<![CDATA[Fiscal decentralization (FD) is widely promoted to enhance regional development, yet its environmental implications remain contested. This study examines the conditions under which FD supports or undermines green regional growth, with particular attention to institutional quality and governance. Using a PRISMA-guided systematic literature review, this study analyzes empirical research from Scopus and Web of Science published between 2016 and 2025. Fifteen eligible studies were identified based on predefined inclusion criteria linking FD indicators with environmental outcomes. The findings reveal three consistent patterns. First, FD is associated with improved environmental outcomes, including lower emissions and stronger green performance, when supported by strong institutional quality, such as the rule of law, corruption control, and administrative capacity. Second, this association tends to be adverse in weak institutions. Third, several studies report cross-jurisdictional spillovers and suggest institutional thresholds at which FD effects change sign. Heterogeneity in outcomes and methods precluded meta-analysis. These results highlight the importance of aligning decentralization with governance capacity. The study contributes by integrating fiscal, institutional, and environmental perspectives and by identifying threshold effects and governance configurations as key mechanisms shaping sustainable decentralization outcomes.]]>
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