IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i23p15859-d987040.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/23/15859/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/23/15859/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mr. David Coady & Ian W.H. Parry & Louis Sears & Baoping Shang, 2015. "How Large Are Global Energy Subsidies?," IMF Working Papers 2015/105, International Monetary Fund.
    2. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    3. Phaneuf,Daniel J. & Requate,Till, 2017. "A Course in Environmental Economics," Cambridge Books, Cambridge University Press, number 9781107004177.
    4. Erjavec, Karmen & Erjavec, Emil, 2015. "‘Greening the CAP’ – Just a fashionable justification? A discourse analysis of the 2014–2020 CAP reform documents," Food Policy, Elsevier, vol. 51(C), pages 53-62.
    5. Besley, Timothy J & Kanbur, S M Ravi, 1988. "Food Subsidies and Poverty Alleviation," Economic Journal, Royal Economic Society, vol. 98(392), pages 701-719, September.
    6. Jedelhauser, Michael & Binder, Claudia R., 2015. "Losses and efficiencies of phosphorus on a national level – A comparison of European substance flow analyses," Resources, Conservation & Recycling, Elsevier, vol. 105(PB), pages 294-310.
    7. 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.
    8. Kornher, Lukas & von Braun, Joachim, 2020. "EU Common Agricultural Policy - Impacts on Trade with Africa and African Agricultural Development," Discussion Papers 303710, University of Bonn, Center for Development Research (ZEF).
    9. Derek Lemoine, 2024. "Innovation-Led Transitions in Energy Supply," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(1), pages 29-65, January.
    10. Guo, Pibin & Wang, Ting & Li, Dan & Zhou, Xijun, 2016. "How energy technology innovation affects transition of coal resource-based economy in China," Energy Policy, Elsevier, vol. 92(C), pages 1-6.
    11. Abdullah Mamun & Will Martin & Simla Tokgoz, 2021. "Reforming Agricultural Support for Improved Environmental Outcomes," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1520-1549, December.
    12. Shengzhong Zhang & Yingmin Yu & Qihong Zhu & Chun Martin Qiu & Aixuan Tian, 2020. "Green Innovation Mode under Carbon Tax and Innovation Subsidy: An Evolutionary Game Analysis for Portfolio Policies," Sustainability, MDPI, vol. 12(4), pages 1-22, February.
    13. Haoran Li & Wei Peng, 2020. "Carbon Tax, Subsidy, and Emission Reduction: Analysis Based on DSGE Model," Complexity, Hindawi, vol. 2020, pages 1-10, December.
    14. Harro van Asselt & Kati Kulovesi, 2017. "Seizing the opportunity: tackling fossil fuel subsidies under the UNFCCC," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(3), pages 357-370, June.
    15. Peter Slade, 2018. "The Effects of Pricing Canadian Livestock Emissions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 305-329, June.
    16. Xing Yin & Xiaolin Chen & Xiaolin Xu & Lianmin Zhang, 2020. "Tax or Subsidy? Optimal Carbon Emission Policy: A Supply Chain Perspective," Sustainability, MDPI, vol. 12(4), pages 1-13, February.
    17. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
    18. Ian W.H. Parry & Mr. Simon Black & Nate Vernon, 2021. "Still Not Getting Energy Prices Right: A Global and Country Update of Fossil Fuel Subsidies," IMF Working Papers 2021/236, International Monetary Fund.
    19. Lekavičius, V. & Bobinaitė, V. & Galinis, A. & Pažėraitė, A., 2020. "Distributional impacts of investment subsidies for residential energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 130(C).
    20. Sidemo-Holm, William & Smith, Henrik G. & Brady, Mark V., 2018. "Improving agricultural pollution abatement through result-based payment schemes," Land Use Policy, Elsevier, vol. 77(C), pages 209-219.
    21. Jussi Lankoski, 2016. "Alternative Payment Approaches for Biodiversity Conservation in Agriculture," OECD Food, Agriculture and Fisheries Papers 93, OECD Publishing.
