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Paris agreement on climate change and the possible impacts on Brazilian meat and dairy sectors

Alvim, Augusto and Sanguinet, Eduardo (2020): Paris agreement on climate change and the possible impacts on Brazilian meat and dairy sectors.

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Abstract

This study analyzes the impacts of reducing GHG emissions on the Meat and Dairy sectors. For this purpose, the Brazilian targets for the reduction of GHG emissions ratified in the Paris Agreement in 2015 are considered as starting points. To achieve this goal, General Equilibrium Model (GTAP) is used, which allows the inclusion of carbon taxes and the construction of alternative scenarios using GWP and GTP as GHG emissions measures. Four scenarios are analyzed. Scenario 1 applies carbon taxes upon Meat & Dairy sector and no carbon taxes on the other Brazilian sectors. Scenario 2 simulates only carbon taxes upon the Energy sector and Scenario 3 equal carbon taxes on all sectors (20$, 40$ and 60$ per tons of CO2). Scenario 4 considers the application of carbon taxes to the Meat & Dairy, Grains & Crops lower than to the Energy and Industry & Services sectors. For all scenarios is analyzed the main effects on sector emissions but also on production, trade and the Brazilian GPD. In general terms, the results show that: the Scenario 3 may be the most appropriate when we use the GTP measures to estimate GHG emissions. In this case, the reduction in GDP are not as intense as when are used GWP, though the exportation of the Beef and Dairy are also expected to drop. The fourth Scenario seems to be the most adequate in terms of cost distribution among the various economic sectors in Brazil, only when the GWP is considered.

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