Reducing unintended consequences of subsidies in (irrigated and rainfed) agriculture

Rethinking agricultural subsidies has gained considerable attention as they serve important societal priorities, but also have unintended environmental and social effects on water. This paper combines insights from a literature review of 1,074 studies, a qualitative analysis of n = 48 studies, and recommendations for subsidy reform from an online seminar with 79 agricultural water management experts. The insight and recommendations show that agricultural subsidies on water, fertiliser and pesticides have intended effects, i.e. are effective in supporting agricultural production and food security. However, they may also harm water resources by triggering water depletion and water pollution. Subsidies often target all farmers and not the needy in rainfed and irrigated agriculture. The paper offers four recommendations for tailor-made subsidy reform to reduce the unintended consequences on water: remove subsidies on biofuel and animal feed crops, subsidise multiple benefits of rainfed agriculture, remove subsidies on excessive inputs in irrigated agriculture, and limit subsidies for irrigation expansion to regions with abundant water.