Yes, subsidies provide an incentive for wasteful use of resources, if they are provided free or at a subsidised rate, then they will be used wastefully i.e. without any concern for the scarcity of say water / electricity. Fertiliser and pesticide subsidies lead to overuse of resources like land. This inturn can be harmful to the environment. So in this way provision of subsidies may cause more harm than benefit, if not properly used.