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Purpose The aim of this paper is to illustrate the particularities and challenges associated with creating municipal environmental governance institutions in the Peruvian Amazon. Design/methodology/approach A case‐study approach based on qualitative research, document analysis and interviews is used based on field research between 2007 and 2009. Findings Findings reveal the limitations of municipal governance institutions to reflect local environmental concerns illustrated by the example of oil exploration. Whereas municipal institutions put in place resulted in environmental plans and policies, they failed to effectively address major sustainability concerns within their territorial boundaries. On the one hand, policy ambiguities about the meaning of “local” action reflect longstanding divides between centralised policy making and local agenda setting. On the other hand, findings point to the flexibility of local environmental processes easily neglecting core environmental problems. Practical implications The conclusions justify reinforcing policy efforts to strengthen the mandate and competencies of municipalities on broader environmental matters. They also reinforce the need for more locally responsive and socially inclusive environmental agenda setting. Originality/value The study sheds light on poorly described environmental governance aspects from an area of global significance. Amazonian affairs are emblematic for environmental conflicts related to deforestation, extractive industries and ecological complexity. Analyzing the importance of municipal processes is critical in this respect.
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