Economic analysis of limitation of deforestation in Brazil

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Please cite the paper as:
“Caroline de Souza Rodrigues Cabral and Ângelo Costa Gurgel, (2014), Economic analysis of limitation of deforestation in Brazil, World Economics Association (WEA) Conferences, No. 1 2014, Is a more inclusive and sustainable development possible in Brazil?, 5th May to 12th August 2014”

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With the advent of the phenomenon of global warming, the greenhouse effect, countries that emit more greenhouse gases (GHGs) have suffered strong international pressure to reduce such emissions. In Brazil, much attention is focused on deforestation, one of the largest emitters of carbon dioxide. Therefore, Brazil has committed to reducing its emissions by 36.1% and 38.9% compared to projected emissions for 2020. In order to accomplish this, the deforestation in the Amazon be reduced by 80% and in the Cerrado (savannah) by 40% by the year 2020. Simultaneously, food production is one of the biggest challenges of the modern world, and second the OECD and FAO, Brazil is the country with the greatest potential to increase agricultural production. Moreover, data show that agribusiness is a key sector of the Brazilian economy in terms of income generation and promotion of foreign exchange. But to reduce deforestation, agriculture and livestock can be quite reached, since its expansion nowadays is happening on Cerrado and Amazon areas. One hypothesis is that halting deforestation would imply lower production of these sectors and food, and lower income in the long run. This article discusses the economic impacts of a restrictive policy of deforestation on the agricultural and livestock sector and the national economy using a computable general equilibrium model. The results point to little losses in GDP from the limiting deforestation scenario compared to the baseline, but greater impacts in the agricultural, livestock and food sector.

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