations to smooth the transition to a fishery-related industry without harmful subsidies.

What would Article 5.1 of the 2022 WTO Ministerial Agreement on Fisheries Subsidies accomplish?

The WTO Agreement on Fisheries Subsidies adopted in June 2022 is potentially a step forward for ocean sustainability. Yet, its success in removing fisheries subsidies contributing to illegal, unreported, and unregulated (IUU) fishing, and overfishing more generally, will depend on its scope, its effective interpretation, and broad implementation. Here we focus on Article 5.1, which, in its narrowest interpretation prohibits fishing subsidies in areas not covered by Exclusive Economic Zones (EEZs) and Regional Fishery Management Organizations (RFMOs) but in its broadest interpretation prohibits subsidies for any unregulated fisheries in the high seas. This study finds that only ∼1.35% of the high seas are not spatially covered by at least one RFMO, and most of that area are frozen parts of the high seas with little to no fishing. This means that if Article 5.1 is interpreted to mean the area of the high seas not managed under RFMOs, then the effect of Article 5.1 will be minimal or non-existent even if the article is fully implemented. Many RFMOs, however, are only mandated to regulate a few species, such as tunas. Much of the potential impact of Article 5.1 thus could rest on the definition of the ‘competence of a relevant RFMO,’ which we argue should be defined based on both area and species of competence. To make the Article meaningful in terms of removing harmful subsidies that impact the sustainability of high seas fish stocks, additional clarifying provisions to Article 5.1 to reaffirm that it applies to both unregulated areas and species outside of the competence of relevant RFMOs are needed.

Mapping the unjust global distribution of harmful fisheries subsidies

Harmful fisheries subsidies contribute to overfishing leading to environmental and societal impacts. If only fisheries and ecosystems within the subsidising nations’ jurisdiction were affected, then unilateral actions might be sufficient to help safeguard our ocean and the people reliant upon it. However, just as fish move between jurisdictions, so too do the subsidised fishing fleets that target them. As such, the impacts and solutions to subsidies-induced overfishing are often matters of international concern. Mapping the distribution and flows of harmful subsidies is therefore key to understanding these concerns, informing multilateral reform, and empowering impacted nations to strengthen the terms of access to their waters and resources. Here we quantify the amount of harmful fisheries subsidies that supports fishing in the high seas, domestic and foreign waters. We estimate that between 20% and 37% of all harmful fisheries subsidies support fishing in foreign waters or the high seas, that is outside the jurisdictions of the subsidising nations. We show that harmful subsidies primarily originate from nations with high-Human Development Index (HDI), strong fisheries management capacity and relatively sustainable fish stocks, yet disproportionately impact nations with low or very low-HDI, lower management capacity and more vulnerable fish stocks—40% of the harmful subsidies that support fishing in very low-HDI nations waters originate from high-HDI and very-high HDI nations. We show that Asia, Europe, and North America, are net subsidy sources; they provide more harmful subsidies to their fishing fleets than their respective ecosystems are impacted by; while Africa, South, Central America and Caribbean, and Oceania are net subsidy-sinks. This discrepancy between the source of harmful subsidies and the nations that are ultimately impacted is unsustainable and unjust. Prohibiting all harmful subsidies to distant-water fishing and fishing in the high seas—with narrow exceptions for Small Island Developing States—should be prioritised to support the advancement of sustainable and equitable fisheries worldwide.

Tackling harmful subsidies in agriculture

Harmful agricultural subsidies can be replaced through sustainable alternatives including restoration of ecosystem services, repurposing subsidies, and tackling the inefficiency of food systems.

Sustainable Development Goal 14 in the Western Indian Ocean: a socio-ecological approach to understanding progress

The Sustainable Development Goals (SDGs) intend to “achieve a better and more sustainable future for all people in the world”1. They have become a key driver for policy and decision-making in many regions, including in the Western Indian Ocean (WIO) region. This paper analyses national and regional progress towards achieving SDG 14 in the WIO. Progress of four of the SDG 14 targets that were due in 2020 are analysed. SDG 14 has influenced regional and national policy agendas but current tools to measure this progress fail to provide a detailed picture of achievement towards each target for countries in the WIO. The paper highlights that the region has shown limited success in achieving the targets and SDG 14 targets are unlikely to be reached by 2030. The WIO region lags behind with regard to marine conservation related targets. More than half of the countries have low to average progress on SDG 14.2 on marine areas being covered by area-based management tools. Even more countries are far from achieving the 10 % coverage of marine protected areas under SDG 14.5. The region is performing better with regards to fisheries management targets with most countries classified as making average to good progress towards SDG 14.4 on sustainable stocks and SDG 14.6 on addressing harmful subsidies and IUU fishing. The diversity of the socio-economic and governance contexts in the WIO countries contributes to different levels of progress. The fairly positive ecological state of the WIO supports progress towards SDG 14. Understanding barriers to progress is fundamental to help with the prioritisation of the actions needed to meet the SDG 14 targets by 2030. Regional actors and policy-makers will need to increase their ambitions to meet the SDG 14 targets and ensure a healthy ocean and improved prospects for the region and its citizens. To account for barriers in progress towards SDG 14, the WIO region needs appropriate reporting and monitoring mechanisms and it should follow a holistic regional approach of ocean governance integrating conservation and sustainable resource use. It needs to build capacity and knowledge sharing for implementation of SDG 14 and ocean governance at various levels. Improved implementation of SDG targets will have social, economic and environmental benefits within the region.

