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Greening the Budget

Budgetary Policies for Environmental Improvement

Edited by J. Peter Clinch, Kai Schlegelmilch, Rolf-Ulrich Sprenger and Ursula Triebswetter

Greening the Budget regards the fundamental cause of environmental degradation as government and market failure and proposes the use of budgets as an instrument of environmental policy to rectify this problem. The book focuses on the elements of the public budget which currently affect the environment and explores the scope for greening both revenue and expenditure through specific measures.
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Chapter 15: Subsidies to the farming sector: who receives direct payments in Ireland?

Budgetary Policies for Environmental Improvement

Susan Scott


Susan Scott INTRODUCTION This chapter1 looks at the distributional pattern of direct payments to farm households in Ireland. These payments have grown to sizeable proportions in response to the EU’s budgetary crisis and pressure from GATT and were not designed primarily with socio-economic considerations in mind. Nevertheless, in the debate surrounding proposals for reform, their socio-economic or distributional effects are likely to be raised as an argument for their retention. Furthermore, if there is evidence that components of the system of direct payments are fulfilling an important role of helping to alleviate need among farm households, resistance to reform may be strengthened despite compelling environmental reasons.2 Extra care will then be needed when formulating reforms in order to avoid causing hardship to low-income farm households. It may surprise readers to learn that the distributional impact of direct payments to farm households has not been adequately explored to date. This chapter makes a start by simply investigating whether the distributional impact is progressive or regressive. A subsidy scheme is said to be progressive if it leaves low-income households better off than high-income households as a result. There are in fact several ways of measuring this. One way is to express the subsidy as a share of income; a progressive subsidy is then one which contributes a higher share to low-income households than to households with higher incomes. Another measure of the distributional impact is to compare the absolute level of subsidy going to a low-income household with that going to a...

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