Despesas Públicas em Gestão Ambiental e Emissões de Gases de Efeito Estufa: evidências para municípios brasileiros (2000-2021)

Public Environmental Management Expenditures and Greenhouse Gas Emissions: Evidence from Brazilian Municipalities (2000-2021)

Abstract

This study investigated the relationship between public expenditures earmarked for environmental management and greenhouse gas (GHG) emissions at the municipal level in Brazil from 2000 to 2021. Data were drawn from the Greenhouse Gas Emissions and Removals Estimation System (SEEG-OC), the Brazilian Public Sector Accounting and Fiscal Information System (SICONFI), the System of National Accounts (SNA) and the Demographic Census of the Brazilian Institute of Geography and Statistics (IBGE), the Annual Land Use and Land Cover Mapping in Brazil (MapBiomas), and the Central Bank of Brazil’s Rural Credit System (BCB). The empirical strategy combines panel models with two-way fixed effects (municipality and year), progressively adding socioeconomic controls, deforestation proxies, agricultural investment, and institutional capacity measures, as well as dynamic panel estimates using the system generalized method of moments (System-GMM) to address persistence and potential endogeneity between spending and emissions. The results indicate that public expenditures on environmental management, both contemporaneous and lagged, are not statistically significant (at the 1% level) in explaining reductions in emissions or containing their growth. The findings underscore the need to strengthen public environmental budget management, particularly implementation capacity and targeting, as a relevant strategy to address the challenges of climate change.