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Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture

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  • Katharine Heyl

    (Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany
    Faculty of Agricultural and Environmental Sciences, University of Rostock, 18051 Rostock, Germany)

  • Felix Ekardt

    (Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany
    Faculty of Law and Interdisciplinary Faculty, University of Rostock, 18051 Rostock, Germany)

  • Lennard Sund

    (Faculty of Management, Economics and Social Sciences, University of Cologne, 50923 Cologne, Germany)

  • Paula Roos

    (Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany)

Abstract

The goals of the Paris Agreement and the Convention on Biological Diversity call for a global transition to sustainability. To achieve these goals, subsidies can be implemented. Subsidies are pervasive especially (but not only) in the agricultural sector. The agricultural sector plays an important role in the transition to sustainability as agriculture can both benefit and harm climate and biodiversity. Some agricultural subsidies seem environmentally beneficial, but the majority appear environmentally destructive. Against this background, this article applies a qualitative governance analysis—including aspects of legal analysis—to provide a comprehensive review of agricultural subsidies in the EU and to discuss the role of subsidies in transitioning towards sustainability. Results show that agricultural subsidies need to be substantially downscaled and implemented as complementary instruments only because other policy instruments such as quantity control instruments are more effective in addressing the drivers of non-sustainability, i.e., fossil fuels and livestock farming. However, subsidies remain a useful complementary instrument to remunerate the provision of public goods (e.g., in nature conservation) as long as they are constructed in a way that they do not suffer from typical governance problems. In addition, data and transparency need to be improved, subsidies for research and development increased, and environmental objectives streamlined through EU law to ensure all agricultural subsidies are in line with global environmental goals.

Suggested Citation

  • Katharine Heyl & Felix Ekardt & Lennard Sund & Paula Roos, 2022. "Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture," Sustainability, MDPI, vol. 14(23), pages 1-26, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:23:p:15859-:d:987040
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    2. Utomo, Raden Priyo & Kuleh, Yohanes & Darma, Dio Caisar, 2023. "Conventional vs modern: which approach is better for the success of agricultural cooperatives?," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(4), December.
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    4. Stubenrauch, Jessica & Garske, Beatrice, 2023. "Forest protection in the EU's renewable energy directive and nature conservation legislation in light of the climate and biodiversity crisis – Identifying legal shortcomings and solutions," Forest Policy and Economics, Elsevier, vol. 153(C).

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