Fiscal decentralization can lead to more pollution in many countries, but having good institutions in place can help reduce this negative impact. The study looked at data from over 80 countries between 1970 and 2000 to see how decentralizing financial power affects pollution levels. The results suggest that when local governments have more control over money, pollution tends to increase. However, if the overall governance is strong, it can help prevent this rise in pollution. This shows that the quality of institutions plays a crucial role in balancing the environmental effects of fiscal decentralization.