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Municipal Responses to Ecological Fiscal Transfers in Brazil: A microeconometric panel data approach
Author(s) -
Droste Nils,
Lima Guilherme Rodrigues,
May Peter Herman,
Ring Irene
Publication year - 2017
Publication title -
environmental policy and governance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.987
H-Index - 48
eISSN - 1756-9338
pISSN - 1756-932X
DOI - 10.1002/eet.1760
Subject(s) - incentive , revenue , panel data , economics , econometric model , tax revenue , econometric analysis , value (mathematics) , state (computer science) , public economics , ecology , econometrics , microeconomics , biology , finance , algorithm , machine learning , computer science
Ecological fiscal transfers in Brazil, the so‐called ICMS‐Ecológico or ICMS‐E, redistribute part of the state‐level value‐added tax revenues on the basis of ecological indicators to local governments. We analyze whether the introduction of this economic instrument in a state offers incentives to municipal responses in terms of further protected area (PA) designation. We provide a microeconomic model for the functioning of ICMS‐E and test the derived hypothesis empirically. Employing an econometric analysis on panel data for two decades we estimate the correlation of the introduction of ICMS‐E in Brazilian states with PA coverage. We find that the introduction of ICMS‐E correlates with a higher average PA share. While the introduction of ICMS‐E schemes may be a compensation for a high share of federal and state PA, we also find an incentive effect for municipalities to designate additional PA. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment