chapter  6
16 Pages

Reforming Subsidies for the Polluter

Humanity stands on the edge of a century in which one of its greatest challenges will be to generate prosperity that is both widely shared among people and ecologically sustainable. Yet the main thing fiscal policies have to say about the environment is that "it pays to pollute." The clear mismatch between actions and goals points to two major policymaking tasks. The first is to reform environmentally harmful subsidies, eliminating or better targeting them in order to increase efficiency and effectiveness dramatically. If subsidies are tools, then those in place today-however well-intended-are blunt instruments applied to complex problems. Almost invariably, they produce more damage than gain.