State capacities and payment for environmental services in Brazilian municipalities

Abstract

Payments for Environmental Services (PES) aim to promote environmental conservation or recovery through economic incentives. However, the limited experiences with PES in developing countries demonstrate a gap between the theoretical framework and the actual implementation of the program. This study analyzes the relationship between administrative and political capacities and the existence of PES in Brazilian municipalities. The study presents results from empirical research, with data extracted from the Survey of Basic Municipal Information (MUNIC) carried out by the Brazilian Institute of Geography and Statistics (IBGE) in 2012, 2017, and 2020. The results show that municipal PES programs reach 15% of Brazilian municipalities in 2020. They also indicated a high rate of program dropout over time. The results of the empirical analysis, including descriptive statistics and probit regression, show that some technical administrative competencies are associated with PES programs in the municipalities, including the qualifications of officials, the existence of an Integrated Solid Waste Management Plan, and the presence of environmental management bodies in the municipality. Political-relational competencies are also related to the existence of PES programs, including an active Municipal Environmental Council. These results highlight that there is no one-size-fits-all solution for successfully implementing PES programs since they depend on specific circumstances, including local institutional capacities. This conclusion requires further attention and research in the environmental economics literature, which tends to present PES as a universal solution.