There has been increased emphasis in the last three decades on the decentralization of natural resource governance decisions to local government in developing countries as a means of improving environmental quality, public service delivery, and the accountability of local officials. We examine the performance of decentralization of natural resource management services in a large sample of municipal governments in four Latin American countries. Our analysis includes a variety of factors discussed in the literature as important in influencing the responsiveness of government officials to local needs. We provide a nested institutional model in which local officials respond to incentives created by the structure of formal political institutions at both the local and national level. The results provide support for the importance of considering local and national institutional arrangements as these co-determine the political incentives within decentralized systems.