#1Ecological fiscal transfers for biodiversity conservation in Brazil Rodrigo S Cassola IBAMA - Brazilian Institute of Environment and Renewable Natural Resources Regional Workshop for Latin America and the Caribbean on Resource Mobilization; 2014#2Key Messages • The role of subnational governments, and related costs, in . . biodiversity conservation policy implementation has to be acknowledged Ecological fiscal transfer as suitable policy instrument to provide incentives for subnational governments and support implementation of biodiversity conservation policies Ecological fiscal transfers use has been limited, there is potential for a greater role in the context of scaling up financing for conservation#3The problem Costs → subnational governments Benefits → national/global level decisions and an allocation of resources that might not be the most efficient in a national perspective 3#4The instrument Intergovernmental fiscal transfers → mechanisms higher levels of government adopt to share revenues with lower levels Ecological fiscal transfers (EFT)- any kind of intergovernmental grants that explicitly incorporates ecological indicators In developing countries, grants represent 60% of subnational government budgets, in comparison to about 30% in OECD countries 3877608 134 HUND#5Brazil: EFT experience Source: icmsecologico.org • . ICMS ECOLÓGICO Target local level Compensatory Protected areas as primary indicator 5#6Source: icmsecologico.org ICMS-E: Parana PARANA • Since early 90's • 5% of mandatory ICMS transfers US$ 70 million (2009) Quantitative criteria plus "quality index" Cassola (2010) 6#7ICMS-E: Mato Grosso Source: icmsecologico.org • Since 2002 • 5% of mandatory ICMS transfers US$ 25 million (2009) Quantitative assessment May et al. (2012) 7#8ICMS-E: Para • • • • Since 2013 8% of mandatory ICMS transfers Still no transfers Prerequisites Relevant new criteria . Avoided deforestation • Forest stock Source: icmsecologico.org • Forest Law implementation#9The case for a Federal-state EFT in Brazil Reward commitment to national targets (Spillover benefits) Legend Level of Biological Importance and Priority BIOLOGICAL IMPORTANCE/PRIORITY OF ACTION Insufficiently Known/High Insufficiently Known/Very High Insufficiently Known/Extremely High High High High/Very High High Extremely High Very High/High Very High Very High Very High/Extremely High Extremely High High Extremely High Very High Extremely High/Extremely High Π Kilometers 0 250 500 1.000#10The case for a Federal-state EFT in Brazil Reward commitment to national targets (Spillover benefits) GOVERNO DE PEAD PAULO PARQUE ESTADUAL Serra do Mar Compensate costs of biodiversity policy implementation Parce Exedral SERRA COMAR#11The case for a Federal-state EFT in Brazil Reward commitment to national targets (Spillover benefits) Compensate costs of biodiversity policy implementation Distribution of fiscal module sizes in Brazil (by municipality) Compensate land use restrictions (Opportunity costs) Legend fiscal module (hectares) Kilometers 0 250 500 1.000#12• An option: FPE Verde Adding ecological indicators to the Fundo de Participação dos Estados (largest federal-state IFT in Brazil) R$ 1.05 billion (~US$ 480 million) FPE Verde = 2% of FPE funds R$ 53.3 billion (2013) (US$24 billion) 12#13FPE Verde: indicator selection Relevance for biodiversity Possible incentive effects Availability of data conservation Protected area coverage Protected area category Protected area management level Biological importance National conservation targets Protected area management effectiveness Opportunity costs Deforestation and land degradation rates Vegetation fire frequency 13#14FPE Verde: indicator selection Relevance for biodiversity conservation Possible incentive effects Protected area coverage Protected area category Protected area management level Biological importance National conservation targets Protected area management effectiveness Opportunity costs Deforestation and land degradation rates Vegetation fire frequency Availability of data 14#15FPE Verde: scenarios EX-ANTE SCENARIO ANALYSIS BASIC ALTERNATE Existing law proposal Product of this study. Classify States into 7 classes of protected area coverage Incorporate selected indicators. BASIC 2 and ALTERNATE2 Same design as previous two, only difference: how to get the 2% that forms FPE Verde#16FPE Verde: winners and losers STATE BASIC ALTERNATE BASIC2 ALTERNATE2 DISTRITO FEDERAL 7.69% 2.56% 6.28% 1.15% RORAIMA 7.47% 2.82% 6.06% 1.41% AMAZONAS 6.58% 19.97% 5.17% 18.56% RONDÔNIA 5.50% 2.55% 4.09% 1.14% AMAPÁ 5.27% 2.67% 3.86% 1.26% ACRE 5.26% 0.66% 3.85% -0.76% MATO GROSSO 4.36% 4.47% 2.95% 3.06% PARÁ 2.68% 9.24% 1.27% 7.83% MATO GROSSO DO SUL 1.56% 0.36% 0.15% -1.05% TOCANTINS 1.39% 0.33% -0.03% -1.89% PIAUÍ 0.73% -0.06% -0.68% -1.47% GOIÁS 0.42% -0.24% -1.00% -1.65% MARANHÃO 0.20% -0.07% -1.21% -1.49% SERGIPE 0.10% -0.57% -1.31% -1.98% ALAGOAS 0.10% -0.56% -1.31% -1.97% RIO GRANDE DO NORTE 0.10% -0.58% -1.32% -1.99% PARAIBA 0.01% -0.55% -1.40% -1.96% PERNAMBUCO -0.17% -0.52% -1.59% -1.93% CEARA -0.20% -0.54% -1.61% -1.96% BAHIA -0.28% -0.27% -1.70% -1.68% SAO PAULO SANTA CATARINA -7.14% -2.75% 0.86% 5.25% -7.77% -8.72% 0.23% -0.72% ESPIRITO SANTO -8.10% -9.66% -0.10% -1.66% RIO DE JANEIRO -8.13% -8.50% -0.13% -0.50% RIO GRANDE DO SUL -8.79% -9.61% -0.79% -1.61% PARANA -9.01% -9.01% -1.01% -1.01% MINAS GERAIS -9.36% -9.01% -1.36% -1.07%#17Policymix: other economic instruments in Brazil IN PLACE / ONGOING PERSPECTIVES / ON STUDY 1. Environmental schemes (infrastructure projects) 2. Environmental funds Amazônia & FUNBIO) compensation 1. Federal PES Law (Fundo 2. Green Infrastructure Bonds 3. Tradable conservation certificates 3. State and Municipal PES Laws and schemes 4. Green procurement 5. Forest Floresta and Bolsa Verde) allowance programs (Bolsa (Forest Law – needs regulation) 4. EFT targeting Amazon States based on deforestation results 5. ... 6. ...#18Thank you for your attention Rodrigo S Cassola [email protected] Acknowledgements: IBAMA/MMA DAAD University of Freiburg UFZ, Leipzig Note: The views and opinions are mine and do not necessarily reflect the position of the Brazilian government#19• • References Ring, I., 2008. Integrating local ecological services into intergovernmental fiscal transfers: the case of the ecological ICMS in Brazil. Land use policy 25(4), 485-497. Cassola R. (2010) TEEBcase: Financing conservation through ecological fiscal transfers Brazil, mainly based on Ring (2008). Available at: http://www.teebweb.org May, P. et al. (2012) Assessment of the role of economic and regulatory instruments in the conservation policymix for the Brazilian Amazon - a coarse grain study. Report 5/2012. Available at: http://policymix.nina.no www.icmsecologico.org.br http://policymix.nina.no 1994