Nils Droste a personal page


I am interested in applied econometric research on public finance institutions for conservation and participatory governance mechanisms for sustainable development and public good provision.

For my thesis at the Helmholtz Centre for Environmental Research – UFZ, I applied econometric analyses to infer effects of ecological fiscal transfers on protected area development in Brazil and Portugal. From these empirical studies I am developing policy advice, e.g. for an ecological public finance design of EU funds.

The theoretical foundation for these analyses is the principle of fiscal equivalence by Mancur Olson (1969). It states that those jurisdictions who benefit from a policy should also bear the corresponding costs of provision. It is thus based on ideas of economic efficiency but outcomes can also be analyzed in terms of equity (cf. Ostrom, 2011, p. 16). Depending on the characteristics of the good in question, the degree of optimal1 (and / or equitable) decentralization of legislative competencies may vary (cf. Tiebout, 1956; Qian and Weingast, 1997; Faguet, 2014). Structure-wise, such overlapping competencies regarding (natural) resource usage are often organized within polycentric, multiorder governance systems (Eusepi and Wagner, 2010; Ostrom, 2010). In this context I am analyzing effects of fiscal transfer and competency changes.

Empirically, I employ micro-econometric techniques such as:

  • panel data analysis for a non-simultaneous self-selection into treatment of implementing ecological fiscal transfers in Brazil;
  • Bayesian structural time series analysis, simulating a counterfactual time series for fiscal transfer policy changes in Portugal; or
  • regression trees and random forest models for obtaining characteristics of potential beneficiaries of a EU wide ecological allocative mechanism of EU funds.

For current versions of the respective papers see publications. Generally, I am interested in how econometric methods can be used in order to assess effects of both existing and proposed policy changes.


1: Regarding optimal pricing for environmental protection, see the seminal piece of Baumol and Oates (1971) which basically provides the idea that optimality in the face of uncertainty may remain an ideal and setting political standards may be a way to go.