Public policy councils and local governments: how Municipal Environmental Councils affect environmental spending in Brazil

Abstract

Brazil is a federalist country, where sovereignty regarding decisions and responsibilities are shared between three spheres of autonomous governments: union, states, and municipalities. This allows, in spite of the constitutional attributions, these entities to establish their own agendas and priorities and they can administer themselves. These federative spheres have different Public Policy Councils, which are joint bodies between the state and society, set up at the heart of the public administration in Brazil, in order to produce a more democratic environment for public management. These Councils are the main experiences of participatory democracy in Brazil, and local government is considered the administrative political unit that offers the best conditions for such a practice (Martins et al, 2008). In the environmental area, Environmental Councils were present in 4,130 municipalities of Brazil (74% of the total) in 2017, and they have the responsibility of supervising, deliberating, and proposing norms for municipal environmental management. The concept of environmental management expenditures carried out by the municipal government is a criterion of effectiveness of the popular participation in municipal environmental management. Although imperfect, this indicator establishes a way of measuring whether the existence of Municipal Environmental Councils has concrete effects, supposing that the greater participation of the environmental expenses in the budget of the municipality represents greater importance of environmental subjects in the list of policies supported by the municipality. The objective of this research is to identify how citizen participation in Brazil, through Municipal Environmental Councils, is related to environmental management expenses and contributes to the greater transfer of financial resources from the states that have legislation on Ecological ICMS (ICMS-E) for the municipalities. The ICMS-E establishes that part of state tax revenues must be transferred to municipalities according to environmental criteria. Seventeen Brazilian states introduced different environmental criteria to distribute the ICMS-E resources. Municipalities presenting better environmental performance receive more resources, considering parameters such as protected areas, Indigenous lands, sanitation, and solid waste disposal. Crossing data for municipal public finances (2012-2016) with local administration (2017), it is shown that the existence of Municipal Environmental Councils is positively related to expenses with environmental management and fiscal transfer received through ICMS-E. These effects are higher where the Municipal Environmental Councils have power over financial decisions. These results confirm the hypothesis that citizen participation, via Municipal Environmental Councils, positively affects local environmental policymaking in Brazil.