Intergovernmental Fiscal Transfers, Forest Conservation and Climate Change

Intergovernmental Fiscal Transfers, Forest Conservation and Climate Change

Silvia Irawan and Luca Tacconi

Intergovernmental fiscal transfers (IFTs) are an innovative way to create incentives for local public actors to support conservation. This book contributes to the debate about how to conserve tropical forests by implementing mechanisms for reducing deforestation and forest degradation (REDD+). With Indonesia as a case study, the authors adopt an interdisciplinary approach, drawing on political science, economics, and public policy. They consider the theoretical justification, as well as the wider political and administrative context for developing the design of IFTs for conservation.

Chapter 6: The design of REDD+ and decentralised forest management

Silvia Irawan and Luca Tacconi

Subjects: economics and finance, environmental economics, environment, climate change, ecological economics, environmental politics and policy, politics and public policy, environmental governance and regulation


As discussed in the previous chapters, local governments often have a strong interest in exploiting forests to generate revenues from taxes and fees as well as from the distribution of relevant national taxes and fees. REDD+ measures may restrict local governments from pursuing productive activities in forests and reduce this revenue stream which is needed to finance local public services. Local governments would also need to perform a number of activities to address locally specific causes of deforestation to ensure successful implementation of REDD+. Meaningful participation of local governments in REDD+ implementation is imperative. Successful implementation of REDD+ requires not only the transfer of funds, but it also requires addressing governance challenges to its implementation (Corbera et al., 2010; Ebeling and Yasué, 2008). Most countries responsible for emissions from deforestation and forest degradation have implemented certain forms of decentralisation in public administration and forest management. Appropriate distribution of revenues among government levels needs to be carefully considered to compensate the costs of REDD+ implementation at the local level

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