Economic impacts of climate policy scenarios for Brazil

Abstract

This paper aims to estimate the economic impacts of climate policy scenarios in Brazil. We use a dynamic-recursive general equilibrium model of the world economy. The main results indicate that the increasing sectorial reduction in emissions from 3% to 30% from 2015 to 2050 produces a cumulative loss between 1% and 2% in terms of the GDP observed in 2004. Although emissions in 2050 drop by 54% in comparison with a reference scenario, the welfare loss is only about 0.8% and does not increase if deforestation reduction goals are considered. We conclude that the policies generate small negative impacts due to the availability of clean energy sources in the Brazilian energy system.