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World Bank, Washington, DC
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Agricultural subsidies make up a
large share of public budgets, exceeding 40 percent of total
agricultural production value in some countries. Subsidies
are often important components of government strategies to
raise agricultural productivity, support agricultural
households, and promote food security. They do so by
reducing production costs, promoting the use of inputs or
modern farming techniques, encouraging the production of
certain crops, and raising household incomes. Given the
magnitude of these subsidies, their distributional
implications and the externalities they impose on the
environment are of significant consequence. This paper uses
a new spatial analysis to explore the distributional
implications of agricultural output subsidies across 16
countries/regions and the distributional and select
environmental implications of input subsidies across 23
countries/regions. The findings show that, relative to the
spatial distribution of income, both types of subsidy are
distributionally mixed. Output subsidies are relatively
progressive in 10 countries/regions and regressive in six,
while input subsidies are relatively progressive in 11
countries/regions, regressive in nine, and neutral in three.
The results also show that input subsidy schemes
significantly increase fertilizer use, particularly in
richer regions within countries, leading to soil saturation
of nitrogen, an indicator of accelerated environmental degradation.
Palabras clave
AGRICULTURE SUBSIDY, DISTRIBUTION, INEQUALITY, FERTILIZER, NITROGEN POLLUTION, ENVIRONMENTAL DEGRADATION