Intra-governmental fiscal transfers redistribute tax revenues among levels of government, from national and regional governments to local jurisdictions according to agreed principles and priorities. Ecological fiscal transfers involve integrating ecosystem services into allocation amounts making conservation indices (e.g. size/quality of protected areas) part of the fiscal allocation formula to reward investments in conservation and to incentivize the expansion of protected areas. (adapted from UNDP SDG Financing Solutions).
One example of a specific fiscal transfer initiative is Portugal’s Local Finances Law, which has resulted in increased significant increases in budgets for municipal areas with a large proportion of land under protection.
Ecological Fiscal Transfers
Intergovernmental fiscal transfers redistribute tax revenues across government levels-from national and regional to local jurisdictions-according to agreed principles and priorities. Integrating ecological services means including conservation indices (e.g. size/quality of protected areas) in the fiscal allocation formula-thus rewarding investments in conservation and incentivize the expansion of protected areas, forests or other natural capital.