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

Surender Kumar, Shunsuke Managi

Research output: Contribution to journalArticle

38 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)3052-3059
Number of pages8
JournalEcological Economics
Volume68
Issue number12
DOIs
Publication statusPublished - 2009 Oct 15

Keywords

  • Environmental expenditure
  • Environmental services
  • Fiscal federalism
  • India
  • Spatial externalities

ASJC Scopus subject areas

  • Environmental Science(all)
  • Economics and Econometrics

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