Brazilian Ethanol: A Gift or Threat to the Environment and Regional Development?
The Brazilian government has been pushing for changes to the United States’ extensive barriers to ethanol imports. However, removing these barriers would have uncertain consequences for the environment and regional development in Brazil. Expansion in sugarcane production required to produce more ethanol could lead to greater deforestation. In terms of regional development, wealthier regions of Brazil could expand production more rapidly, actually reinforcing regional inequality. This paper addresses these two issues by developing and estimating a general equilibrium model of regional agricultural and labor markets. I find that the threat to forests is minimal. The greatest expansion in sugarcane cultivation occurs in Sao Paulo, away from the most environmentally sensitive areas. Concerning the regional development issue, I find that ethanol expansion leads to a significant rise in expected wages in all regions, with some of the largest proportional increases in very poor regions. Still, the gap in expected wages between wealthier and poorer regions does not close in general. Most of the earnings gains accrue to workers who were already working in sugarcane prior to the policy change. As a result, within many regions wage inequality actually increases.
|Date of creation:||Jan 2008|
|Contact details of provider:|| Postal: 366 Galvez Street, Stanford, California 94305-6015|
Phone: (650) 725-1874
Fax: (650) 723-8611
Web page: http://siepr.stanford.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October.
- Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 73-96, 02.
- Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
- Amani Elobeid & Simla Tokgoz, 2006.
"Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets,"
Center for Agricultural and Rural Development (CARD) Publications
06-wp427, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Amani Elobeid & Simla Tokgoz, 2006. "Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets," Food and Agricultural Policy Research Institute (FAPRI) Publications 06-wp427, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Bovenberg, A. Lans & Goulder, Lawrence H. & Jacobsen, Mark R., 2008. "Costs of alternative environmental policy instruments in the presence of industry compensation requirements," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1236-1253, June.
- Bovenberg, A.L. & Goulder, L.H. & Jacobson, M.R., 2006. "Costs of Alternative Environmental Policy Instruments in the Presence of Industry Compensation Requirements," Discussion Paper 2006-127, Tilburg University, Center for Economic Research.
- L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
- L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
- Carrington, William J, 1996. "The Alaskan Labor Market during the Pipeline Era," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 186-218, February.
- Filho, Joaquim Bento de Souza Ferreira & Horridge, Mark, 2005. "The Doha Round, poverty, and regional inequality in Brazil," Policy Research Working Paper Series 3701, The World Bank.
- Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 613-646.
- Francisco Alcalá & Antonio Ciccone, 2001. "Trade and productivity," Economics Working Papers 580, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2002.
- Francisco Alcalá & Antonio Ciccone, 2003. "Trade and Productivity," Working Papers 12, Barcelona Graduate School of Economics.
- Alcala, Francisco & Ciccone, Antonio, 2001. "Trade and Productivity," CEPR Discussion Papers 3095, C.E.P.R. Discussion Papers.
- Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank.
- Assuncao, Juliano, 2006. "Land Reform and Landholdings in Brazil," WIDER Working Paper Series 137, World Institute for Development Economic Research (UNU-WIDER).
- Steven M. Helfand & Gervásio Castro de Rezende, 2004. "The Impact of Sector-Specific and Economy-Wide Policy Reforms on the Agricultural Sector in Brazil: 1980-98," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 194-212, 04.
- Christopher Timmins, 2005. "Estimable equilibrium models of locational sorting and their role in development economics," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 83-100, January.
- Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters,in: Globalization and Poverty, pages 291-336 National Bureau of Economic Research, Inc.
- Petia Topalova, 2005. "Trade Liberalization, Poverty And Inequality: Evidence From Indian Districts," Working Papers id:222, eSocialSciences.
- Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc.
- Marc-Andreas Muendler, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," CESifo Working Paper Series 1148, CESifo Group Munich.
- Muendler, Marc-Andreas, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," University of California at San Diego, Economics Working Paper Series qt6m96c2r7, Department of Economics, UC San Diego.
- Patrick Kline, 2008. "Understanding Sectoral Labor Market Dynamics: An Equilibrium Analysis of the Oil and Gas Field Services Industry," Cowles Foundation Discussion Papers 1645, Cowles Foundation for Research in Economics, Yale University.
- Kline, Patrick, 2008. "Understanding Sectoral Labor Market Dynamics: An Equilibrium Analysis of the Oil and Gas Field Services Industry," Working Papers 43, Yale University, Department of Economics.
- Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
- Nina Pavcnik & Andreas Blom & Pinelopi Goldberg & Norbert Schady, 2004. "Trade Liberalization and Industry Wage Structure: Evidence from Brazil," World Bank Economic Review, World Bank Group, vol. 18(3), pages 319-344.
- Zvi Eckstein & Kenneth I. Wolpin, 1999. "Why Youths Drop Out of High School: The Impact of Preferences, Opportunities, and Abilities," Econometrica, Econometric Society, vol. 67(6), pages 1295-1340, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:07-039. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne Shor)
If references are entirely missing, you can add them using this form.