ID 6510
Submitting Entity IUCN
Submitted for Sixth Ordinary Meeting of the Conference of the Parties to the Convention on Biological Diversity (COP 6)
Main Information
Title Perverse Subsidies
Description The question asked in this paper is: which subsidies are detrimental to 
society's overall and long-term interests? Subsidies represent 3.8% of a global 
economy of $26 trillion and therefore play a prime role in the functioning of the global 
economy. They can be detrimental, i.e. 'perverse,' to society in the sense that they 
contribute to the destruction of the environment and the over-exploitation of natural 
resources. For example, agricultural subsidies can lead to over-loading of croplands 
and pollution from synthetic fertilisers and pesticides. The main problems associated 
with subsidies are that they are very expensive for governments and that they cause 
inefficiencies in production or the mis-use and over-use of resources. The case of 
subsidies for marine fisheries is studied in detail. All major marine fisheries are 
considered to be over-exploited and while world-wide harvest has increased almost 
fivefold since 1950, the catch has been declining since 1989. Subsidies, aimed at 
preserving the fishermen's jobs, aggravate the situation by allowing the fishing industry 
to continue over-exploiting the fisheries in spite of the declining annual catch. As a 
result, there is now an excessive extractive capacity in the fishing industry. Several 
policy responses are proposed, such as using the subsidies to retrain fishermen who 
are put out of work through reduced catches—whether reduced through declining 
stocks or through policy shifts. Another proposal is for governments to charge foreign 
fishermen for the right to catch off their shores. Finally, the solution proposed is that of 
a limited number of tradeable fishing rights to individual fishermen.
Web Link /doc/case-studies/inc/cs-inc-iucn-05-en.pdf
Additional Information
Authors Norman Myers
Source IUCN (1996).
Ecosystems Marine and Coastal Biodiversity
Regions Global
Incentive Measures Reform of Perverse Incentives
Keywords Subsidy reform
  • United Nations
  • United Nations Environment Programme