Sustainable finance
Subsidy Reform
Removing or repurposing subsidies that damage the environment — above all fossil fuel, fisheries and agricultural support.
Definition
Subsidy reform is the reduction, removal or redirection of government support that encourages environmentally harmful activity: fossil fuel consumption and production subsidies (estimated by the IMF in the trillions annually when externalities are counted), capacity-enhancing fisheries subsidies driving overfishing, and agricultural support linked to intensification and land conversion. The case for reform is fiscal and environmental at once; the difficulty is distributional — subsidies are regressive in structure but their removal hurts poor households first if not compensated.
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