Reforming Environmentally Harmful Subsidies

The document contains technical appendices for a report on reforming environmentally harmful subsidies (EHS). It introduces a 'Fiscal Pressure' indicator to identify countries where high debt and deficits create strong incentives for subsidy reform, and provides a stakeholder analysis mapping the influence and attitudes of businesses, governments, consumers, and civil society toward EHS reform.

• The 'Fiscal Pressure' indicator identifies countries with high government deficits, gross debt, and debt servicing costs over a 10-year period (2014–2023) to determine where EHS reform would have the highest positive fiscal impact. Countries with a final indicator value between 0.6 and 1 are considered to have higher levels of fiscal pressure and are most likely to benefit from reform.
• Based on the fiscal pressure analysis, India has the highest indicator value (1.0), followed by Venezuela (0.9), Madagascar (0.8), and Brazil (0.7). Conversely, the Republic of Korea and Russia have the lowest values (0.0).
• The political economy of EHS reform is characterized by a conflict where beneficiaries (such as oil producers and agribusinesses) receive immediate financial gains, while the environmental and health costs are diffuse and perceived only in the long term. This leads to a political calculus that favors the status quo due to loss aversion among beneficiaries.
• Stakeholder mapping identifies 'Businesses—EHS recipients' as highly influential (score 4) but completely opposed to reform (score -5). In contrast, 'Businesses—sustainable competitors' (such as renewable energy developers) are supportive (score 5) but have moderate influence (score 3) due to their smaller size and lack of lobbying power compared to large EHS recipients.
• Governments are mapped as the most influential stakeholders (score 5) but generally lean toward opposing reform (score -3) due to fears of political backlash, administrative hurdles, and lack of capacity. While environment ministries advocate for nature and climate action, they are often the weakest in terms of political influence compared to finance ministries.
• Household consumers are viewed as a potential source of opposition to reform, particularly poor households for whom price reductions from subsidies are significant relative to income. To make reforms feasible, the document suggests using targeted social assistance and time-limited compensation.

APA

Gerasimchuk, I., Doan, D., McConnell, C., Urazova, I., Ullah, F., Laan, T., Tipping, A., & Morra, F. (2025). Reforming Environmentally Harmful Subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform-appendices.pdf

Chicago

Gerasimchuk, Ivetta, Darcie Doan, Claire McConnell, Indira Urazova, Farooq Ullah, Tara Laan, Alice Tipping, and Fernando Morra. Reforming Environmentally Harmful Subsidies. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform-appendices.pdf.

Wikipedia

{{cite report |last1=Gerasimchuk |first1=Ivetta |last2=Doan |first2=Darcie |last3=McConnell |first3=Claire |last4=Urazova |first4=Indira |last5=Ullah |first5=Farooq |last6=Laan |first6=Tara |last7=Tipping |first7=Alice |last8=Morra |first8=Fernando |title=Reforming Environmentally Harmful Subsidies |publisher=International Institute for Sustainable Development |date=February 2025 |url=https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform-appendices.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gerasimchuk2025reforming, author = {Gerasimchuk, Ivetta and Doan, Darcie and McConnell, Claire and Urazova, Indira and Ullah, Farooq and Laan, Tara and Tipping, Alice and Morra, Fernando}, title = {{Reforming Environmentally Harmful Subsidies}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = feb, url = {https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform-appendices.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }