Sustainable finance
Subsidy Reform
Definition
Subsidy reform is the reduction, removal or redirection of government support that encourages environmentally harmful activity: fossil fuel consumption and production subsidies (estimated by the IMF in the trillions annually when externalities are counted), capacity-enhancing fisheries subsidies driving overfishing, and agricultural support linked to intensification and land conversion. The case for reform is fiscal and environmental at once; the difficulty is distributional — subsidies are regressive in structure but their removal hurts poor households first if not compensated.
References
This reference provides supporting context for how “Subsidy Reform” is defined and used.
Source imported for editorial provenance.
Overview
How it is used
The concept structures IMF and World Bank fiscal advice, WTO fisheries disciplines, SDG targets 12. c and 14. 6, and agricultural policy repurposing (FAO-World Bank analysis).
Why it matters
Governments spend more subsidising nature's destruction than protecting it; subsidy reform is the single largest unlocked climate and biodiversity lever.