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.
"Not only do these subsidies promote inefficiencies, but they also cause much environmental havoc," a new World Bank report, 'Detox Development', released on June 15, said.
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.
For instance, 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.
"Repurposing these wasteful subsidies will help ensure a green and just transition that can provide jobs and opportunities for all. Annually, countries spend six times more on subsidising fossil fuel consumption than their commitments made under the Paris Agreement to tackle climate change. Redirecting these subsidies can unlock significant funds for sustainable purposes," the World Bank said.
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.
The report's observations come just as the G20 Agriculture Ministers' Meeting began in Hyderabad. In a video address, Prime Minister Narendra Modi said on June 16 that the ministers' responsibilities were not limited to just the agriculture sector but "towards securing the future of humanity".
Farm subsidies in crosshairs
In its report, the World Bank was scathing in its assessment of agriculture subsidies.
"Agriculture is both a victim and a villain when it comes to environmental degradation and climate change... while much of agricultural support is intended to increase farmers' resilience to extreme weather events, such support can unintentionally expand the sector's environmental footprint, exacerbate climate impacts, and diminish its resilience to climate change," it said.
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.
"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.
"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," van Trotsenburg added.
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