Research On Environmentally Harmful Subsidies

The research on environmentally harmful subsidies has been started only from recent ten years. With the further study, the connection between subsidies and the environmental harm is raising great concern. This paper gives the definition of environmentally harmful subsidies and discloses the mechanism of damage by building an interaction relational model between subsidies and the environment. Based on the analysis of externality theory and the subsidies' demand expansion effect, it builds a common model of environmentally harmful subsidies, which proves that the subsidies damage the environment from the view of keeping environmental sustainable quality. Further more, taking energy subsidies for example, it concludes that both producer and consumer subsidies are environmentally harmful though a model analysis. By analyzing the cost-benefits and policy environment changes, it proves that the reform is both environmental and economical beneficial. In the end, it sorts the barriers of reform and gives some policy advices.The main creative aspects could be as follows. First, it proposes a new classification by sorting the environmentally harmful subsidies as renewable resource subsidies and nonrenewable resource subsidies to reveal the resources' critical role in the damaging process. Second, it builds a common model of environmentally harmful subsidies by the view of keeping environmental standard, other than the classical analysis of demand and supply curve's change. Third, it concludes the political, technical and conceptual barriers to help governments, scholars and public to conquer them more effectively.As the global environment problems becoming more and more serious and the reform's huge environmental and economical benefits, the reform is imperative under the situation. This paper is trying to give some theoretical guide and policy advices to china's would-coming pressure of environment improvement especially for the energy subsidies reform.