Potentials and Limitations of Subsidies in Sustainability Governance: The Example of Agriculture

Katharine Heyl (), Felix Ekardt, Lennard Sund and Paula Roos
Additional contact information
Katharine Heyl: Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany
Felix Ekardt: Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany
Lennard Sund: Faculty of Management, Economics and Social Sciences, University of Cologne, 50923 Cologne, Germany
Paula Roos: Research Unit Sustainability and Climate Policy, 04229 Leipzig, Germany

Sustainability, 2022, vol. 14, issue 23, 1-26

Abstract: The goals of the Paris Agreement and the Convention on Biological Diversity call for a global transition to sustainability. To achieve these goals, subsidies can be implemented. Subsidies are pervasive especially (but not only) in the agricultural sector. The agricultural sector plays an important role in the transition to sustainability as agriculture can both benefit and harm climate and biodiversity. Some agricultural subsidies seem environmentally beneficial, but the majority appear environmentally destructive. Against this background, this article applies a qualitative governance analysis—including aspects of legal analysis—to provide a comprehensive review of agricultural subsidies in the EU and to discuss the role of subsidies in transitioning towards sustainability. Results show that agricultural subsidies need to be substantially downscaled and implemented as complementary instruments only because other policy instruments such as quantity control instruments are more effective in addressing the drivers of non-sustainability, i.e., fossil fuels and livestock farming. However, subsidies remain a useful complementary instrument to remunerate the provision of public goods (e.g., in nature conservation) as long as they are constructed in a way that they do not suffer from typical governance problems. In addition, data and transparency need to be improved, subsidies for research and development increased, and environmental objectives streamlined through EU law to ensure all agricultural subsidies are in line with global environmental goals.

Keywords: agricultural subsidies; subsidies; Common Agricultural Policy; Paris Agreement; Convention on Biological Diversity; State aid; Green Deal; Farm to Fork Strategy; public goods (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/23/15859/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/23/15859/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:23:p:15859-:d:987040

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().