Did India’s Ecological Fiscal Transfers Incentivize State Governments to Increase their Forestry Budgets?

Jonah Busch, Avani Kapur , Anit Mukherjee
(2020)

Ecological fiscal transfers (EFTs) involve higher levels of government distributing funds to lower levels of government based on ecological indicators. In 2015 India established the world’s largest system of EFTs when its 14th Finance Commission added forest cover to the formula that determines the amount of tax revenue the Union government distributes annually to each state. Here we gather state-by-state data on forestry budgets to assess whether India’s EFTs incentivized states to protect and restore forests as evidenced by increases to their forestry budgets.