IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v68y2009i12p3052-3059.html
   My bibliography  Save this article

Compensation for environmental services and intergovernmental fiscal transfers: The case of India

Author

Listed:
  • Kumar, Surender
  • Managi, Shunsuke

Abstract

This paper studies mechanisms to compensate local government for the public provision of environmental services using the theory of optimal fiscal transfers in India. Especially, we analyzed the role of intergovernmental fiscal transfers in achieving the environmental goal. Simply assigning the functions at appropriate levels does not ensure optimal provision of environmental services. Optimality in resource allocation could be achieved by combining the assignment system with an appropriate compensation mechanism. Intergovernmental fiscal transfers would be a suitable mechanism for compensating the local governments and help in internalizing the spillover effects of providing environmental public goods. Illustrations are also provided for India.

Suggested Citation

  • Kumar, Surender & Managi, Shunsuke, 2009. "Compensation for environmental services and intergovernmental fiscal transfers: The case of India," Ecological Economics, Elsevier, vol. 68(12), pages 3052-3059, October.
  • Handle: RePEc:eee:ecolec:v:68:y:2009:i:12:p:3052-3059
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921-8009(09)00294-8
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    2. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May.
    3. Quentin Grafton, R. & Jotzo, Frank & Wasson, Merrilyn, 2004. "Financing sustainable development: Country Undertakings and Rights for Environmental Sustainability CURES," Ecological Economics, Elsevier, vol. 51(1-2), pages 65-78, November.
    4. Anwar Shah, 2006. "A Practitioner´s Guide to Intergovernmental Fiscal Transfers," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(2), pages 128-186, July.
    5. List, John A & Bulte, Erwin H & Shogren, Jason F, 2002. ""Beggar Thy Neighbor": Testing for Free Riding in State-Level Endangered Species Expenditures," Public Choice, Springer, vol. 111(3-4), pages 303-315, June.
    6. Hajkowicz, Stefan, 2007. "Allocating scarce financial resources across regions for environmental management in Queensland, Australia," Ecological Economics, Elsevier, vol. 61(2-3), pages 208-216, March.
    7. Barton, D.N. & Rusch, G. & May, P. & Ring, I. & Unnerstall, H. & Santos, R. & Antunes, P. & Brouwer, R. & Grieg-Gran, M. & Similä, J. & Primmer, E. & Romeiro, A. & DeClerck, F. & Ibrahim, M., 2009. "Assessing the role of economic instruments in a policy mix for biodiversity conservation and ecosystem services provision: a review of some methodological challenges," MPRA Paper 15554, University Library of Munich, Germany.
    8. Mandal, Subrata & M. Govinda Rao, 2005. "Overlapping fiscal domains and effectiveness of environmental policy in India," Working Papers 05/25, National Institute of Public Finance and Policy.
    9. Oates, Wallace, 2001. "A Reconsideration of Environmental Federalism," Discussion Papers dp-01-54, Resources For the Future.
    10. Ring, Irene, 2002. "Ecological public functions and fiscal equalisation at the local level in Germany," Ecological Economics, Elsevier, vol. 42(3), pages 415-427, September.
    11. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 397-412, July.
    12. Dur, Robert & Staal, Klaas, 2008. "Local public good provision, municipal consolidation, and national transfers," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 160-173, March.
    13. A. B. Atkinson & N. H. Stern, 1974. "Pigou, Taxation and Public Goods," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 119-128.
    14. repec:npf:wpaper:25 is not listed on IDEAS
    15. Sigman, Hilary, 2005. "Transboundary spillovers and decentralization of environmental policies," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 82-101, July.
    16. Breton,Albert, 1996. "Competitive Governments," Cambridge Books, Cambridge University Press, number 9780521481021, April.
    17. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
    18. Helland, Eric & Whitford, Andrew B., 2003. "Pollution incidence and political jurisdiction: evidence from the TRI," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 403-424, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexandre Sauquet & Sébastien Marchand & José Gustavo Feres, 2012. "Ecological Fiscal Incentives and Spatial Strategic Interactions: the Case of the ICMS-E in the Brazilian state of Paraná," Working Papers halshs-00700474, HAL.
    2. Mumbunan, Sonny & Ring, Irene & Lenk, Thomas, 2012. "Ecological fiscal transfers at the provincial level in Indonesia," UFZ Discussion Papers 06/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    3. Sridhar, Kala S. & Kumar, Surender, 2012. "India’s urban environment: air and water pollution and pollution abatement," MPRA Paper 43810, University Library of Munich, Germany.
    4. Droste, N. & Ring, I. & Santos, R. & Kettunen, M., 2016. "Ecological Fiscal Transfers in Europe: Evidence-based design options of a transnational scheme," UFZ Discussion Papers 10/2016, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    5. Luca Tacconi & Sango Mahanty & Helen Suich (ed.), 2010. "Payments for Environmental Services, Forest Conservation and Climate Change," Books, Edward Elgar Publishing, number 14052.
    6. Giannetti, B.F. & Ogura, Y. & Bonilla, S.H. & Almeida, C.M.V.B., 2011. "Emergy assessment of a coffee farm in Brazilian Cerrado considering in a broad form the environmental services, negative externalities and fair price," Agricultural Systems, Elsevier, vol. 104(9), pages 679-688.
    7. Pinaki Chakraborty & Shatakshi Garg, 2018. "Fiscal pressure of migration & horizontal fiscal inequality: Evidence from Indian experience," WIDER Working Paper Series 004, World Institute for Development Economic Research (UNU-WIDER).
    8. Sauquet, Alexandre & Marchand, Sébastien & Féres, José Gustavo, 2014. "Protected areas, local governments, and strategic interactions: The case of the ICMS-Ecológico in the Brazilian state of Paraná," Ecological Economics, Elsevier, vol. 107(C), pages 249-258.
    9. Nurfatriani, Fitri & Darusman, Dudung & Nurrochmat, Dodik Ridho & Yustika, Ahmad Erani & Muttaqin, Muhammad Zahrul, 2015. "Redesigning Indonesian forest fiscal policy to support forest conservation," Forest Policy and Economics, Elsevier, vol. 61(C), pages 39-50.
    10. Shalini Gupta, 2016. "Forest sustainability and development in hills of Uttarakhand, India: Can they move together?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(1), pages 279-294, February.
    11. Farley, Josh & Aquino, André & Daniels, Amy & Moulaert, Azur & Lee, Dan & Krause, Abby, 2010. "Global mechanisms for sustaining and enhancing PES schemes," Ecological Economics, Elsevier, vol. 69(11), pages 2075-2084, September.
    12. Alexeev, Alexander & Good, David H. & Krutilla, Kerry, 2016. "Environmental taxation and the double dividend in decentralized jurisdictions," Ecological Economics, Elsevier, vol. 122(C), pages 90-100.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:68:y:2009:i:12:p:3052-3059. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.