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Decentralization Effects in Ecological Fiscal Transfers: A Bayesian Structural Time Series Analysis for Portugal

Author

Listed:
  • Nils Droste

    (UFZ – Helmholtz Centre for Environmental Research
    Martin-Luther University Halle-Wittenberg)

  • Claudia Becker

    (Martin-Luther University Halle-Wittenberg)

  • Irene Ring

    (Technische Universität Dresden)

  • Rui Santos

    (Universidade Nova de Lisboa)

Abstract

Portugal has a unitary system in which the central government transfers funds to lower government levels for their public functions. In 2007, Portugal introduced Ecological Fiscal Transfers (EFT), where municipalities receive transfers for hosting protected areas (PA). We study whether introducing EFT in Portugal incentivized municipalities to designate PA and has led to a decentralization of conservation decisions. We employ a Bayesian structural time series approach to estimate the effect of introducing EFT in comparison to a simulated counterfactual time series. Quantitative results show a significant increase in the ratio of municipal and national PA designations following Portugal’s EFT introduction—which we infer to be a causal consequence. The analysis furthermore places emphasis on the importance of relevant municipal conservation competencies for the functioning of the instrument. Results have important implications for conservation policy-making in terms of allocating budgets and competencies in multi-level governments.

Suggested Citation

  • Nils Droste & Claudia Becker & Irene Ring & Rui Santos, 2018. "Decentralization Effects in Ecological Fiscal Transfers: A Bayesian Structural Time Series Analysis for Portugal," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(4), pages 1027-1051, December.
    • Handle: RePEc:kap:enreec:v:71:y:2018:i:4:d:10.1007_s10640-017-0195-7
    DOI: 10.1007/s10640-017-0195-7
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    5. Ruggiero, P.G.C. & Pfaff, A. & Pereda, P. & Nichols, E. & Metzger, J.P., 2022. "The Brazilian intergovernmental fiscal transfer for conservation: A successful but self-limiting incentive program," Ecological Economics, Elsevier, vol. 191(C).
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