Environmental preservation of the Colombian Amazon: Challenges for fiscal policy

This paper explores the challenges faced by fiscal policy in the preservation of the Colombian Amazon. Some biases against public environmental expenditure are discussed; the financing arrangements for the state function of environmental protection in the region are examined. The authors argue that many of the fiscal tools used to that effect in Colombia generate perverse incentives for conservation purposes. In addition to the fact that environmental externalities go beyond the jurisdictions of local and departmental authorities, the potential effectiveness of Amazonian subnational governments in the realm of environmental policy is constrained by their relatively low fiscal capacity. The intervention of the national level government, accompanied by international action, is viewed as particularly necessary in the case of the Amazon.