Negative Influence of Fiscal Subsidies on Environment: Empirical Evidence from Cross-Country Estimation

Sacchidananda Mukherjee and Debashis Chakraborty ()

Working Papers from National Institute of Public Finance and Policy

Abstract: It has been observed that a number of developed as well as developing countries provide subsidies to their resource-intensive sectors like agriculture, fisheries, manufacturing etc. However, overproduction and consequent pollution as well as overexploitation of natural resources resulting from the provision of input and output subsidies have been a serious threat to environmental sustainability. An area of concern is that subsidies with potentially harmful environmental impacts are not declining in the recent period, despite the ongoing negotiations through the WTO framework and the UN forums. The present analysis attempts to understand the role of government budgetary subsidies on the overall environmental performance through panel data model estimation for a set of seventy four countries over an eleven year period (2000-2010). The empirical findings confirm that a positive relationship between subsidies and environmental degradation exists in a cross-country framework. The analysis notes that the failure to contain provision of subsidies through timely conclusion of the Doha Round negotiations is also posing a serious threat to the global climate change related concerns.

Keywords: Budgetary subsidy; Environmental performance index; Environmental sustainability; Per capita CO2 emission; Human development; Urbanization; Government policy (search for similar items in EconPapers)
JEL-codes: H23 Q53 Q56 Q58 (search for similar items in EconPapers)
Pages: 25
Date: 2013-01
New Economics Papers: this item is included in nep-agr and nep-env
Note: Working Paper 117, 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:13/117

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