The ecological ICMS has become a notorious public state level policy aimed to support local biodiversity conservation in Brazil. This strategy is understood to support reduction of carbon-dioxide levels and reduce natural forest depletion. The mechanism takes the form of fiscal transfers and its primary objective is to compensate municipalities for their environmental services such as the creation and maintenance of protected areas. The performance of these Payments for Environmental Services have been subjected to several researches aiming to comprehend the cost-effectiveness of the compensations. These payments are transferred directly to the local municipal administrations, thus, excluding the private agents as receptors of the benefits. Literature, up to date, has scrutinized the ability of this policy as to its several economic outcomes. Although the original objective of the Ecological ICMS is to avoid deforestation by obstructing access to protected ares, the ideal application of the generated financial resources are expected to improve welfare levels in the communities receiving the benefits. The thesis investigates the impact caused by the fiscal policy as financial, environmental and social development and consequences within the State of Mato Grosso. This Brazilian state covers three different biomes that concentrate high levels of biomass and lies within the limits of the Legal Amazon region. The policy has become a key research topic as to the United Nations’ REDD environmental policies. This empirical study is based on a qualitative and quantitative analysis and uses the pioneering experience of another Brazilian state, Paraná, as benchmark. The investigation, moreover, examines what drivers have motivated the municipalities to implement the strategy and whether the program is capable of maintaining its economic strength to reward members, even when there are more entrants into the program. The investigation also tests if local public services (e.g. municipal schools) have benefited from the improvement of the municipalities’ finances. Although these variables show only modest interaction, this result is a challenging relationship to be established and one of the most relevant outcomes. As to this regards, the thesis merely seek to understand the covariance of the municipal education improvement and attainment of revenue by the municipalities. Furthermore, It also examines the effects of regional economic growth as to the Ecological ICMS compensations.
Ecological ICMS, Amazon, Brazil, REDD strategy, Payment for Ecological Services, fiscal compensations, environment, conservation unities, Mato Grosso, climate change, local biodiversity, natural forest, protection, deforestation, degradation, municipalities, opportunity cost, efficiency, effectiveness, public policy assessment and Paraná.