Reform of harmful subsidies that can drive sustainable land use

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in the European Union: the European Water Framework Directive, the Nitrate Directive, and the Birds and Habitat Directives (DeBoe, 2020[65]). in the United States, the US EPA regulates production practices of Concentrated Animal Feeding Operation (CAFO) under provisions of the 1972 Clean Water Act (DeBoe, 2020[65]). Well-designed input use regulations can be highly environmentally beneficial (DeBoe, 2020[65]). Although input regulations do not seem to put financial burden on farmers, they do financially weigh more on smaller farms and their impact varies with the availability for alternatives (for instance in the case of a ban on specific pesticides) and the ability to transfer these costs to consumers (DeBoe, 2020[65]). Because excessive use of inputs (especially fertilisers) leads to agricultural pollution, input use regulations can simultaneously increase input use efficiency and reduce pollution (Piot-Lepetit and Moing, 2007[66]; DeBoe, 2020[65]).

When there is sufficient capacity to monitor land use and attribute production to individual producers, most stringent tools are bans. However, they may not be the right tool for land degradation-related issues because environmental parameters are hard to monitor, and leakage is

likely to happen. For instance, studies on logging bans have found mixed results. Challenges included: When logging bans are established, registered logging companies leave the forests creating a vacuum and, if enforcement is deficient, illegal logging starts happening in this new vacuum, sometimes at a pace exceeding legal logging before the bans. Logging bans that were supposed to protect the forests generated more deforestation (FAO, 2019[67]). In other cases, when logging bans are established, forests loose financial value and thus, once logging has stopped, land is turned into an area that can be developed for social and economic benefits (e.g. industrial purposes). It is the case with economic land concessions in Vietnam10 (FAO, 2019[67]). Moreover, some countries where logging bans were established did not have alternative domestic wood sources (e.g. planted forests and trees outside forests) and had to import wood from countries with weaker environmental regulations (FAO, 2019[67]). Logging bans that were supposed to protect the forests generated deforestation elsewhere.

Reform of harmful subsidies that can drive sustainable land use

Reform of selected sectoral subsidies could drive sustainable land use. Large subsidies and support policies set up for other purposes (income support) are encouraging farmers and other land use actors to maintain or increase unsustainable practices. This is the case for some energy and many agricultural subsidies. It is estimated that potentially environmentally harmful agricultural support amount to USD 345 billion per year in 54 countries in 2018-19 (OECD, 2020[68]). OECD keeps a list of environmentally harmful supports to fossil fuels11 and one of environmentally harmful support to agriculture12. Examples of environmentally harmful energy subsidies include biofuel production, and electricity subsidies for groundwater pumping in Mexico (Gruère and Le Boëdec, 2019[69]). Examples of agricultural subsidies

10 Objectives of economic land concessions are: 1) developing an intensive agricultural base and promoting capital investment in industrial agriculture; 2) increasing employment in rural areas to improve and diversify livelihood opportunities; and 3) generating revenue from concession fees, taxation (FAO, 2019[67]).

and other charges 11 OECD Inventory of Support Measures for Fossil Fuels www.oecd.org/site/tadffss 12 OECD Producer and Consumer Support Estimates database https://www.oecd.org/unitedstates/producerandconsumersupportestimatesdatabase.htm