GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 21, March 2008
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Estimating irrigation subsidies: the need for a common methodology
By Ravinder P.S. Malik*
Agricultural is the leading consumptive user of water, accounting for between 70 to 90 percent of the total water used in developing countries and more than one third of the water consumed in many OECD countries. In most countries, water for irrigated agriculture is subsidized by governments, with far reaching implications for food security, patterns of agricultural development, trade, government finances, and, more generally, the sustainable use of water.
Also in this issue:
Commentary
News
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Reports of off-budget subsidies in India as food and fuel prices rise
A report from the Reuters news agency says that India's national budget, released on 29 February, will not show the true cost of government subsidies due to a growing practice of issuing special bonds to oil and fertilizer companies to support low consumer prices.
While these subsidies do not appear on the budget, they do result in costs and risk for the government.
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Environmental groups call for full cost pricing for electricity in Ontario, Canada
A report from a coalition of Canadian environmental organizations has called on the Province of Ontario to eliminate subsidies and the health and environmental costs externalized to the rest of society as a result of burning coal, which benefit the generation of electricity. By cutting the nearly C$ 8 billion that the group says went to subsidizing electricity in 2006 (40 percent of which includes non-internalized environmental and health costs), homeowners would do more to conserve energy, and businesses would be forced to become more efficient.
Studies
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Nokia and North Rhine-Westphalia spar over investment subsidies
Finnish telecoms giant Nokia has angered the German federal state of North Rhine-Westphalia (NRW) by announcing its plans to close a cell-phone manufacturing plant in Bochum, Germany. At the center of the dispute is over €40 million worth of investment subsidies that NRW gave Nokia in order to attract the company.
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Report on the high cost of meeting U.S. biofuels mandates
A new study has examined the tax incentives and subsidies that will be required to meet U.S. biofuels mandates. The results show that subsidies of nearly US$ 2.50 per gallon to biodiesel and US$ 1.86 per gallon to cellulosic ethanol will be required to stimulate production that meets the mandates.
The U.S. Energy Independence and Security Act of 2007 mandates the use of 36 billon gallons of biofuels by 2022.
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Accountant survey says subsidies amount to bulk of farmer’s profits in the UK
A survey of agricultural accountants in the United Kingdom finds that subsidies accounted for nearly 97 percent of farm profits in 2006/07.
According to the survey by the Institute of Chartered Accountants, the average net profit for British farms was £46,300, while average subsidy receipts were £45,000.
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Energy consultants advise that subsidies will drive clean energy
A U.S. consulting firm has released a study that says renewable power and biofuels could supply up to 16 percent of global electric and transport needs, but that government policies such as mandates and subsidies will need to be key drivers.
The Cambridge Energy Research Associates (CERA), the publisher of the report, is an influential advisor to large energy companies (the Wall Street Journal says CERA "is as close as it gets to a proxy for conventional wisdom within big oil").
Events
The Global Subsidies Initiative, in partnership with The International Water Management Institute (IWMI), is holding a two-day workshop to discuss a common methodology for measuring irrigation subsidies. The aim is help build consensus on a methodology to define irrigation subsidies in a way that is technically sound and realistic, while taking into account wide variations in the availability of data. Ultimately, the GSI intends to arrive at an agreed method that will have the capacity, when applied to individual countries, to generate data that can be meaningfully compared across countries.
The Global Subsidies Initiative is holding a three-day forum for journalists in Latin America on the links between government subsidies and sustainable development. The forum, which is being organised in partnership with the INCAE Business School, and the Inter Press Service (IPS) News Agency, is part of an ongoing series of regional media forums designed to lead journalists around the world towards a better understanding of the decisive role that subsidies play in key emerging challenges that face policy makers.
www.globalsubsidies.org
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The Nano-flyover syndrome*
When the world's richest Indian, Lakshmi Mittal, recently visited Kolkata, the city of his youth, he was thrilled to see change. Mittal told the media that the biggest difference he saw was the many flyovers dotting the city skyline and "disciplined traffic". This is great progress, he told journalists, who promptly reported that the tycoon had given the city's road and traffic management a big thumbs up. I was also in Kolkata that day. But all I could see was lines and lines of traffic, belching black smoke, honking madly.
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