Economic and social effectiveness of carbon pricing schemes to meet Brazilian NDC targets
Résumé
Curbing down GHG emissions while preserving economic growth is the
main challenge that developing and developed countries are facing to
meet the Paris Agreement commitments. Brazil's NDC target is to reduce
economy-wide absolute levels of GHG emissions by 37% in 2025 and
43% in 2030, compared to 2005 emissions.
In this paper, we compare command-and-control and carbon pricing
policies to induce the Brazilian economy to meet its NDC targets. Our
paper focuses on analysing synergies and trade-offs in macroeconomic
and social development, focusing on economic growth and income
distribution, while reducing GHG emissions. By integrating a series of
sectorial models and a computable general equilibrium model (CGE), we
develop and run different policy scenarios which simulate different
carbon pricing schemes in Brazil. Our analysis shows that NDC
implementation in Brazil under carbon pricing policies allows the country
to meet its targets and improve economic and social indicators compared
to a command-and-control policy. With about the same GHG emissions
up to 2030, important macroeconomic and social co-benefits can be
achieved under a carbon pricing policy in Brazil, allowing for reducing
welfare losses against business-as-usual trends.