Approximately 5% of the world's GNP, is spent by developed and developing countries on environmentally damaging subsidies on [inter alia], fossil fuels, electricity, agriculture, water and pesticides. Global reductions in these subsidies would result in economically and environmentally beneficial changes in favour of cleaner and more efficient industries and faster and greener growth. It would liberate financial resources in developed countries, which could enhance the possibility of transfers to the developing countries. It would also liberate resources in developing countries, which could be used to meet their sustainable development needs. By improving efficiency and raising productivity, it might expand a country's overall economic output and thereby provide a second source of increased revenue by enlarging the tax base. It would improve the environment not only for providing more resources for environmental protection, but also by reinforcing incentives for environmentally sound practices. Nevertheless, care should be taken to ensure that the changes in subsidies do not adversely affect the access of poor communities to basic amenities.
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities. Agenda 21 recommends removal or reduction of those subsidies which do not conform with sustainable development objectives.