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Environmental Investments and Income: A Municipal Perspective

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  • Chantal Toledo Karp

    (Universidad de California- Berkeley)

Abstract

This paper uses detailed panel data on the universe of municipalities in Peru to study whether municipalities undertake more environmental investments when their income increases. I test whether municipalities invest more in green spaces, water treatment, environmental management, waste collection and programs that incentivize environmental protection. Using variation in international mineral prices to generate exogenous variation in municipal income, I find evidence of significant effects of an increase in municipal income on some environmental investments. In particular, municipalities invest more in green spaces, water treatment, municipal waste plans, and frequency of waste collection. However, the magnitude of the effects is relatively small given the large increase in income. I also test whether municipalities invest more in non-environmental investments when their income increases and find evidence of additional investments in education, health and transportation.

Suggested Citation

  • Chantal Toledo Karp, 2012. "Environmental Investments and Income: A Municipal Perspective," Working Papers 201247, Latin American and Caribbean Environmental Economics Program, revised 2012.
    • Handle: RePEc:lae:wpaper:201247
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    File URL: http://laceep.org/publications/working-papers/item/160-environmental_nvestments_and_income_a_municipal_perspective_chantal_toledo_2012
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