Subsidies, reprise

Via Twatter, yet more subsidies stuff. This time they've decided to consider fossil fuels, agriculture, and fisheries together, presumably so as to get a bigger number. And so they do; about $1.25t direct, compared to ~$500m when thinking only of fossil fuels. Unfortunately - even though this is at least nominally a World Bank report - they are distinctly sloppy in their language: Governments spend a large percentage of their budget on subsidies that exacerbate air pollution and affect the agriculture and fisheries sectors. The magnitude of subsidies for fossil fuels, agriculture, and fisheries is vast and likely exceeds US$7 trillion per year in explicit and implicit subsidies — or approximately 8 percent of global GDP. So here they give the impression that govt spend on subsidies is ~8% of GDP. But of course that's bollox, because that $7t includes "implicit" subsidies, which aren't seen in GDP. If you include only direct, you'd get a rather less impressive 1.4%. Note that explicit Ag subsidies are bigger than FF, and fisheries ones are significantly smaller; implicit Ag subsidies appear to be wildly uncertain, ranging from ~$500b to $5t (but I think much of that in turn comes from GHG effects, so there may be double-counting with the FF subsidies). We get stuff like For fisheries, the largest implicit subsidy is the lack of effective regulations to reduce overcapacity and prevent overfishing, which shows you how far away from the usual meaning of the word "subsidy" we have drifted.

Another amusing point is that when looking at Ag subsidies, they are easily able to see - it's their first point - that Richer countries spend more on agricultural subsidies than poorer countries, even when seen relative to total agricultural production. But when looking at FF direct subsidies, they are unable to say anything about what kind of countries subsidise more. Could that be because when you look, the answer is that its the banana republics, not the West, doing the subsidising? There is a sliver of good news though: Implicit subsidies for fossil fuels... the local impacts of air pollution and global climate change constituting more than 75 percent of the total: so the banana republics are damaging themselves mostly, rather than us. This means that recommendations like Policy makers must fully reflect the health and societal costs of air pollution in the price of fossil fuels are dubious; because most of the damage / implicit subsidy occurs in what you burn and how you burn it, not how much you burn (see e.g. box 2.3). Indeed I'm somewhat dubious that their focus on FF is correct; they need to include "dung".

Perhaps I should note that I'm all for removing harmful subsidies. But I'm doubtful that a somewhat meally-mouthed report that can't bring itself to be honest about who is doing the subsidising, and which sez stuff like Subsidies are important tools that governments can use, is going to help.

Incidentally: I don't think they include negative subsidies (e.g. the EU's ETS) in their totals, and probably should.

Refs

* In Debate Over Railway Safety Bill, J.D. Vance and Donald Trump Are Leaning to the Left

* ‘Power and Progress’ Review: Technology and the New Leviathan: Deirdre N. McCloskey on Daron Acemoglu and Simon Johnson.

* Not only will Hollandse Kust Zuid become the world’s largest offshore wind farm it’s also the world’s first offshore wind farm to be built without subsidy.

* Orwell’s Falsified Prediction on Empire.

* Diversity Really is Our Strength.