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Bioethanol As Basis for Regional Development in Brazil: An Input-Output Model With Mixed Technologies

Author

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  • Marcelo Pereira Da Cunha

  • Jose Antonio Scaramucci

Abstract

Many issues of strategic importance that have emerged in recent years are contributing to the formulation of national policies for promoting biofuels worldwide. In the developed countries, such initiatives result mainly from concerns on energy security and greenhouse gases emissions. Developing countries envisage biofuels as a potential means to improve access to energy, increase income and employment, alleviate poverty, spur rural development, reduce oil imports and enhance exports of biomass products. These interests converge as to render bioethanol trade a unique opportunity for sustainable development. Despite its simplicity and ease of use, the basic input-output (i-o) model does not allow the representation of technology-differentiated sectors producing the same good or service. For instance, in Brazil, sugarcane can be collected manually or via harvesting machines and alcohol can be produced in plants appended to a sugar mill or in autonomous distilleries. An i-o model with mixed technologies was constructed for the purposes of the study. A linear technology is used to represent the sugarcane and ethanol sectors, whereas the remaining industries are characterized by the usual Leontief production function. Activity levels for the linear-technology sectors are set by a scenario analysis, avoiding the use of much more complicated mathematical tools, such as a computable general equilibrium (cge) model. The construction of the database was done in two stages. Firstly, an i-o table containing 42 sector and 80 commodities was estimated for the base year of 2002. Secondly, the sugarcane and ethanol industries were disaggregated from the sectors they appear in IBGE economic tables, based on detailed engineering information obtained from experts and specialized publications. The extended input-output model with mixed technologies was used to analyze the socioeconomic impacts of a large-scale expansion of bioethanol production in Brazil so as to replace 5% of the estimated global demand for gasoline in 2025. The resulting direct, indirect and induced effects indicate that if ethanol production is augmented in nearly 800%, GDP would increase by a factor of 11.4%, equivalent to approximately the entire economy in the Northeast region of Brazil, and more than 5 million of jobs would be created.

Suggested Citation

  • Marcelo Pereira Da Cunha & Jose Antonio Scaramucci, 2006. "Bioethanol As Basis for Regional Development in Brazil: An Input-Output Model With Mixed Technologies," ERSA conference papers ersa06p242, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa06p242
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    References listed on IDEAS

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    1. Guilhoto, J. J. M. & Sesso Filho, U. A., 2005. "Estimação da Matriz Insumo-Produto a Partir De Dados Preliminares das Contas Nacionais [Estimation of input-output matrix using preliminary data from national accounts]," MPRA Paper 38212, University Library of Munich, Germany.
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    1. Herreras Martínez, Sara & van Eijck, Janske & Pereira da Cunha, Marcelo & Guilhoto, Joaquim J.M. & Walter, Arnaldo & Faaij, Andre, 2013. "Analysis of socio-economic impacts of sustainable sugarcane–ethanol production by means of inter-regional Input–Output analysis: Demonstrated for Northeast Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 290-316.
    2. Grant J. Allan, 2015. "The Regional Economic Impacts of Biofuels: A Review of Multisectoral Modelling Techniques and Evaluation of Applications," Regional Studies, Taylor & Francis Journals, vol. 49(4), pages 615-643, April.
    3. Cerqueira Leite, Rogério Cezar de & Verde Leal, Manoel Regis Lima & Barbosa Cortez, Luís Augusto & Griffin, W. Michael & Gaya Scandiffio, Mirna Ivonne, 2009. "Can Brazil replace 5% of the 2025 gasoline world demand with ethanol?," Energy, Elsevier, vol. 34(5), pages 655-661.
    4. Brinkman, Marnix L.J. & Wicke, Birka & Faaij, André P.C. & van der Hilst, Floor, 2019. "Projecting socio-economic impacts of bioenergy: Current status and limitations of ex-ante quantification methods," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    5. Neuwahl, Frederik & Löschel, Andreas & Mongelli, Ignazio & Delgado, Luis, 2008. "Employment impacts of EU biofuels policy: Combining bottom-up technology information and sectoral market simulations in an input-output framework," Ecological Economics, Elsevier, vol. 68(1-2), pages 447-460, December.
    6. de Carvalho, Ariovaldo Lopes & Antunes, Carlos Henggeler & Freire, Fausto, 2016. "Economic-energy-environment analysis of prospective sugarcane bioethanol production in Brazil," Applied Energy, Elsevier, vol. 181(C), pages 514-526.
    7. Gustavo FERRO & M. Priscila RAMOS & Carlos A. ROMERO, 2025. "Net Jobs Generation And Net Ghg Emissions Reduction From Partial Replacement Of Fossil Fuels With Renewable Energy Sources In Southern Brazil," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 141-151, June.
    8. Brinkman, Marnix L.J. & da Cunha, Marcelo P. & Heijnen, Sanne & Wicke, Birka & Guilhoto, Joaquim J.M. & Walter, Arnaldo & Faaij, André P.C. & van der Hilst, Floor, 2018. "Interregional assessment of socio-economic effects of sugarcane ethanol production in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 88(C), pages 347-362.
    9. Malik, Arunima & Lenzen, Manfred & Ely, Rômulo Neves & Dietzenbacher, Erik, 2014. "Simulating the impact of new industries on the economy: The case of biorefining in Australia," Ecological Economics, Elsevier, vol. 107(C), pages 84-93.

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