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Perseverance of Perverse Subsidies and their Impact on Trade and the Environment

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  • Cees van Beers

    (Delft University of Technology)

  • Jeroen C.J.M. van den Bergh

    (Vrije Universiteit Amsterdam)

Abstract

Theoretical and empirical aspects of policy failures due to subsidies are discussed in the context of international trade. A general classification of subsidies that cause environmental externalities is presented. The economic and environmental impacts of producer subsidies on international trade are examined with partial equilibrium analysis. The magnitude and economic and environmental relevance of subsidies in various sectors is assessed on the basis of empirical indicators. Finally, suggestions are provided on how subsidy-related policy failures can be eliminated at national and international levels. This discussion paper has resulted in a publication in Ecological Economics , 2001, 36(3), 475-86.

Suggested Citation

  • Cees van Beers & Jeroen C.J.M. van den Bergh, 2000. "Perseverance of Perverse Subsidies and their Impact on Trade and the Environment," Tinbergen Institute Discussion Papers 00-005/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000005
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    References listed on IDEAS

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    1. Wu, Hanjun & Hong Tsui, Kan Wai & Ngo, Thanh & Lin, Yi-Hsin, 2020. "Impacts of aviation subsidies on regional wellbeing: Systematic review, meta-analysis and future research directions," Transport Policy, Elsevier, vol. 99(C), pages 215-239.
    2. Hou, Shuhua & Xu, Jiuping & Yao, Liming, 2021. "Integrated environmental policy instruments driven river water pollution management decision system," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    3. Ciaian, Pavel & Pokrivcak, Jan, 2011. "Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments," Working papers 117485, Factor Markets, Centre for European Policy Studies.
    4. Cees van Beers & Jeroen C.J.M. van den Bergh & André de Moor & Frans Oosterhuis, 2004. "Determining the Environmental Effects of Indirect Subsidies," Tinbergen Institute Discussion Papers 04-047/3, Tinbergen Institute.
    5. Jiang, Zhujun & Lin, Boqiang, 2014. "The perverse fossil fuel subsidies in China—The scale and effects," Energy, Elsevier, vol. 70(C), pages 411-419.
    6. Stefan Gössling & Frank Fichert & Peter Forsyth, 2017. "Subsidies in Aviation," Sustainability, MDPI, vol. 9(8), pages 1-19, July.
    7. Robert J. R. Elliott & Toshihiro Okubo, 2016. "Ecological Modernization in Japan: The Role of Interest Rate Subsidies and Voluntary Pollution Control Agreements," Asian Economic Papers, MIT Press, vol. 15(3), pages 66-88, Fall.
    8. Schmid, Erwin & Sinabell, Franz & Hofreither, Markus F., 2007. "Phasing out of environmentally harmful subsidies: Consequences of the 2003 CAP reform," Ecological Economics, Elsevier, vol. 60(3), pages 596-604, January.
    9. Badcock, Jeremy & Lenzen, Manfred, 2010. "Subsidies for electricity-generating technologies: A review," Energy Policy, Elsevier, vol. 38(9), pages 5038-5047, September.
    10. Bajona, Claustre & Kelly, David L., 2012. "Trade and the environment with pre-existing subsidies: A dynamic general equilibrium analysis," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 253-278.
    11. Bagstad, Kenneth J. & Stapleton, Kevin & D'Agostino, John R., 2007. "Taxes, subsidies, and insurance as drivers of United States coastal development," Ecological Economics, Elsevier, vol. 63(2-3), pages 285-298, August.
    12. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Fiscal Subsidies and Environmental Sustainability: What does the Cross-country Empirical Estimates Suggest?," Foreign Trade Review, , vol. 48(3), pages 383-397, August.
    13. David L. Kelly, 2006. "Subsidies to Industry and the Environment," Working Papers 0602, University of Miami, Department of Economics.
    14. Machado, Fábio Luiz Vargas & Halmenschlager, Vinícius & Abdallah, Patrízia Raggi & Teixeira, Gibran da Silva & Sumaila, Ussif Rashid, 2021. "The relation between fishing subsidies and CO2 emissions in the fisheries sector," Ecological Economics, Elsevier, vol. 185(C).
    15. Ciaian, Pavel & Pokrivcak, Jan & Szegenyova, Katarina, 2011. "Do Agricultural Subsidies Crowd-out or Stimulate Rural Credit Market Institutions?: The Case of CAP Payments," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114289, European Association of Agricultural Economists.
    16. Garth Heutel & David L. Kelly, 2013. "Incidence and Environmental Effects of Distortionary Subsidies," NBER Working Papers 18924, National Bureau of Economic Research, Inc.
    17. Salesi, Vinolia Kilinaivoni & Kan Tsui, Wai Hong & Fu, Xiaowen & Gilbey, Andrew, 2022. "Stakeholder perceptions of the impacts of aviation subsidies in the South Pacific Region," Journal of Air Transport Management, Elsevier, vol. 103(C).
    18. Daniel Rondeau & Brianna Perry & Franque Grimard, 2020. "The Consequences of COVID-19 and Other Disasters for Wildlife and Biodiversity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 945-961, August.
    19. Polimeni, John M., 2004. "Graduate education in ecological economics," Ecological Economics, Elsevier, vol. 51(3-4), pages 287-293, December.
    20. Garth Heutel & David L. Kelly, 2016. "Incidence, Environmental, and Welfare Effects of Distortionary Subsidies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 361-415.
    21. Svoboda, J. & Lososová, Jana & Zdeněk, R., 2015. "Analysis of Operating Costs of Subsidies in the Field of Agriculture of EU Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), pages 1-13, December.
    22. Gössling, Stefan & Cohen, Scott Allen & Hares, Andrew, 2016. "Inside the black box: EU policy officers' perspectives on transport and climate change mitigation," Journal of Transport Geography, Elsevier, vol. 57(C), pages 83-93.
    23. Hofreither, Markus F. & Schmid, Erwin & Sinabell, Franz, 2004. "Phasing Out Of Environmentally Harmful Subsidies: Effects Of The Cap 2003 Reform," 2004 Annual meeting, August 1-4, Denver, CO 20169, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. Ornella Tarola & Cecilia Vergari, 2024. "Endogenous subsidies for cleaner products: The role of ecofriendly consumers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(2), February.
    25. Solaymani, Saeed & Kari, Fatimah, 2014. "Impacts of energy subsidy reform on the Malaysian economy and transportation sector," Energy Policy, Elsevier, vol. 70(C), pages 115-125.

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