are especially useful for addressing development challenges in lagging regions, where poverty tends to be spatially concentrated. In addition, because poorer farmers are more likely to live in poorer regions, assessing the broad contours of the spatial distribution of subsidies can give some indication of a subsidy scheme’s overall progressiveness or regressiveness at household level.

Our analysis finds that output subsidies are spatially progressive in 10 countries and spatially regressive in six. We also find that if countries were to repurpose their output subsidies from rice—a very waterintensive crop responsible for exacerbating harmful externalities such as water scarcity, salinization, and carbon dioxide emissions—to maize, their subsidies would become significantly more spatially progressive. This finding stems from rice being produced in richer regions, probably because it is more input-intensive.

For input subsidies, of the 23 countries examined, we find that 11 have spatially progressive subsidies, nine have spatially regressive subsidies, and three have spatially neutral ones. As well as distributional impacts, we examine environmental consequences. Using spatially disaggregated data on fertilizer use, we find a very close, positive relationship between input subsidies and fertilizer use, particularly in richer regions. We also show that subsidies are significant contributors to soil saturation of nitrogen, a sign of fertilizer overuse and an indicator of increased environmental degradation.

The remainder of the paper is as follows. Section 2 briefly describes the literature on the impact of agricultural subsidies on distributional and environmental outcomes. Section 3 explains the main datasets we use and our strategy for estimating the spatial distribution of subsidies across regions. Section 4 describes our strategy of using Lorenz curves for estimating the progressiveness of subsidies. Section 5 presents our findings on the distribution of output subsidies, and section 6 on the distribution of input subsidies and their impact on fertilizer use and nitrogen concentrations in soils. Section 7 contains a discussion of the results and our conclusions.

# **2 Literature**

Much of the literature examining the distributional impacts of agricultural subsidies has focused on developed countries, and specifically the EU’s Common Agricultural Policy (CAP). Several studies find that CAP payment distribution has exacerbated economic and profit inequality by widening the gap between wealthy and poor farmers (Von Witzke and Noleppa 2007; Scown, Brady and Nicholas 2020). Others find more nuance in the relationship, showing that direct payments under CAP reduce farm-household income inequalities (Severini and Tantari 2013), but market-based subsidies such as MPS increase farm-household inequalities (El Benni and Finger 2013; Bojnec and Fertő 2019).

Only a handful of studies examine the distributional impacts of subsidies in developing countries. Examining input and output subsidies in developing economies, Tang, Wang and Zhao (2022) find that output subsidies exacerbate the income gap among farmers, but input subsidies narrow it. However, some studies argue that subsidized fertilizer is disproportionately distributed to wealthier households, increasing income inequality in Kenya (Marenya and Barrett 2009), Malawi (Ricker-Gilbert, Jayne and Chirwa 2011; Chibwana et al. 2012), and Zambia (Mason and Tembo 2015; Kuteya et al. 2016).

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