Alongside the identification and introduction of incentives to support conservation and sustainable use of biodiversity, it is necessary to consider removing incentives which have a negative impact. This includes reviewing certain systems of property and use rights, contractual mechanisms, international trade policies, and economic policies.
The real environmental and health costs of the transport sector are far greater than the additional taxes paid by road transport (through fuel tax, registration, etc.). In other words, road traffic does not pay for the social costs it generates, which is tantamount to its being subsidized. This favours a pattern of transport development, and especially that of road transport, which is accompanied by excessive impacts on the environment and health.
Subsidies for natural resources are widely used to stimulate economic development. All have the effect that the user pays less than the market price for commodities such as energy, land, water and wood. While some subsidies are useful for stimulating economic or social development, protecting dependent communities or reducing dependence on imported resources, they can also encourage uneconomic practices and lead to severe environmental degradation. Some subsidies established long ago for sound economic or social reasons no longer serve their original purpose. Subsidies can take many forms and are often hidden so that even the beneficiaries may be unaware of the adverse environmental impacts they are having.
Without subsidies for irrigated water, for example, farmers in the western United States would be less likely to grow rice and other water-intensive crops in arid regions. Without crop supports, farmers would be less likely to overuse fertilizers and pesticides, a major source of water pollution. Without road transport subsidies, traffic congestion, urban air pollution and carbon dioxide emissions could be significantly reduced worldwide. And without energy subsidies, energy prices would rise, encouraging the use of more efficient vehicles and industrial equipment, and reducing pollutant emissions.
In 1996, the UN General Assembly's [Programme for the Further Implementation of Agenda 21] called specifically for government action towards "a socially responsible process of reduction and elimination of subsidies to environmentally harmful activities".
In its 1998 [Human Development Report], the UN Development Programme called for governments to "remove perverse subsidies" (especially in the OECD countries, where they are twice as large as the rest of the world) "and restructure taxes to shift incentives from consumption that damages the environment to consumption that promotes human development." The European Environment and Health Committee recommended in [Economic Perspectives on Environment and Health] (June 1999), that: European Member States should, so far as is practicable: (a) advance the internalization of environment and health costs, and the preparation of strategies for achieving this; (b) screen and revise the subsidies that encourage practices detrimental to the environment and health; and (c) coordinate their efforts in these directions through the relevant intergovernmental and international bodies, such as the European Commission and the European Environment and Health Committee (EEHC).
Energy is a major source of pollution (both local and global) and a potentially stable source of tax revenue. Restructuring energy taxes and prices is one of the most promising paths to environmental fiscal reform. A first step is the removal of subsidies. The Intergovernmental Panel on Climate Change's Working Group III recommends phasing out existing distortionary policies and practices that increase greenhouse gas emissions, such as some subsidies and regulations, as well as the noninternalization of environmental costs and distortions in transport pricing.
Calculations suggest that energy subsidies in developing countries and Eastern Europe have fallen by about half (from around $200 billion per year) since the early 1990s. A growing number of countries, led by Bangladesh and Indonesia, have eliminated pesticide subsidies; and a number of countries, including China and India, have begun to reduce subsidies on irrigation water, which accounts for more than 80 percent of all water use.
2. Subsidies -- especially perverse and environmentally damaging subsidies -- should be removed in a manner that promotes equitable development and that does not preclude use of subsidies for positive social and environmental purposes.
3. An obstacle to eliminating destructive subsidies is the lack of media attention that would inform the public of the environmental degradation and threats to public health that their tax payments are financing. This is a sensitive issue for which no one gets thanked. Understandably, when citizens, as taxpayers, learn about how badly their taxes are being spent, they often feel betrayed.
3. The world is spending hundreds of billions of dollars annually to subsidize its own destruction. (Earth Council).
2. Professional buy-out artists are drawn like bees to honey by a socially responsible firm that internalizes its environmental costs, pays union wages, invests in worker training, fully funds its pension fund, and pays its full share of taxes. To the serious money person, these are inefficiencies to be eliminated.