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Second, it has to be borne in mind that decoupling can
never be complete because of real-world phenomena
like market imperfections, risk and political dynamics
(OECD 2000b). Under imperfect capital markets, for
instance, any kind of income support would be partially
reinvested in agriculture, generating additional
production in future years. If wealthier farmers are
ready to assume more risks, any payment – by increasing
their wealth – will affect their production decisions
(OECD 2000b). Moreover, scale also matters:
even relatively small impacts may add up to a large
aggregate distortion if the overall volume of the subsidy
is high. These distortions may include the production
decisions of potential foreign competitors.
Better targeting of decoupled support measures for
specific income objectives or market failures remains
a major challenge of ongoing policy reforms in OECD
countries (OECD 2009). This includes agri-environment
payments. A 2005 analysis of EU agri-environment
payments noted generally positive effects of the
measures on habitat preservation, but called for development
of more impact-oriented monitoring, of
evaluation procedures that are better adapted to the
variety of issues, as well as for better targeting of
measures for the most problematical farms and the
most environmentally sensitive areas (Oréade-Breche
2005). The OECD stresses that both decoupling and
targeting are among the policy principles that have
shown to improve effectiveness, efficiency and equity
of policies, and should continue to inspire future policy
design (OECD 2009).
Support measures that encourage agricultural
production are considered to distort potential trade
flows and are therefore slated for ‘substantial reductions’
in the agricultural trade negotiations under the
Doha work programme of the World Trade Organization
(WTO). These negotiations also seek to review and
clarify the ‘Green Box’ criteria, while ensuring that due
account is taken of non-trade concerns, including
environmental objectives (WTO 2004). While the
successful conclusion of the negotiations has the
potential to create synergy with the objectives
of preserving ecosystems and biodiversity, the
positions of WTO Members are still divergent. The
agricultural negotiations remain one of the major
stumbling blocks to the successful conclusion of the
Doha work programme.
REFORMING SUBSIDIES
6.3.2 FISHERIES
“More than a decade after adoption
of the 1995 U.N. Code of Conduct
for Responsible Fisheries, putting
an end to overfishing remains a
fundamental global challenge…
Progress towards improved fisheries
subsidies policies has been made
since 1997,…but the real work of
ending harmful fisheries subsidies
has just barely begun”.
Achim Steiner, Executive Director, UNEP, and James P. Leape,
Executive Director, WWF. Source: UNEP and WWF (2007)
Although subsidies to fisheries are much less substantial
than those to agriculture, they are significant both
in terms of their potential impact on the environment
and also relative to the size of the industry in several
countries. For instance, in some EU Member States,
fisheries subsidies are higher than the economic value
of landings.
Addressing their negative environmental impacts is a
matter of particular urgency as almost one third
of global marine fisheries are close to collapse or
have already collapsed. According to the 2008
Fisheries Report by the Food and Agriculture Organization
of the United Nations (FAO):
• 28% of marine capture fish stocks monitored
by FAO are either overexploited, depleted or
recovering from depletion and are yielding less
than their maximum sustainable yield (up from
25% in the 2006 report);
• 52% are fully exploited, producing at or close to
their maximum sustainable yield;
• the remaining 20% are underexploited or
moderately exploited (down from 25% in the
2006 report). Although this figure might imply
that more could be produced, it must be borne
in mind that at least some of these stocks are
low-value species or consist of species for which
harvesting may be uneconomical under current
market conditions (FAO 2006 and 2008; map
presented in Chapter 1).
TEEB FOR NATIONAL AND INTERNATIONAL POLICY MAKERS - CHAPTER 6: PAGE 16