Subsidies worsening climate change, says World Bank

According to the report, the global spending on subsidies — both explicit and implicit — for fossil fuels, agriculture, and fisheries is more than $7 trillion, or around 8 percent of global GDP. And, they are only making climate change worse by incentivising the use of certain goods or activities that are harmful to the environment.

The World Bank has called on countries to use the money they spend on subsidising fossil fuels, agriculture, and fisheries to fight climate change instead.

The report estimates that agriculture subsidies cause a loss of 2.2 million hectares of forest every year. This is equal to 14 percent of global deforestation. The use of fossil fuels is a “key driver” of 7 million premature deaths annually due to air pollution. Fishing-related subsidies worth more than $35 billion per year are leading to reduced fish stocks, huge fishing fleets, and dwindling profitability.

The report’s findings are key as they come amid increasing pressure on developed economies to enhance the size of their financial support to help developing and other nations make the transition to a greener future, with India, serving as the G20 presidency this year, looking to rally the voice of the “Global South”.

At the COP-26 conference in Glasgow in late 2021, India demanded $1 trillion in climate finance from rich countries by the end of the decade.

In its report, the World Bank was scathing in its assessment of agriculture subsidies. Using India as an example, the report argued that agricultural subsidies could also make other sectors more inefficient by not only making fewer resources available to other sectors but also by increasing demand for agricultural labour, raising farm wages, and reducing non-agricultural output.