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GTAP Resource #2295

"Economic Evaluation of Public Policies Aiming the Reduction of Greenhouse Gas Emissions in Brazil"
by Ferreira-Filho, Joaquim Bento and Marcelo Theoto Rocha

In this paper a general equilibrium model of greenhouse gas emissions in Brazil is developed, and some policies for emissions reductions are evaluated. The core model is derived from the MMRF-GREEN model of Australia (Adams, Horridge and Wittwer, 2002). It is a static inter-regional “bottom-up” general equilibrium model, which distinguishes 27 regions inside Brazil, as well as 38 commodities and industries in the economy. The core database is calibrated with Brazilian economic data from 1996, while the emissions module is based on the Brazilian Initial National Communication to the United Nations Convention about Global Climate Change (Ministério da Ciência e Tecnologia, 2004) for the 1994 reference year. The gas module in the model comprises all known sources of greenhouse gases emissions except emissions from land use change (deforestation).
The recent introduction in Brazil of the flexfuel technology for vehicles (which allows the use of alcohol, gasoline, or any blend of these two fuels) is a particular characteristic of the fuel market in the country. Although gasoline in Brazil has for long been blended with alcohol (the so called gasoalcool fuel), the flexfuel engines allow instant substitution based on relative price changes. The number of cars with flexfuel engines is increasing fast as a share of the national fleet. To deal with this aspect of the Brazilian economy, the model has as a special feature a detailed specification of substitution in fuel use between alcohol and gasoline.
Emissions in the model are classified in basically two sources: emissions on fuel use, and emissions on the activity level of the economic sectors. The main characteristics of the emissions patterns in the Brazilian economy are analyzed, and simulations with carbon taxes are performed. The simulations comprise carbon taxes on emissions, either on fuel use or on the activity level of industries. Results show that taxing activities is more relevant for greenhouse gases emissions reductions in Brazil than just taxing fuel use, due to the importance of activity related emissions in the Brazilian emissions matrix. Livestock is found to be one of the most important emission sectors in Brazil. Due to the importance of this particular sector, sensitivity analysis is performed with the value of the coefficient for conversion of CH4 emissions into CO2 equivalents.
Sensitivity analysis is also performed on the value the alcohol/gasoline substitution parameter. The impact on aggregated results of increasing this parameter, however, is not very high, due to the relative little importance of gasoline in the Brazilian emissions matrix, although this has important impacts on the alcohol production and related sectors.

Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA; Journal of Economic Integration Vol. 23. No. 3
Created: Ferreira-Filho, J. (4/5/2007)
Updated: Ferreira-Filho, J. (4/5/2007)
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