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Determining the environmental effects of indirect subsidies: integrated method and application to the Netherlands

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  • Cees van Beers
  • Jeroen C. J. M. van den Bergh
  • Andre de Moor
  • Frans Oosterhuis

Abstract

The term 'environmentally damaging subsidies' covers all sorts of direct and indirect subsidies with negative consequences for the environment. This article presents a method to determine the environmental impact of these subsidies. It combines a microeconomic framework with an environmental impact module. The method is particularly useful for analysing indirect subsidies. These are often hidden, and therefore, not recognized as subsidies. Use of the method will provide a basis for formulating corrective policy. The method is applied to several important subsidies in the Netherlands, in agriculture, energy and transport sectors. The results reveal large environmental effects, which deserve serious attention from policy makers. To illustrate the specific features of the method, its application to a particular subsidy, namely the exemption of excise taxes on aviation fuels, is presented in full detail.

Suggested Citation

  • Cees van Beers & Jeroen C. J. M. van den Bergh & Andre de Moor & Frans Oosterhuis, 2007. "Determining the environmental effects of indirect subsidies: integrated method and application to the Netherlands," Applied Economics, Taylor & Francis Journals, vol. 39(19), pages 2465-2482.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:19:p:2465-2482
    DOI: 10.1080/00036840600592833
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    References listed on IDEAS

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    1. Martijn Brons & Eric Pels & Peter Nijkamp & Piet Rietveld, 2001. "Price Elasticities of Demand for Passenger Air Travel," Tinbergen Institute Discussion Papers 01-047/3, Tinbergen Institute.
    2. Cees van Beers & André de Moor, 2001. "Public Subsidies and Policy Failures," Books, Edward Elgar Publishing, number 2040.
    3. Tae H. Oum & Waters, W.G. & Jong Say Yong, 1990. "A survey of recent estimates of price elasticities of demand for transport," Policy Research Working Paper Series 359, The World Bank.
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    Cited by:

    1. Diaz Arias, Adriana & van Beers, Cees, 2013. "Energy subsidies, structure of electricity prices and technological change of energy use," Energy Economics, Elsevier, vol. 40(C), pages 495-502.
    2. Marie-Estelle Binet & Lionel Richefort, 2011. "Diffusion of irrigation technologies: the role of mimicking behaviour and public incentives," Applied Economics Letters, Taylor & Francis Journals, vol. 18(1), pages 43-48.
    3. Stefan Gössling & Frank Fichert & Peter Forsyth, 2017. "Subsidies in Aviation," Sustainability, MDPI, vol. 9(8), pages 1-19, July.
    4. Cansino, José M. & Pablo-Romero, María del P. & Román, Rocío & Yñiguez, Rocío, 2010. "Tax incentives to promote green electricity: An overview of EU-27 countries," Energy Policy, Elsevier, vol. 38(10), pages 6000-6008, October.
    5. Ming-Chung Chang & Jin-Li Hu, 2009. "Inconsistent preferences in environmental protection investment and the central government's optimal policy," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 767-772.

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