Economic impacts of the Brazilian proposal in COP21: a computable general equilibrium approach

Abstract

This article aims to simulate the likely economic impacts associated with the Brazilian proposal, pledged during COP21, to cut its greenhouse gases emissions by 37% until 2025, compared to 2005 levels. A computable general equilibrium model with a recursive-dynamic structure was developed, which includes energetic and environmental specification modules that allow for emissions grouping by emitting agent (fuel, industries and households) and emitting activity. The results indicate a cumulative decrease of -3.3% in real GDP in 2025, compared to the baseline scenario. As expected, sectors with the greatest dependence on fuel burning, or with intensive emissions in their production processes, were the most negatively affected.