This dissertation analyses incentive effects in ecological fiscal transfers for the designation of protected areas. The potential of ecological fiscal transfers to set such fiscal incentives for nature conservation is displayed through a microeconomic model that generates testable hypothesis. Corresponding empirical evidence of an incentive effect is provided by panel data regressions and time series analyses of existing ecological fiscal transfer systems in Brazil and Portugal. Moreover, three tangible proposals for potential adaptations of the instrument to federal, supra-national, and global levels are developed through quantitative simulations that take the specifics of the institutional frameworks into account. Thereby, this dissertation provides an evidence based foundation for policy advice for the design of ecological fiscal transfer systems.