Indicator Code: AGSUB
Objective: Ecosystem Vitality
Policy Category: Productive Natural Resources
Subcategory: Agriculture
Indicator Short Name: Agricultural Subsidies
Indicator Full Name: Agricultural Subsidies represented by Nominal Rates of Assistance(NRA) by country
Indicator Description: According to a report by the OECD (2004), agricultural subsidies exacerbate environmental pressures through the intensification of chemical use and the expansion of land into sensitive areas. This indicator seeks to assess the magnitude of subsidies in order to assess the degree of environmental pressure they exert. The NRA is defined as the price of their product in the domestic market (plus any direct output subsidy) less its price at the border, expressed as a percentage of the border price (adjusting for transport costs and quality differences).
Units: Proximity-to-Target, with 100 being the target, and 0 being the worst performer
Country Coverage: 238
Reference Year: 2005
Target: 100
Target Source: Expert Judgment
Short Source: YCELP calculation based on OECD Producer Support Estimates Data, WDR 2008 and the Pilot 2006 EPI
Source: World Development Report Selected Indicators 2008, OECD Producer Support Estimates database 2007, Pilot 2006 EPI
Source URL: http://siteresources.worldbank
Methodology: Where available, we used data on the Nominal Rate of Assistance (NRA) from the World Development Report 2008. NRA is defined as the price of a product in the domestic market, less its price at a country’s border, expressed as a percentage of the border price, and adjusted for transport costs and quality differences (WDR 2008). These were converted to the standard EPI proximity-to-target indicator.
NRA data were unavailable for a number of countries for which we had data when we compiled the Pilot 2006 EPI (Costa Rica, Israel, Jordan, Peru, Tunisia, Uruguay, and Venezuela). For these, the indicator was computed by subtracting greenbox subsidies from total agricultural subsidies, which was then divided by the total value of agriculture.
Low and middle-income countries without agricultural subsidies data were imputed a proximtity to target score of 0 on the basis that most non-OECD countries do not subsidize their agricultural sector.
Caveats: Combining the 2008 EPI data with the AGSUB indicator data from the 2006 EPI represented a less than perfect solution, yet we were uncomfortable assigning a score of 100 to countries that subsidize their agriculture, and unwilling to estimate subsidy levels for countries that are engaged in agriculture of dubious environmental sustainability. This methodology makes use of the best data available, and we hope to include a more accurate measure in future editions of the EPI, as improved data sources arise.
Additional Citations: Agriculture’s “multifunctionality” and the WTO; Kym Anderson; The Australian Journal of Agricultural and Resource Economics, 44:3, pp 475-494