This project, in collaboration with Professor Dr. Alex Pfaff from the Sanford School of Public Policy and the Nicholas School of the Environment, Duke University, focuses on the evaluation of the effectiveness of the intergovernmental fiscal transfer mechanism in Brazil - the Ecological ICMS. The Ecological ICMS (Imposto sobre Circulação de Mercadorias e Serviços) is cited as one of the most promising and innovative financial incentive mechanisms for environmental conservation. It consists of an intergovernmental fiscal transfer that considers ecological criteria for redistributing the revenues from the added-value tax ICMS to local governments. Land covered by legally protected areas (i.e. Conservation Units) is the main ecological criteria that municipalities must accomplish to benefit from the Ecological ICMS. Although it has been implemented in 16 Brazilian states since 1996, there are no impact evaluations of this mechanism that are based on a counterfactual approach, properly distinguishing between mechanism effect and hidden biases (confounders). We propose to test how effective the Ecological ICMS is on the promotion of new Conservation Units and on the increase of native forest under regeneration in the Atlantic Forest region. We will analyze neighbor municipalities located in state borders, comparing states that implemented the ICMS-E, with states with no ICMS-E policy. In these state borders, the selection of comparable pairs of treatment municipalities (under the Ecological ICMS incentive) and control (without the incentive) will be made based on: i) biophysical and geographic characteristics - native vegetation area, relief, soil type, precipitation and temperature, presence of water bodies; ii) infrastructure conditions - road density, urban area and iii) socioeconomic conditions - population density, per capita income and HDI. Our hypothesis is that the Ecological ICMS promotes an increase of the area within Conservation Units (SNUC) and the increase of area of native vegetation under regeneration, being the incentive particularly more effective when municipalities have a lower economic activity. Our research will significantly contribute to natural resources public management, providing important subsidies for the implementation of public policies for land use planning and ecosystem maintenance services in the Atlantic Forest region.
News published in Agência FAPESP Newsletter about the scholarship: