Charles University in Prague Environment Center

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Charles University in PragueEnvironment Center

• Milan casný
• State of play environmental harmful subsidies
• (Introduction for discussion)
• EEB, CUEC and SSL seminar
• Prague, 21-22 November 2003

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Why subsidise ?

• Key objectives for subsidy and support measures
  introduction
• protect (sectoral) employment and investment,
• safeguard domestic supply and reduce external
  dependency,
• stimulate (rural) economic development and
  growth,
• abate policy or support of the poor,
• provide access to basic living conditions

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Environmental harmful subsidies

• all kinds of financial supports and
  regulations that are put in place to enhance the
  competitiveness of certain products, processes or
  regions, and that, together with the prevailing
  taxation regime, (unintentionally) discriminate
  against sound environmental practises.
• OECD, 1998, Part I, p. 7

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Environmental harmful subsidies

• there is NO activity with ANY negative
  environmental effect
• negative effects on the environment refer to
  those levels of waste and emissions, incl. those
  of the previous and subsequent stages of Q/C,
  that are generated because a support measure is
  in place and which would not occur if no support
  was applied
• GOAL how to satisfy a particular need with the
  lowest possible environmental impact ?

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The linkages between SUPPORT and the ENVIRONMENT
(by OECD1998)

• Linkage 1
• link between the support measure and volume and
  composition of output
• Linkage 2
• impact of the changes in the level composition
  of output on actual pollution and waste levels
• Linkage 3
• damage done to the environment by the resulting
  changes in pollution and waste levels

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Classification of support measures

• immediate budgetary impact
• condition of the support / points of impact
• support resulting in PRICE INCREASE of PRODUCERS
  (purchase of agri products)
• support leading to DECREASE of production COSTS
  (tax rebates for industry)
• support resulting in a decrease of final price
  paid by CONSUMERS (cross-subsidy of electricity)
• support that is not conditional on production or
  input levels

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Environmentaly harmful subsidies
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Environmentaly harmful subsidies

• Total EHS 1000 bil. USD -14GDP-CR2002
• 75 in OECD MS
• 3,6 OECD-GDP
• mostly supported sectors influences 97 of world
  trade
• 100 bil. USD yearly additional costs in poorer
  countries involved by subsidy policy of West (WB
  EEB 2002)

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For debate

• we should consider a historical reason of
  support introduction
• it is not too late make change if we find
  soemthing is not perfect
• ask for a removal or a reform ?
• remove support measure?
• change priorities?
• adjust criterias?
• focus not only visible on/off budgetary support
  measures
• implicit subsidy - non-internalised
  externalities
• inefficiently allocated public spendings
  (transport infrastructure, housing policy)
• privatisation, deregulation, liberalisation
• efficient use of non-national grants (SF/CF in
  particular)

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The key stages in the CHECKLIST
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