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GTAP Resource #4700

"Low Carbon Economy in Brazil: Policy Alternatives, Costs of Reducing Greenhouse Gas Emissions and Impacts on Households."
by Magalhaes, Aline, Edson Domingues and Geoffrey Hewings

One of the most discussed effects of economic activity on the environment is climate change caused by the accumulation of greenhouse gases (GHG). Developing countries have increased their importance as emitters of GHG and increasingly, it has become necessary that these countries also contribute to curbing emissions. Brazil already has taken the first step in this direction at conferences in Copenhagen and Cancun, to confirm voluntary national targets to reduce GHG emissions. Brazil faces the dual challenge of promoting development and reducing GHG emissions. In this context, This paper aims to study alternatives to reduce price-induced emissions policies such as a carbon tax and its impact on the share of emissions related to the use fuels and productive activity. The distributive impact on households, for example, is a new result in Brazil’s literature. There are many examples of national policies already in place that could serve as an example to the proposition of similar schemes in Brazil.

In methodological terms, we used a dynamic recursive general equilibrium model, built for the Brazilian economy, called “BeGreen.” The model presents energy and environmental detail, specially trained for the analysis of GHG reduction policies on the economy. The model is innovative in many ways. It has a high breakdown of energy sectors and products. It incorporates recursive dynamic mechanisms and presents different energy and environmental specification.

The results indicate that ambitious emissions reduction should be associated with longer periods of time, with less ambitious goals for shorter periods. In terms of the effects on income classes, the carbon tax is moderately regressive, even when considering the return of revenue via subsidizing consumption of all households. If the aim is to make more progressive policy, then compensation policies via income for the poorest deciles may be the solution

Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2015
Created: Magalhaes, A. (4/14/2015)
Updated: Batta, G. (5/6/2015)
Visits: 984
- Dynamic modeling
- Climate change policy
- South America

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