Subsidy incentives and benefit incidence
- Support paid directly differs from support through prices or borrowing costs
- Temporary support can reduce the cost of trying a new technology
- Input affordability and targeting create an equity trade-off
- Relative input prices can change input and crop choices
- A price gap between eligible and other uses can encourage diversion
- Access to the subsidised input affects who receives the benefit
- Cost reimbursement can weaken incentives to reduce production costs
- Cheap pumping energy can weaken incentives to conserve groundwater
- Replacing an input-price subsidy with cash changes access requirements