Opportunity for change or reinforcing inequality? Power, governance and equity implications of government payments for conservation in Brazil

Abstract Economic instruments for conservation are invoked as a strategy to achieve the dual goals of maintaining healthy ecosystems and improving human well-being. The outcomes of such instruments are highly variable and there has been limited analysis of their social outcomes. Economic instruments for conservation can create opportunity and political leverage for minority groups or reinforce pre-existing power relationships and reproduce socio-economic inequalities. This research examines the equity implications of a government scheme from Brazil known as an ecological fiscal transfer, looking at how institutional arrangements and local power dynamics influence the application of revenue to achieve social outcomes. A case study from the Atlantic forest explores whether the application of revenue reflects the interests of a broad community base and avoids elite capture, or if decision-making processes are engineered by local power actors to further specific interests. Results demonstrate how poor local institutional capacity limits the effective governance of the revenue, leading to limited positive social outcomes. Furthermore, incentives offered by the mechanism stimulate conservation activity which implies high costs for the rural poor. The application of a framework of good governance guides the development of recommendations for improving the social equity of ecological fiscal transfer policies. These findings reinforce the importance of the design of EFTs applied in regions of poverty, if they are to promote socially equitable conservation.