LAUSR

ABSTRACT Regions of high biodiversity often coincide with regions of poverty and conservation can imply economic and social costs for poor resident populations. Environmental compensation is considered a tool to reduce socio-environmental conflict, improve the equity of conservation and promote sustainable development. The intricacies of specific socio-ecological systems may determine how compensation payments are interpreted locally to produce outcomes. This research examines the social perceptions of an ecological fiscal transfer which intends to compensate the local public administration for the substantial costs of conservation in a hotspot of biological and social diversity in the Brazilian Atlantic forest. In this context we explore whether financial compensation (1) influences local perceptions of the conservation regime, (2) contributes towards the reconciliation of human-conservation conflicts and (3) triggers any meaningful socio-economic improvement that would counter the local costs of conservation. Results show that environmental compensation is not widely recognised as effectively benefiting the community. Local authorities consider compensation insufficient to enact a sustainable development agenda. Environmental compensation could play an important role in a policy mix for socially equitable conservation by being explicitly linked to community benefits, especially to fostering local livelihoods. The collaboration of actors operating across multiple governance levels may improve the institutional capacity of local actors to produce effective outcomes.