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


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.


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





Confidence interval


Ecological Fiscal Transfers


European Union


Gross domestic product


General Municipal Fund


Instituto da Conservação da Natureza e das Florestas


International Union for Conservation of Nature


Markov chain Monte Carlo


Non-governmental organization


Protected area


Rede Nacional de Áreas Protegidas


Special Areas of Conservation


Standard deviation


Special Protection Areas

JEL Codes

C32 H41 H72 Q57 



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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© Springer Science+Business Media B.V., part of Springer Nature 2017

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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