Options for agricultural subsidy reform from a health, climate and economic perspective

We used an integrated modeling framework for our analysis. To build the economic, environmental, and health modeling framework, we incorporated a detailed economic representation of agricultural subsidies11 With region- and commodity-specific environmental impacts5, with health assessment of the burden of diet-related disease associated with dietary risk factors, such as low intake of fruits and vegetables, and high intake of red meat12 (“Methods”). In our environmental analysis, we focus on changes in agricultural greenhouse gas emissions (specifically methane and nitrous oxide) because greenhouse gas emissions, compared to other environmental influences, are less modifiable through farm-level management and more through changes in the production mix.5. In the framework, we calculate the dynamic interactions that occur for example changes in diet-related diseases on the workforce and thus economic output, and how the interactions of price, supply and demand affect production, consumption, trade and the distribution of environmental impacts.

We used a modeling framework to analyze different options for agricultural subsidy reform in line with health and climate change goals. The options we considered ranged from the complete elimination of subsidies; partial and complete over-correlation of subsidies for food commodities with beneficial environmental and health properties; Structural changes to the global subsidy scheme which, in addition to reallocating subsidies for other purposes, included more equal provision of subsidies across countries. For subsidy coupling, we adopted a food group approach and, in line with expectations of a required shift in the diet for healthy and sustainable diets, we redirected different proportions of subsidies to the production of horticultural goods (fruits, vegetables, legumes, nuts) that were associated with beneficial health and environmental characteristics.

Our food group’s focus on horticultural products can be considered similar to approaches aimed at explicitly tailoring supports to the actual health and environmental characteristics of food commodities. Life cycle analyzes indicate that the effects of the type of food being grown far outweigh how it is grown, especially when comparing animal-source foods with plant-based foods, and when comparing different foods in the same area.13, 14. Similarly, epidemiological studies suggest that non-starchy plant foods such as fruits, vegetables, legumes, and nuts are associated with reduced risk of various diet-related diseases, while other foods are either associated with increased risk (red and processed meat) or are seen as relatively neutral to risk (poultry and dairy products). ) compared to basic diets4, 15. Here we focus on these general health and environmental properties of horticultural foods, noting that additional differentiation may sometimes be appropriate.

current subsidies

Total agricultural support measures, excluding tariffs and trade subsidies, were US$233 billion globally in 2017 (Table S9). More than half (55%) was spent by OECD countries, notably the European Union (32%), the USA (12%), Japan (3%), and most of the rest (45%) by non-OECD countries. Members of the Organization for Economic Co-operation and Development, including China (25%) and India (15%). Globally, about 8% of all subsidies were directly associated with a single product, and the remaining percentage benefited either special groups of goods (29%), all goods without differentiation (31%), or farmers directly without the need for production (31%). ) . Analyzed by end use, one-fifth to one-fourth of ASMs each were used for staple crops (22%), meat products (22%), fruits and vegetables (24%), and about one-tenth of each for milk and dairy products (10%) , oil and sugar (12%), and other crops (11%) (Fig. 1 and Supplementary Table 10).

Figure 1: Overview of agricultural support measures in 2017, including major spenders and distribution by end use for each commodity.

Total support payments to major spenders, grouped by OECD and non-OECD countries, are shown on the right axis and percentage distribution on the left axis.

The removal of subsidies

Elimination of all agricultural subsidies by 2030 reduced production of previously subsidized crops, including cereals, fruits, vegetables and oilseeds in OECD countries (from 1.1 to -2.8% on average) and fruits, vegetables and dairy products in non-OECD countries OECD (0.8 to −1.2%) (Fig. 2a). Regions that did not have support for cancellation responded by increasing production (+0.6%), but this did not offset the reductions in other regions. GHG emissions reflected changes in production and were moderately reduced in OECD countries (1.8%), decreased slightly in non-OECD countries (0.1%), and increased slightly in non-supported countries (+0.5%) (Fig. 2b)). Individual countries showed larger changes (Supplementary Fig. 5).

Figure 2: Effects of Agricultural Subsidy Reform.
Figure 2

Effects include changes in food production (a), greenhouse gas emissions (B), food consumption (c), diet-related deaths (Dr), and economic welfare (e) by scenario, region and component. Impacts for 2030 compared to a business-as-usual scenario without reforms. Reform scenarios include complete elimination of agricultural subsidies (RMV), reallocation of 50% (S50) and 100% (S100) of subsidies to the production of food commodities with beneficial health and environmental characteristics, and a combination of reallocation and territory. A restructuring in which each country provides subsidies in proportion to its economy (GDP) or population (POP), while keeping the global amount of support payments constant. Regions include OECD countries with agricultural subsidies (OECD), non-OECD countries with agricultural subsidies (non-OECD), and countries without agricultural subsidies (OECD). In the economic field), the group of all countries (the world). Food groups include wheat, grains and other grains (staple foods), vegetables, fruits, and other horticultural products (fruits and vegetables), vegetable oils, sugar (oil and sugar), beef, lamb, pork, poultry (meat), milk and dairy products (milk), and other food commodities (others). Percentage changes and impacts for more specific regions and countries are shown in the supplementary information.

