Subsidies of destruction.

• Author: Brown, Lester R.
• Position: Fishery subsidies - ECONOMIC OBSERVER

ONE WAY TO CORRECT market failures is lax shifting--raising taxes on activities that harm the environment so that their prices begin to reflect their true cost, while offsetting this with a reduction in income taxes. A complementary way to achieve this goal is subsidy shifting. Each year, the world's taxpayers provide at least $700,000,000,000 in subsidies for environmentally destructive activities, such as fossil fuel burning, overpumping aquifers, clearcutting forests, and overfishing. As an Earth Council study observes, "There is something unbelievable about the world spending hundreds of billions of dollars annually to subsidize its own destruction."

The perverse nature of harmful subsidies especially is apparent in the case of oceanic fisheries. Partly as a result of these subsidies, there now are so many fishing trawlers that their catch potential nearly is double the sustainable catch. Three-fourths of ocean fisheries are being fished at or beyond capacity or are recovering from overexploitation. If we continue with business as usual, many of these fisheries will collapse.

In me end, governments need to eliminate fishery subsidies. Shifting these subsidies to the creation of marine parks to regenerate fisheries would be a giant step in the right direction. A U.K. team of scientists, led by Andrew Balmford of the Conservation Science Group at Cambridge University, has analyzed the costs of operating marine reserves on a large scale based on data from 83 relatively small, well-managed reserves. The researchers concluded that managing a network of marine reserves governing 30% of the oceans would cost about $13,000,000,000--certainly less than the $22,000,000,000 in harmful subsidies that governments dole out to fishers. "Our study suggests that we could afford to conserve the seas and their resources in perpetuity, and for less than we are now spending on subsidies to exploit them unsustainably," Balmford asserts.

Falling water tables pose another problem that could be addressed--at least in part--through subsidy shifting. The drilling of millions of irrigation wells over the last half-century has pushed water withdrawals beyond recharge rates, in effect leading to groundwater mining. The failure of governments to limit pumping to the sustainable yield of aquifers means that water tables are falling in countries that contain more than half of the world's people, including the big three grain producers--China, India, and the U.S. In...