Paying the Polluter

Paying the Polluter

Environmentally Harmful Subsidies and their Reform

Edited by Frans H. Oosterhuis and Patrick ten Brink

Pledges to reform environmentally harmful subsidies (EHS) have increased over the past few years, at both global and national levels. Paying the Polluter addresses the most important issues to be considered when embarking upon these necessary reforms.

Appendix 1: Appendix 1: Classifying and estimating government support

Ronald Steenblik and Jehan Sauvage

Subjects: environment, environmental economics, environmental politics and policy, politics and public policy, environmental governance and regulation, environmental politics and policy


As explained in Chapter 2, support mechanisms differ both in the form in which they transfer something of value to a recipient (the 'transfer mechanism'), and to what activity they relate (the 'statutory or formal incidence'). The form of the transfer mechanism largely determines the method used to estimate the amount of government support, whereas formal incidence is what matters most in determining the behavioural responses of economic agents to the support. Formal incidence also provides a basis for categorizing support when producing sectoral subsidy accounts. This Appendix probes more deeply into the common categories along both dimensions of support, and then outlines briefly what steps are typically involved in developing a set of support estimates for an industry or sector. Because of space limitations, this Appendix sticks to the basics. For further information on the details of estimating individual support elements and compiling them into meaningful indicators, see OECD (2010, 2012, 2013a, 2013b), Jones and Steenblik (2010) and Steenblik (2003).

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