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Charles University in Prague Environment Center

Charles University in Prague Environment Center. Milan Ščasný „State of play environmental harmful subsidies“ (Introduction for discussion) EEB, CUEC and SSL seminar Prague, 21-22 November 2003. Why subsidise ?. Key objectives for subsidy and support measures introduction:

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Charles University in Prague Environment Center

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  1. Charles University in PragueEnvironment Center Milan Ščasný „State of play environmental harmful subsidies“ (Introduction for discussion) EEB, CUEC and SSL seminar Prague, 21-22 November 2003

  2. Why subsidise ? Key objectives for subsidy and support measures introduction: • protect (sectoral) employment and investment, • safeguard domestic supply and reduce external dependency, • stimulate (rural) economic development and growth, • abate policy or support of the poor, • provide access to basic living conditions

  3. Environmental harmful subsidies „… all kinds of financial supports and regulations that are put in place to enhance the competitiveness of certain products, processes or regions, and that, together with the prevailing taxation regime, (unintentionally) discriminate against sound environmental practises.“ OECD, 1998, Part I, p. 7

  4. Environmental harmful subsidies • there is NO activity with ANY negative environmental effect • negative effects on the environment refer to those levels of waste and emissions, incl. those of the previous and subsequent stages of Q/C, that are generated because a support measure is in place and which would not occur if no support was applied • GOAL: how to satisfy a particular need with the lowest possible environmental impact ?

  5. The linkages between SUPPORT and the ENVIRONMENT (by OECD1998) Linkage 1: link between the support measure and volume and composition of output Linkage 2: impact of the changes in the level & composition of output on actual pollution and waste levels Linkage 3: damage done to the environment by the resulting changes in pollution and waste levels

  6. Classification of support measures • immediate budgetary impact • condition of the support / points of impact • support resulting in PRICE INCREASE of PRODUCERS (purchase of agri products) • support leading to DECREASE of production COSTS (tax rebates for industry) • support resulting in a decrease of final price paid by CONSUMERS (cross-subsidy of electricity) • support that is not conditional on production or input levels

  7. Environmentaly harmful subsidies

  8. Environmentaly harmful subsidies • Total EHS: 1000 bil. USD -14*GDP-CR2002 • 75% in OECD MS • 3,6% OECD-GDP • mostly supported sectors influences 97% of world trade • 100 bil. USD yearly additional costs in poorer countries involved by subsidy policy of West (WB; EEB 2002)

  9. For debate… • we should consider „a historical reason“ of support introduction • it is not too late make change if we find soemthing is not perfect • ask for a removal or a reform ? • remove support measure? • change priorities? • adjust criterias? • focus not only „visible“ on/off budgetary support measures: • „implicit subsidy“ - non-internalised externalities • inefficiently allocated public spendings (transport infrastructure, housing policy) • privatisation, deregulation, liberalisation • efficient use of non-national grants (SF/CF in particular)

  10. The key stages in the CHECKLIST

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