An analysis of delay in implementing ecological fiscal transfers in Brazil

Abstract

This paper sheds light on the cases of delay, in some cases interruptions and cancellations of criteria, that followed the adoption of ecological fiscal transfers (EFT) by Brazilian states. Using the transaction costs-politics framework to analyze the policy-making process, the central argument is that state legislatives are likely to weight benefits and costs at the formulation stage. At the implementation stage, legislatives delegate the role of refining EFT procedures to state agencies and, as such, increase the costs they incur. The empirical design is based on a set of case-studies, collecting data using questionnaires devised to describe the time-lags and the interruptions and cancellations of environmental criteria. The findings provide evidence of the presence of gridlocks in the formulation stage and delegation problems in the political-bureaucratic relationship at the implementation stage. Also, the absence of a gradual increase to implement the percentage dedicated to ecological criteria in each state is likely to explain the delays in the implementation of EFT schemes. In the end, we recommend flexibility in the design of scheme and the involvement of political actors in the policy process of adopting EFT.