The Role of the Ecological Fiscal Transfers for Water Conservation Policies

Abstract

This paper's purpose is to fill the lacuna found in the literature with regard to describing the role of EFTs for water conservation policies. The literature tells us that ecological fiscal transfers (EFTs) are analysed so to pursue biodiversity conservation policies and solid waste management (SWM). For biodiversity conservation policies, EFTs have two purposes: (1) to incentivize municipalities to create local protected areas (PA); and (2) to compensate municipalities for corresponding land-use restrictions. In the case of SWM, the main idea is that, even considering the fees paid by the households, it is still costly to maintain waste services in the municipal territories. In this context, EFTs are appealing policy instrument to help local governments create landfills or composting plants. However, in Brazil EFTs are functioning as a policy instrument which also includes a wide range of policy domains, such as water conservation, indigenous land, fire-control, and so on. Six states adopted EFTs specifically for water conservation policies: Goiás, Paraná, Pernambuco, Piauí, Rio de Janeiro, and Tocantins. Descriptive analyses, focusing on legislative differences are conducted for each of these states.

An analysis of delay in implementing ecological fiscal transfers in Brazil

“…According to Sauquet et al (2014, p. 250), the primary objective at the conception of the EFT was to reduce the "biodiversity loss by stimulating the creation and management of protected areas". Over time, these schemes began to include criteria related to solid waste management (Silva et al, 2012;, water conservation policies (Paulo and Camões, 2020), education, reforestation, Fig. 1.…”

“…Other states followed Paraná and also adopted ecological indicators to redistribute ICMS, mainly to extend protected areas (PA) and to compensate local governments for the positive externalities derived from biodiversity conservation (Grieg-Gran, 2001;Ring, 2008;Droste et al, 2017d;Paulo and Camões, 2019b). Over time, other ecological criteria were introduced in these schemes, such as water conservation policies (Paulo and Camões, 2020), solid waste management (Silva et al, 2012), reforestation, and fire control.…”