Payments for environmental services and their potential relation with agricultural subsidies: The case of the European Union

December, 2013
María Victoria Lottici
María Daniela Guarás
Julia Hoppstock
Carlos Galperín

Payments for environmental services came up as a tool that allowed economic agents to take into account the value of environmental services in the decision making process. However, the legitimate objective of protecting the environment could be used, by some developed countries, as a way of disguising or legitimating their distorting agricultural subsidies. This would be contrary to the WTO rules and the WTO mandate on agriculture, which calls those countries to reduce and/or eliminate their agricultural subsidies.

Moreover, debates and negotiations on this topic are taking place both in fora specialized in environmental issues and in fora specialized in agricultural and trade-related issues. This could lead to inconsistencies among the decisions taken in the different negotiating tables as well as to the legitimization, in the environmental fora, of issues that could be in conflict with the mandates and rules agreed in trade-related fora.

This can be appreciated in the EU's negotiating strategy, which uses the argument of environmental conservation, both at the domestic and the global level, so as not to discontinue their high agricultural subsidies. Thus, it becomes necessary to monitor that the results achieved in the different environmental fora do not undermine what has been achieved with much effort in other areas of multilateral negotiation.