Environmental subsidies in the system of environmental accounts Maja Larsson, Statistics Sweden

What am I going to talk about?  Background and definitions of environmentally harmful subsidies  Environmental subsidies in Sweden, project at Statistics Sweden in 2003  Subsidies in the system of national accounts (SNA) – limitations and possibilities  Future work – environmental accounts  Sweden today

Background  Report 2000:3 ”Environmental taxes and environmentally harmful subsidies”  Based on a report from the Swedish Environmental Protection Agency in criterias: - Protection of the environment - Efficient use of energy and other resources - Sustainable supply (closed cycles)  Difficulties to define

Environmentally ”harmful” subsidies from report 2000:3 Tax subsidies – determining a norm - Tax subsidies for energy tax on fuels - Tax subsidies for energy tax on electricity - Tax subsidies in carbon dioxide taxation - Allowances for journeys to and from work

Environmental subsidies in Sweden  Purpose:  To identify and document the subsidies in Sweden that can be defined as environmental subsidies.  To find definitions suitable not only for this report but also for the future work on environmental subsidies, internationally as well as in Sweden.  To develop the environmental accounts further by including data on environmental subsidies.

Subsidies in SNA (System of National Accounts)  Subsidies as defined by the European system of accounts (ESA 1995 §4.30) “…current unrequited payments from government to producers with the objective of influencing their levels of production, their prices or the remuneration of the factors of production”  Possibilities: total subsidies, all areas  Limitations: narrow definition. Not included: investment subsidies, tax subsidies, subsidies to households….

The total subsidies in Sweden (SNA)

Environmentally motivated subsidies in Sweden (SNA) Percent of total subsidies in Sweden

Environmental subsidies in Sweden – according to different definitions

Comparison – ”harmful” and motivated subsidies Agricultural, forestry and fishing sector

Conclusions, report 2003:4  Two different definitions of an environmental subsidy used  Different use of taxes and subsidies  SNA good base, however not enough  Many different definitions can be distinguished from the total subsidies in SNA

Future work on subsidies  Develop methods for comparing payments with their environmental effect  Starting point - the environmental accounts (SEEA)  SEEA - good base for international comparisons  Follow international work on definitions (OECD among others)

Possibilities with SEEA  Identify, measure and estimate environmental effect  How estimate effect? - Resource accounts. Land-, fishing- and energy accounts. - Study subsidies/transfers per industry, compared to other environmental statistics on the industry

Environmental Accounts Data from Relationship between environment and economy. Satellite system to the National Accounts. A base for estimating the costs of environmental measures and damage to the environment. Provide information for analyzing environmental and economic policies

Environmental accounting – one system National Accounts/ Environmental statistics Environment al accounts

Sweden  Historic reform on harmful subsidies - green tax reform  Present? - No approved strategy for environmentally harmful subsidies - Work in progress – strategy for sustainable development and proposition for environmental quality objectives

Green tax reform  Tax reform can be seen as part of subsidy reform, since taxes on environmentally harmful activities increases  Taxes on energy reduces the implicit subsidy  Start 1990 – CO2 tax introduced  Large tax reform around 1995, SEK 18 million

Green tax reform  Reform in progress: - So far – SEK 8 million in SEK 6 million between  Exceptions from taxes are subsidies. High taxes – high subsidies