Citing a study that takes into account the costs of greenhouse gas emissions (which those researchers put at $1.5 trillion), land degradation and biodiversity loss ($1.7 trillion), and pollution, pesticides, and antimicrobial resistance ($2.1 trillion), the report finds they could be as high as $5.3 trillion. At the low end, the report says they could amount to anywhere from $548 billion to $1.1 trillion in damage caused by greenhouse gas emissions. This includes “impacts from local air pollution, greenhouse gas emissions, road congestion, and forgone tax revenues,” notes the report.Įstimates of the annual value of implicit subsidies for agriculture vary. Implicit subsidies for fossil fuels amounted to an estimated $5.4 trillion in 2020. People’s Plenary, COP27, Sharm el-Sheikh, Egypt, Nov. These are the indirect costs attributable to the three heavily subsidized sectors and the havoc they wreak on the health of the world’s air, land, and oceans and by extension, its people. The report estimates that implicit subsidies for fossil fuels, farming, and fishing range from $6 trillion to $10.8 trillion per year. The problem is much larger than explicit subsidies, however. According to the report, $22 billion of this constitutes “harmful subsidies that can lead to overcapacity and overfishing -often in international waters or the exclusive economic zones (EEZs) of low-income coastal countries.” Over 60 percent of this amount “is in the form of coupled support, which distorts producers’ decisions and leads to harmful environmental and economic impacts,” the report laments.Įxplicit subsidies for fisheries are estimated to exceed $35 billion per year. “Of all subsidies to the energy sector, about three-quarters go to fossil fuels.”Įxplicit subsidies for agriculture are estimated to exceed $635 billion per year. “By underpricing fossil fuels, governments not only incentivize overuse, but also perpetuate inefficient polluting technologies and entrench inequality,” states the report. That’s nearly six times as much as the $100 billion of financing wealthy countries pledged to mobilize annually for climate action in impoverished nations starting in 2020 - a promise that has yet to be delivered. The report notes that governments provided $577 billion in 2021 to “artificially lower the price” of planet-heating coal, oil and gas. Some of the annual support for fossil fuels, farming, and fishing comes in the form of more than $1.25 trillion in explicit subsidies, or direct government expenditures. (World Economic Forum, Flickr, CC BY-NC-ND 2.0) As van Trotsenburg suggested in a blog post, vast sums of public money to do just that are “hiding in plain sight.”Īxel van Trotsenburg, senior managing director with the World Bank at the World Economic Forum in January 2023. Notably, the world needs to invest trillions of dollars each year in climate change mitigation, adaptation, and compensation, from ramping up clean energy production to strengthening the capacity of communities to withstand and recover from extreme weather. “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.”Īccording to the bank’s newly published report, “ Detox Development: Repurposing Environmentally Harmful Subsidies,” governments around the world collectively spend at least $7.25 trillion each year - roughly 8 percent of global gross domestic product - to sustain the socially and ecologically damaging fossil fuel industry along with often destructive forms of farming and fishing. “People say that there isn’t money for climate but there is - it’s just in the wrong places,” Axel van Trotsenburg, senior managing director of the World Bank, said in a statement. The World Bank last week reached a conclusion that environmentalists have been hammering for decades: governments must use the trillions of dollars they spend annually to prop up fossil fuels, industrial agriculture and commercial fisheries on the climate crisis instead. (Franz Mahr / World Bank, CC BY-NC-ND 2.0) World Bank Group headquarters in Washington, D.C.
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