Changes in consumption followed changes in production, but were mediated by changes in trade and commodity prices. Per capita consumption of fruits, vegetables and other horticultural products decreased across all regions (6 g/day, 1-9 g/day across regions), and total energy intake decreased (11 kcal/day, 2-21 kcal/d across regions) (Fig. 2c). These changes were accompanied by a net increase in diet-related deaths (+75,000 deaths in 2030; 95% confidence interval (CI), 71,000–80,000), most of which were associated with lower consumption of fruits and vegetables in both the OECD and the OECD. and development in the economic field. Non-OECD countries, but were slightly compensated for by reduced overweight and obesity (Fig. 2d).

Increases in the mortality rate affected the supply of labor and led to a decrease in economic welfare (measured by the equivalent variance of income) by about US$1 billion (Fig. 2e). However, this decline was over-compensated by increases in allocation efficiency associated with more efficient use of labor outside of previously subsidized agricultural sectors (US$11 billion). In addition, changes in terms of trade played a role for certain regions. For example, the removal of subsidies has been associated with increases in world market prices, resulting in lower gains from trade (i.e. terms of trade) for net import areas such as the OECD (US$1.1 billion), and increased terms of trade net export areas. The net economic impact was positive for most regions.

Change the purpose of the support

The use of agricultural subsidies to support the production of foods with beneficial health and environmental characteristics (i.e. changing purposes from previous methods of subsidy allocation, Figure 1) has increased production of horticultural products in OECD countries (+19% for full reuse) and non-OECD countries Economic Cooperation and Development (+3%), and to slight reductions in non-supported countries (2.4%) (Fig. 2a). GHG emissions were moderately reduced in OECD countries (1.7%) due to reductions in animal source foods and staple crops that accompanied increases in horticultural products, and remained similar in non-OECD countries (0.2%). ) which had relatively less support directed towards these crops, and increased slightly in non-subsidized countries (+0.5%) because it partially compensated for the decline in animal-source foods in other countries (Fig. 2b).

Consumption of fruits, vegetables and horticultural products increased significantly when all subsidies were redirected (Fig. 2c). In OECD countries, consumption of fruits and vegetables increased by 55 g/day (10%) on average, and in non-OECD countries by 31 g/day (5%). Consumption also increased in non-subsidized countries (2 g/day, 0.3%) as global increases in production pushed down world market prices. Changes in consumption, particularly of fruits and vegetables, resulted in a lower diet-related mortality rate of 444,000 (95% CI, 429,000–460,000) lower than deaths in 2030 overall, with a similar geographical distribution (Fig. 2d).

In the economic analysis, reductions in diet-related mortality resulted in economic benefits associated with an increase in the supply of labor (US$12 billion) (Fig. 2e). However, redirecting subsidies to a specific agricultural sector has also led to reductions in allocation efficiency, particularly in OECD countries (US$20 billion). In non-OECD countries, subsidies have offset countervailing taxes often levied on the horticultural sector, resulting in small increases in allotment efficiency (US$0.3 billion). The net effect on economic well-being was negative in the OECD under complete reorientation, but rather positive in non-OECD countries. Reallocation of half of subsidies led to smaller reductions in the allocation efficiency, attenuated most net reductions in economic welfare in OECD countries, but also halved health benefits due to lower labor market gains.

Support restructuring

The combination of redirecting support to a restructuring in which each country provides subsidies in proportion to its population or GDP, while maintaining the global amount of fixed support payments, has led to increases in the production of fruits and vegetables that were evenly distributed across regions, with significantly large increases Especially in countries that had no prior support, particularly in the population-based (+4%) subsidy scenario (Fig. 2a). Because of the global coverage of sectoral incentives in this scenario, there were fewer production-based feedback effects, and total GHG emissions were similarly reduced or more so than in the repurposing scenarios (0.3% in the GDP scenario, 0.4% in the population scenario) ( Figure 2b).

Changes in horticultural consumption and associated health effects were also distributed evenly across regions, particularly in the population-based scenario (Fig. 2c). The increases in fruits and vegetables in previously unsupported countries were on average 12 g/day in this scenario (and 5 g/day in the GDP-based scenario), compared to 2 g/day in the repurpose-only scenario. . The overall reductions in diet-related deaths were similar in magnitude as the reuse-only scenario (370.00–379.00 deaths averted in 2030) (Fig. 2d), but with a fairer distribution of per capita mortality reductions (0.2 -0.8% in the population-based scenario and 0.1-1.4% in the GDP-based scenario, compared to 0.1-1.5% in the re-purposes-only scenario; Supplementary Figure 9).

Both variables of structural support reform were associated with global increases in economic well-being (US$1.8–5.5 billion), but the regional effects differed (Fig. 2e). With the reduction of subsidies in OECD countries, the efficiency of allocation decreased or became positive, resulting in net economic gains when combined with gains from an increased labor force. The overall level of subsidies remained similar in non-OECD countries, with positive effects similar to the reuse only scenario. However, subsidy payments increased and the efficiency of allocation decreased in countries that had not previously provided subsidies, which was partially offset by gains from an increased workforce. Losses could be fully offset, at least in principle, by shifting payments from other regions where net gains were twice as large as net losses in countries that had not previously provided support.

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