Does this sentence correct??

The logic is as follows:
(1) There are a number of subsidies.
(2) We are talking about removing (cancelling) one of them.
(3) One of these subsidies appears to be good to the environment.
(4) So, if we remove this subsidy, the consequence is bad to the environment.
(5) This kind of subsidy is the subsidy to manage soil erosion.

The expression can be analysed as follows:

The one kind of subsidy (.......adj. clause......) was the subsidy to manage soil erosion.

( that appeared to have been bad for the environment if removed )

The sentence structure is correct, but the expression too classic. Not recommended for modern English.

The one kind of subsidy......was the subsidy to manage soil erosion.
先拆開of which中間作為解釋這種subsidy(資助)[第一個字係咪串錯了]，全句意是說這種subsidy是眾多subsidy中用作處理泥土流失的方案。

of which removal appeared to have been bad for the environment

中間部份只是解釋這subsidy的考慮(of which)是除去這些資助(removal)看來(appeared)是對環境做成壞處(to have been bad for the environment).

這似乎是法律或論文的complex詞句結構。

One kind of subsidies was the subsidy to manage soil erosion.
The removal of this subsidy appeared to have been bad for the environment.
"of which removal appeared to have been bad for the environment" is a relative defining clause while "One kind of subsidies was the subsidy to manage soil erosion." is the main clause.

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