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

Nils Droste, Claudia Becker, Irene Ring, Rui Santos

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)1027-1051
Number of pages25
JournalEnvironmental and Resource Economics
Issue number4
Publication statusPublished - 1 Dec 2018


  • Bayesian structural time series
  • C32
  • Ecological Fiscal Transfers
  • Fiscal federalism
  • H41
  • H72
  • Municipal conservation competencies
  • Portugal
  • Q57

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