Identifying Environmentally Harmful Agricultural Subsidies at the International Level

This report by the Forum on Trade, Environment, & the SDGs (TESS) examines the environmental impacts of agricultural subsidies and proposes frameworks for identifying and reforming those that are environmentally harmful. It emphasizes the need for international cooperation to avoid market leakage and competitiveness losses while aligning agricultural support with global biodiversity and climate goals.

• Global agricultural support is estimated to be between $610 billion and $842 billion per year. Of the approximately $540 billion spent annually on net support to individual producers across 88 countries from 2013 to 2018, the FAO, UNDP, and UNEP estimate that two-thirds are price distorting and potentially harmful to the environment.
• Certain types of agricultural support are identified as more environmentally harmful than others. Market price support, payments based on commodity output, and subsidies for unconstrained variable inputs (such as fertilizers, pesticides, and fuel) are highlighted as particularly damaging because they incentivize production intensification and land conversion.
• Removing market price support (MPS) can lead to complex global outcomes. While it may decrease greenhouse gas (GHG) emissions at a national level, several modelling exercises suggest it can increase global emissions because lower prices in protecting countries can raise overall demand, leading to greater environmental harm elsewhere.
• The report identifies significant trade-offs between environmental goals and other public policy objectives. For example, ruminant livestock are highly emissions-intensive and drive biodiversity loss, yet they are critical for food security, nutrition, and the livelihoods of many populations.
• To identify environmentally harmful subsidies, the report suggests several granular approaches: focusing on production-linked support, enhancing transparency through standardized reporting, differentiating by high-footprint commodities (like ruminant livestock), or targeting specific farming practices using frameworks like the Driver-Pressure-State-Impact-Response (DPSIR) model.
• The report proposes the use of a 'rebuttable presumption' as a pragmatic tool. Under this approach, a core set of subsidies would be deemed environmentally harmful unless the subsidizing country can demonstrate that the specific scheme does not result in environmental damage, effectively reversing the burden of proof.
• International cooperation is presented as essential to prevent 'market leakage,' where the removal of subsidies in one country leads to increased production and environmental degradation in third countries with lower standards.

APA

Forum on Trade, Environment, & the SDGs (2025). Identifying Environmentally Harmful Agricultural Subsidies at the International Level. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-IEG-Report-Agricultural-Subsidies.pdf?dm=1749207802

Chicago

Forum on Trade, Environment, & the SDGs. Identifying Environmentally Harmful Agricultural Subsidies at the International Level. 2025. https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-IEG-Report-Agricultural-Subsidies.pdf?dm=1749207802.

Wikipedia

{{cite report |author=Forum on Trade, Environment, & the SDGs |title=Identifying Environmentally Harmful Agricultural Subsidies at the International Level |date=May 2025 |url=https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-IEG-Report-Agricultural-Subsidies.pdf?dm=1749207802 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{forumontradeenvironmentthesdgs2025identifying, author = {{Forum on Trade, Environment, \& the SDGs}}, title = {{Identifying Environmentally Harmful Agricultural Subsidies at the International Level}}, institution = {Forum on Trade, Environment, \& the SDGs}, year = {2025}, month = may, url = {https://lyrical-cormorant.files.svdcdn.com/production/assets/images/Publications/TESS-IEG-Report-Agricultural-Subsidies.pdf?dm=1749207802}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }