A new World Bank report has explained how trillions of dollars spent on subsidies can save the people and the planet.
The global bank said $577 billion was spent in 2021 to lower the price of polluting fuels, such as oil, gas, and coal.
The report, titled: Detox Development: Repurposing Environmentally Harmful Subsidies, says the subsidies were wasted on agriculture, fishing and fossil fuels.
The report puts the global direct government expenditures in the three sectors as $1.25 trillion a year, adding that redirecting the subsidies could unlock at least $500 billion towards more productive and sustainable uses.
The Senior Managing Director of the World Bank, Axel van Trotsenburg, said: “People say that there isn’t money for climate, but there is – it’s just in the wrong places. If we could repurpose the trillions of dollars being spent on wasteful subsidies and put these to better, greener uses, we could together address many of the planet’s most pressing challenges.”
The problem, a statement by the bank said, is bigger than direct government expenditures.
“The report assesses the harmful impact of implicit subsidies, which amount to $6 trillion each year. These represent the costs on people and the planet from pollution, greenhouse gas emissions, road congestion, and the destruction of nature ultimately resulting from the subsidies.
“In agriculture, direct subsidies of more than $635 billion a year are driving the excessive use of fertilisers that degrade soil and water and harm human health. Subsidies for products, such as soybeans, palm oil, and beef, cause farmers to push into the forest frontier and are responsible for 14 per cent of forest loss every year.
“Fisheries subsidies, which exceed $35 billion each year, are a key driver of dwindling fish stocks, oversized fishing fleets, and falling profitability. With more than 1 billion poor people obtaining most of their animal protein from fish, it is critical that the world’s fish stocks are restored to healthy status.
“The burning of oil, gas, and coal causes 7 million premature deaths a year around the world through the bad air that people must breathe. The burden falls mostly on the poor,” the bank said.
The World Bank’s Chief Economist of the Sustainable Development Practice Group, Richard Damania, said: “With foresight and planning, repurposing subsidies can provide more resources to give people a better quality of life and to ensure a better future for our planet.
“Much is already known about best practices for subsidy reform, but implementing these practices is no easy feat due to entrenched interests, challenging political dynamics, and other barriers.”