The Regulation of Environmentally Harmful Fossil Fuel Subsidies: From Obscurity to Prominence in the Multilateral Trading System

Abstract Environmentally harmful fossil fuel subsidies were notably absent from efforts to enhance the mutual supportiveness of trade and environment in the multilateral trading system. However, a combination of factors has recently propelled the regulation of such subsidies up the trade and environment agenda. The recently launched initiative to negotiate a plurilateral Agreement on Climate Change, Trade and Sustainability (ACCTS) represents the latest and most ambitious of the growing number of initiatives to discipline fossil fuel subsidies. This article examines the factors that brought the regulation of fossil fuel subsidies to prominence and the prospects of the ACCTS initiative to introduce binding rules on fossil fuel subsidies. The article argues that such an initiative is long overdue, but it faces significant hurdles to succeed. Drawing on past and present intergovernmental initiatives to tackle environmentally harmful subsidies, the article highlights the key challenges on the road ahead and suggests possible ways forward.

The Policy Implications of the Dasgupta Review: Land Use Change and Biodiversity: Invited Paper for the Special Issue on "The Economics of Biodiversity: Building on the Dasgupta Review" in Environmental and Resource Economics.

The “Dasgupta Review” of the economics of biodiversity (Dasgupta 2021) identifies many factors that threaten the ecological sustainability of our economies. This article examines how two policy failures - the underpricing and underfunding of nature – influence global land use change and terrestrial biodiversity loss. If natural areas are priced too cheaply, then converting them to agriculture, forestry and other land uses is less costly than protecting or preserving habitats. Underfunding nature further reduces the incentives for conservation and restoration. The current global funding gap for biodiversity is just under $900 billion annually, and especially impacts developing countries. Ending the underpricing of natural landscape requires removing environmentally harmful subsidies and adopting policies that place an additional cost on the use of land and natural resources or on pollution. Overcoming the funding gap means expanding public and private sources of financing nature, particularly for poorer countries, such as biodiversity offsets, payments for ecosystem services, debt-for-nature swaps, green bonds, sustainable supply chains and international environmental agreements. Using the example of peatlands, the article shows how such a comprehensive global strategy can be built.

Strengthening European Union fisheries by removing harmful subsidies

Harmful fisheries subsidies have historically contributed to fleet overcapacity and continue to be allocated to the fishing industry to artificially maintain its profitability. However, in this contribution we show that removing harmful subsidies and reducing overfishing will help to recover the resource biomass, subsequently leading to increased levels of sustainable catches, income and well-being of fishers, and reduces inequities in income and consumption when fish stocks are not effectively managed. Maintaining harmful fisheries subsidies is socially and economically inefficient. Taking the example of the EU fishing fleet, one of the largest fishing fleets in the world, we use the total factor productivity to show that small-scale fishing fleet's productivity is almost two-fold in the North Atlantic and 16% higher in the Mediterranean and Black seas compared to large-scale vessels. This result is explained because the harmful fisheries subsidies disproportionately allocated to large-scale vessels introduce distortions in the efficient allocation of inputs. With critical WTO negotiations ongoing regarding the global rules on fisheries subsidies, the EU must take advantage of the opportunity to lead a desirable transformative change while also supporting developing nations to truly achieve global sustainable and equitable fisheries.

Reforming fossil fuel subsidies requires a new approach to setting international commitments

Reforming fossil fuel subsidies requires a new approach to setting international commitments

Circular Economy and Environmental Sustainability: A Policy Coherence Analysis of Current Italian Subsidies

Policy instruments for a circular economy and for environmental protection both aim at sustainable development, but do not necessarily share the same goals. The purpose of the paper is to assess the coherence with the EU-recognized circular economy principles of a large set of subsidies currently in force in Italy: those listed in the Italian Catalogue of Environmentally Harmful Subsidies and Environmentally Friendly Subsidies. The method is inspired by the OECD’s “Checklist” method and “Policy Coherence for Sustainable Development” approach recommended by the UN 2030 Agenda, which can be usefully applied to all policy instruments, including subsidies and green budgeting. The analysis allows one to identify as many as 56 potentially harmful subsidies for the circular economy in Italy, for a financial value of at least 13.5 billion euros in 2019, and 75 potentially friendly subsidies for the circular economy, for at least 13.0 billion euros. A total of 25% of subsidy schemes analyzed with a circular economy perspective have contradictory effects when compared to the Catalogue’s results obtained with an environmental perspective. The results of the study underline the importance of coordination between environmental and circular economy policies in achieving sustainable development goals. The analysis can be considered a “pilot study” on a national case; its method can be easily replicated by administrations also in ex-ante evaluation of new subsidy schemes.

Barriers to ecological restoration in Europe: expert perspectives

Ecological restoration is key to counteracting anthropogenic degradation of biodiversity and to reducing disaster risk. However, there is limited knowledge of barriers hindering the wider implementation of restoration practices, despite high‐level political priority to halt the loss of biodiversity. In Europe, progress on ecological restoration has been slow and insufficient to meet international agreements and comply with European Union Nature Directives. We assessed European restoration experts' perceptions on barriers to restoration in Europe, and their relative importance, through a multiple expert consultation using a Delphi process. We found that experts share a common multi‐dimensional concept of ecological restoration. Experts identified a large number of barriers (33) to the advancement of ecological restoration in Europe. Major barriers pertained to the socio‐economic, not the environmental, domain. The three most important being insufficient funding, conflicting interests among different stakeholders, and low political priority given to restoration. Our results emphasize the need to increase political commitment at all levels, comply with existing nature laws, and optimize the use of financial resources by increasing funds for ecological restoration and eradicate environmentally harmful subsidies. The experts also call for the integration of ecological restoration into land‐use planning and facilitating stakeholders' collaboration. Our study identifies key barriers, discusses ways to overcome the main barriers to ER in Europe, and contributes knowledge to support the implementation of the European Biodiversity Strategy for 2030, and the EU 2030 Restoration Plan in particular.