    22. Jessica Stubenrauch & Beatrice Garske & Felix Ekardt, 2018. "Sustainable Land Use, Soil Protection and Phosphorus Management from a Cross-National Perspective," Sustainability, MDPI, vol. 10(6), pages 1-23, June.
    23. Felix Ekardt & Benedikt Jacobs & Jessica Stubenrauch & Beatrice Garske, 2020. "Peatland Governance: The Problem of Depicting in Sustainability Governance, Regulatory Law, and Economic Instruments," Land, MDPI, vol. 9(3), pages 1-24, March.
    24. Joel E. Smith & Johannes Urpelainen, 2017. "Removing fuel subsidies: How can international organizations support national policy reforms?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(3), pages 327-340, June.
    25. Theodoros Arvanitopoulos & Grégoire Garsous & Paolo Agnolucci, 2021. "Carbon leakage and agriculture: A literature review on emissions mitigation policies," OECD Food, Agriculture and Fisheries Papers 169, OECD Publishing.
    26. Zhang, Yue-Jun & Peng, Yu-Lu & Ma, Chao-Qun & Shen, Bo, 2017. "Can environmental innovation facilitate carbon emissions reduction? Evidence from China," Energy Policy, Elsevier, vol. 100(C), pages 18-28.
    27. Sovacool, Benjamin K., 2017. "Reviewing, Reforming, and Rethinking Global Energy Subsidies: Towards a Political Economy Research Agenda," Ecological Economics, Elsevier, vol. 135(C), pages 150-163.
    28. Leng Wong, Siang & Chia, Wai-Mun & Chang, Youngho, 2013. "Energy consumption and energy R&D in OECD: Perspectives from oil prices and economic growth," Energy Policy, Elsevier, vol. 62(C), pages 1581-1590.
    29. Phaneuf,Daniel J. & Requate,Till, 2017. "A Course in Environmental Economics," Cambridge Books, Cambridge University Press, number 9780521178693.
    30. Rubini, Luca, 2009. "The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective," OUP Catalogue, Oxford University Press, number 9780199533398.
    31. Garrone, Paola & Grilli, Luca, 2010. "Is there a relationship between public expenditures in energy R&D and carbon emissions per GDP? An empirical investigation," Energy Policy, Elsevier, vol. 38(10), pages 5600-5613, October.
    32. Anastasios Xepapadeas (ed.), 1996. "Economic Policy for the Environment and Natural Resources," Books, Edward Elgar Publishing, number 1012.
    33. Maria Marino & Benedetto Rocchi & Simone Severini, 2021. "Conditional Income Disparity between Farm and Non‐farm Households in the European Union: A Longitudinal Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 589-606, June.
    34. Susanne Stoll-Kleemann & Tim O’Riordan, 2020. "Revisiting the Psychology of Denial Concerning Low-Carbon Behaviors: From Moral Disengagement to Generating Social Change," Sustainability, MDPI, vol. 12(3), pages 1-16, January.
    35. Antonia Weishaupt & Felix Ekardt & Beatrice Garske & Jessica Stubenrauch & Jutta Wieding, 2020. "Land Use, Livestock, Quantity Governance, and Economic Instruments—Sustainability Beyond Big Livestock Herds and Fossil Fuels," Sustainability, MDPI, vol. 12(5), pages 1-27, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stoicea Paula & Tudor Valentina Constanța & Stoian Elena & Micu Marius Mihai & Soare Elena & Militaru Dan Ciprian, 2023. "Subsidies’ Impacts on Technical–Economic Indicators in Large Crop Farms," Agriculture, MDPI, vol. 13(9), pages 1-17, August.
    2. Bo Yao & Fangbin Qiao, 2023. "The Heterogeneous Effects of Central and Local Subsidies on Firms’ Innovation," Sustainability, MDPI, vol. 15(2), pages 1-15, January.
    3. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beatrice Garske & Katharine Heyl & Felix Ekardt & Lea Moana Weber & Wiktoria Gradzka, 2020. "Challenges of Food Waste Governance: An Assessment of European Legislation on Food Waste and Recommendations for Improvement by Economic Instruments," Land, MDPI, vol. 9(7), pages 1-23, July.
