Fiscal incentives for agricultural commodity production: options to forge compatibility with REDD+
An estimated 80 per cent of global deforestation occurs as a direct result of agricultural practices. Government subsidies, estimated at $200 billion annually, are often the key underlying drivers of forest loss worldwide, with policy makers rarely recognizing their impact, says a new United Nations brief. The report, entitled 'Fiscal incentives for agricultural commodity production: Options to forge compatibility with REDD+', explores ways of aligning government subsidies and other fiscal instruments with the objectives of REDD+ (reducing emissions from deforestation and forest degradation in developing countries). The negative impact of subsidies on forest cover is often caused by outdated and incoherent policies. Any government-led effort to bolster agricultural productivity should account for the broader implications of such schemes. This report demonstrates that policy that decouples economic growth from deforestation and land degradation is the clearest pathway toward an agricultural sector that realizes both sustainable land use and sustainable inclusive economic growth. Drawing on examples from Ecuador, Indonesia, Brazil, India and ten other countries, the study demonstrates that subsidies to inputs, such as fertilizers and irrigation water, often fail to increase yield per hectare and can instead contribute to a wasteful use of resources and environmental damage to tropical forests.