This blog is about environmentally harmful subsidies: what they are,
where they come from, how you measure them, how you make others
disclose them, and just maybe how you can get rid of them.
I should say I'll be writing mostly
about environmentally harmful subsidies, because some other stuff will come in sometimes. You'll see some material on
recycling, on the use of market-based instruments for environmental
protection, on carbon control approaches, even about old advertising
for products that later turned out not to be as great as first thought
-- things like lead paint and asbestos. There will also be the occasional
rant about random things that make no sense -- like Ticketmaster
"convenience fees" perhaps. But mostly I'll be writing about
around the world that harm the environment we live in.
will tend to be less frequent and a bit longer. While I welcome your
feedback and comments, I simply don't have enough time to be able to
respond to all of them or to cull the inevitable inappropriate or spam-like
ones. As a result, public comments are not turned on, though you can send a private e-mail. If your feedback
to me helps to move forward a topic area, I will post your feedback
online. However, I will not attribute this material to you by name
unless I have advance permission to do so. I hope to be able to have
guest commentary from time to time. In every area that I touch upon,
there are others who specialize on those topics. I hope some of you will be willing to share your insights on the origins of particular subsidies or problems
with reporting transparency. If there is an area you would like to post
about, please let me know. I will likely contact some of you about this
Government subsidies is a wonkish
area to be sure. When I first stumbled upon it in the late 1980s, I had
no idea I'd still be following it 20 years later. But there is something fascinating about piecing together the complex,
and sometimes ingenious ways, in which industries have been able to use
their political systems to transfer value to themselves. Like the
mythical hydra, when one venue of subsidization is closed down, another
two are often opened. The more complex and arcane the method of
subsidization, the better for the recipients and their political
partners, as the potential fallout from public exposure is lower.
harmful subsidies will likely be around for quite some time to come.
However, there is much room for improvement. The revolutions in
information technology that have already washed through logistics and
marketing have yet to make much headway in the realm of improved
accountability in governance. Globalization creates natural constituent
groups to oppose subsidies in other countries (albeit while trying to
protect them in their own). The World Trade Organization's Agreement on Subsidies and Countervailing Measures has the potential to bring about change as well, though that potential has yet to be well tapped.
are having trouble understanding particular types of subsidies, you
are not alone. They were often constructed that way. But I hope you will
persist in trying, and let me know if I've done a murky job explaining
something so perhaps a second take can clear it up. Surely there are
other environmental issues that makes for better media: somebody camped
out in a redwood tree, or an industrial facility spewing toxic gases
into the nearby community. But in terms of the way we use our fixed
endowment of natural resources, subsidies are among the most important.
Modifications in the tax code that allow ethanol blenders to treat their tax credits as tax-exempt rather than includible
in taxes hardly capture the imagination in the same way. Too bad. This
particular example generates an incremental subsidy to the corn ethanol
industry of nearly a billion dollars per year. This wrinkle alone
provides more total subsidies than many renewable energies get in
total. Pending iniatives in the US to create a government-funded "bank" for energy investment is another. Assumptions on loss rates for loan guarantees, made largely out of the public eye by a handful of people, will drive how big a subsidy trough is opened and ultimately tens or hundreds of billions of dollars in taxpayer losses. If you multiply these examples by
ten thousand around the world, you can begin to get a sense of the
immense scope of this problem.
may encourage more rapid or more extensive depletion of natural
resources; they may hide the real costs in terms of pollution, accident
risk, or energy security from the resource users; they may encourage
development patterns that generate much larger environmental
destruction than needed. This list goes on, limited, it seems, only by
how hard one wants to look. The energy, water, solid waste, forestry,
agricultural, mining, transport, fisheries, and primary materials
sectors tend to be the ones most commonly associated with environmental
harm. My own expertise is mostly energy and water, so this will often
be the source of my examples. A central goal of the new site is to expand the resources available in all of these areas; if you specialize in these other natural resource areas, please post subsidy analysis that you have done.