Ecological Fiscal Transfers
Ecological Fiscal Transfers (EFT) distribute a share of intergovernmental fiscal transfers and revenue sharing schemes according to ecological indicators such as protected areas or watershed management areas. These conservation areas thus become a source of income for the receiving governments. EFT were invented as a compensation scheme for municipalities. Today, EFT are often seen as an instrument that incentivizes decentralized conservation efforts. There are exisisting EFT schemes at subnational level in Brazil and national level in Portugal.
The aim of EFT is twofold. On the one hand, EFT compensate municipalities for foregone revenue and other opportunity costs of protected areas and thus help the acceptability of nature conservation. On the other hand, protected areas become a source of income and thus create an incentive for decentralized conservation efforts.
There is a growing body of evidence that the implementation of EFT schemes increases municipal designations of protected areas.
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