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Environmental and Resource Economics

, Volume 71, Issue 4, pp 1027–1051 | Cite as

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

  • Nils DrosteEmail author
  • Claudia Becker
  • Irene Ring
  • Rui Santos
Article

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.

Keywords

Bayesian structural time series Ecological Fiscal Transfers Fiscal federalism Municipal conservation competencies Portugal 

Abbreviations

AR

Autoregressive

CI

Confidence interval

EFT

Ecological Fiscal Transfers

EU

European Union

GDP

Gross domestic product

GMF

General Municipal Fund

ICNF

Instituto da Conservação da Natureza e das Florestas

IUCN

International Union for Conservation of Nature

MCMC

Markov chain Monte Carlo

NGO

Non-governmental organization

PA

Protected area

RNAP

Rede Nacional de Áreas Protegidas

SAC

Special Areas of Conservation

SD

Standard deviation

SPA

Special Protection Areas

JEL Codes

C32 H41 H72 Q57 

Notes

Acknowledgements

While retaining responsibility for any error, we thank the editor, two anonymous reviewers, the participants of the AURÖ 2016 and LACEA/LAMES 2016 conferences, and colleagues at Cense and UFZ for helpful comments and suggestions. Furthermore, ND is grateful for financial support of the Heinrich Böll foundation (Grant No. P118873).

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Authors and Affiliations

  1. 1.Department of EconomicsUFZ – Helmholtz Centre for Environmental ResearchLeipzigGermany
  2. 2.Department of EconomicsMartin-Luther University Halle-WittenbergHalle an der SaaleGermany
  3. 3.International Institute ZittauTechnische Universität DresdenZittauGermany
  4. 4.Centre for Environmental and Sustainability Research (CENSE)Universidade Nova de LisboaCaparicaPortugal

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