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Costs of Reducing Greenhouse Gas Emissions in Brazil

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  • Gurgel, Angelo Costa

Abstract

The Brazilian government has announced volunteer targets to reduce greenhouse gas (GHG) emissions during the 2009 COP meeting in Copenhagen. In this paper we estimate the economic impacts from alternative policies to achieve such targets, including actions to cut emissions from deforestation and agricultural production. We employ a dynamic-recursive general equilibrium model of the world economy. The main results show that deforestation emissions in Brazil can be reduced at very low costs, but the costs of cutting emissions from agricultural and energy use may reach 2.3% loss in GDP by 2020 if sector specific carbon taxes are applied. Those costs may be reduced to 1.5% under a carbon trading scheme. The negative impacts of carbon taxes on agricultural production indirectly reduce deforestation rates. However, directly cutting emissions from deforestation is the most cost-effective option, since it does not hurt agricultural production, which still expands on lower yield and underutilized pasture and secondary forest areas.

Suggested Citation

  • Gurgel, Angelo Costa, 2012. "Costs of Reducing Greenhouse Gas Emissions in Brazil," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125937, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae12:125937
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    File URL: http://purl.umn.edu/125937
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    References listed on IDEAS

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    1. Babiker, Mustafa & Reilly, John M. & Jacoby, Henry D., 2000. "The Kyoto Protocol and developing countries," Energy Policy, Elsevier, vol. 28(8), pages 525-536, July.
    2. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    3. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
    4. Viguier, Laurent L. & Babiker, Mustafa H. & Reilly, John M., 2003. "The costs of the Kyoto Protocol in the European Union," Energy Policy, Elsevier, vol. 31(5), pages 459-481, April.
    5. Gurgel Angelo & Reilly John M & Paltsev Sergey, 2007. "Potential Land Use Implications of a Global Biofuels Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-36, December.
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    More about this item

    Keywords

    Climate policies; Brazil; deforestation; general equilibrium; Environmental Economics and Policy; Land Economics/Use; Q54; Q58; Q15; C68;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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