    2. Bo Yao & Fangbin Qiao, 2023. "The Heterogeneous Effects of Central and Local Subsidies on Firms’ Innovation," Sustainability, MDPI, vol. 15(2), pages 1-15, January.
    3. Thijs Van de Graaf & Harro van Asselt, 2017. "Introduction to the special issue: energy subsidies at the intersection of climate, energy, and trade governance," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(3), pages 313-326, June.
    4. Nicky R. M. Pouw & Hans-Peter Weikard & Richard B. Howarth, 2022. "Economic analysis of international environmental agreements: lessons learnt 2000–2020," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(2), pages 279-294, June.
    5. Liang, Ting & Zhang, Yue-Jun & Qiang, Wei, 2022. "Does technological innovation benefit energy firms’ environmental performance? The moderating effect of government subsidies and media coverage," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    6. Zhu, Zhishuang & Liao, Hua & Liu, Li, 2021. "The role of public energy R&D in energy conservation and transition: Experiences from IEA countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    7. Ahmet Koseoglu & Ali Gokhan Yucel & Recep Ulucak, 2022. "Green innovation and ecological footprint relationship for a sustainable development: Evidence from top 20 green innovator countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 976-988, October.
    8. Eli P Fenichel & Yukiko Hashida, 2019. "Choices and the value of natural capital," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(1), pages 120-137.
    9. Xiao Yu & Yingdong Xu & Meng Sun & Yanzhe Zhang, 2021. "The Green-Innovation-Inducing Effect of a Unit Progressive Carbon Tax," Sustainability, MDPI, vol. 13(21), pages 1-18, October.
    10. Xiao Yu & Yingdong Xu & Jian Zhang & Yue Sun, 2022. "The Synergy Green Innovation Effect of Green Innovation Subsidies and Carbon Taxes," Sustainability, MDPI, vol. 14(6), pages 1-27, March.
    11. Acemoglu, Daron & Rafey, Will, 2023. "Mirage on the horizon: Geoengineering and carbon taxation without commitment," Journal of Public Economics, Elsevier, vol. 219(C).
    12. Qian Zhang & Yunjia Wang & Lu Liu, 2023. "Carbon Tax or Low-Carbon Subsidy? Carbon Reduction Policy Options under CCUS Investment," Sustainability, MDPI, vol. 15(6), pages 1-26, March.
    13. Awaworyi Churchill, Sefa & Inekwe, John & Smyth, Russell & Zhang, Xibin, 2019. "R&D intensity and carbon emissions in the G7: 1870–2014," Energy Economics, Elsevier, vol. 80(C), pages 30-37.
    14. Meya, Jasper N. & Drupp, Moritz A. & Hanley, Nick, 2021. "Testing structural benefit transfer: The role of income inequality," Resource and Energy Economics, Elsevier, vol. 64(C).
    15. Argueyrolles, Robin & Delzeit, Ruth, 2022. "The interconnections between Fossil Fuel Subsidy Reforms and biofuels," Conference papers 333492, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Moeltner, Klaus, 2019. "Bayesian nonlinear meta regression for benefit transfer," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 44-62.
    17. David A. Keiser & Joseph S. Shapiro, 2019. "US Water Pollution Regulation over the Past Half Century: Burning Waters to Crystal Springs?," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 51-75, Fall.
    18. Schilling, Markus & Chiang, Lichun, 2011. "The effect of natural resources on a sustainable development policy: The approach of non-sustainable externalities," Energy Policy, Elsevier, vol. 39(2), pages 990-998, February.
    19. Mathieu-Bolh, Nathalie, 2017. "Can tax reforms help achieve sustainable development?," Resource and Energy Economics, Elsevier, vol. 50(C), pages 135-163.
    20. Caplan, Arthur J. & Acharya, Ramjee, 2019. "Optimal vehicle use in the presence of episodic mobile-source air pollution," Resource and Energy Economics, Elsevier, vol. 57(C), pages 185-204.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:23:p:15859-:d:987040. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.