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Developing countries have been recently addressing the respiratory health impact of agricultural burnings with innovative environmental policy. In Acre state, Brazilian Amazon, mechanization is subsidized, enabling smallholders to comply with a cap on burned area. To appraise amendments in the policy, a statistical Hicks-Kaldor test was developed and applied to stakeholders' stated choice surveys coupled with an econometric estimate of fire's effect on health. The test unveiled the trade-off between urban dwellers' health and smallholders' production. It also avoided the large disparity of groups in size and in goods valued to result into instability of efficiency assessment across six alternative group weighting schemes. The amendments that increased joint welfare required a great expansion of mechanization supply. Such change, which is not presently feasible at state level, could be piloted at municipal level by relying on the private sector and smallholders' organizations, and also on subsidized credit and power tillers. • A statistical Hicks-Kaldor test, robust to stakeholders' disparities, is devised. • It is applied to a policy replacing agricultural fires with subsidized tractors. • A health and welfare trade-off is unveiled by alternative stakeholder weightings. • · The test proved highly stable across six alternative group weightings. [ABSTRACT FROM AUTHOR]

• The Brazilian Ecological Fiscal transfer (ICMS-E) has, to date, promoted the creation of new protected areas (PAs). • The quality of that impact may be lower than expected: new PAs belong mostly to a category that impose low local costs. • The quantity of that impact is unlikely to still be high, as the incentive in ICMS-E's formula declines as PA stock rises. • State and local governments respond differently to ICMS-E incentive, respectively focused more on impact or revenue. Brazil's ecological intergovernmental fiscal transfer (ICMS-E) is a conservation incentive for protected areas (PAs). It redistributes tax revenues to reward municipalities for hosting PAs. To quantify its impact on the creation of state and municipal PAs, we used panel regressions on a longitudinal municipality dataset that combined information on PA creation and ICMS-E implementation for the 1467 municipalities in 6 Brazilian states in the Atlantic Forest region that never changed borders, from 1987 to 2016. We found that the percent of the municipal area covered with state or municipal PAs increased as a consequence of ICMS-E implementation. However, the magnitude of this effect declined as the ICMS-E revenue is shared more widely due to the expansion of PAs that reduced the gain from new PAs. We also found that ICMS-E policy primarily spurred the creation of PAs with less restrictive rules – similar to IUCN category V reserves – mainly by municipalities. For more restrictive PAs with higher local costs for municipalities, ICMS-E promoted state-proposed PAs but not municipal PAs. Our results suggest that states used ICMS-E to incentivize local implementation of their conservation preferences, including strict conservation, while municipal governments responded mostly with low-cost actions to increase their revenues. [ABSTRACT FROM AUTHOR]