Climate Change Policies and the Carbon Tax Effect on Meat and Dairy Industries in Brazil

Augusto Mussi Alvim,Eduardo Rodrigues Sanguinet

doi:10.3390/su13169026

Abstract

This study analyzes the impacts of reducing greenhouse gas (GHG) emissions on the meat and dairy industries. To achieve this goal, the Global Trade Analysis Project (GTAP) database was used in a Computable General Equilibrium (CGE) setting, which allows for the inclusion of carbon taxes and the definition of four alternative environmental policies scenarios using both Global Warming Potential (GWP) and Global Temperature Potential (GTP) as GHG emissions measures. All scenarios analyze the main effects of carbon-based tax economic instruments on the industry and national production, trade, and emissions, comparing the results for different measures of GHG, GWP, and GTP from the Greenhouse Gas Emissions Estimation System (SEEG) sectoral Brazilian emissions database. In contrast with other industries, relatively lower taxes on the meat and dairy industries seem to be the most adequate in terms of cost distribution in the Brazilian economic structure when only the GWP measure is considered. Urban activities and less-methane-intensive industries benefit from climate change policies designed using GWP-based rather than GTP-based carbon taxes. The article also highlights the importance of a gradual introduction of carbon taxes, allowing the most vulnerable industries a transition moment to adopt clean technologies and/or redirect economic activity to less-GHG-emitting segments.

Highlights

Over the last decade, Brazil has experienced substantial economic growth in agriculture and food processing, maintaining a leading position in international trade
There is a gap in the institutional regulation framework in Brazil, which requires empirical evidence to contribute to policy-making [23]. This study addresses these issues by adding to the existing literature’s economic and environmental results based on simulations of carbon market policies, further providing novel measures comparing Global Temperature Potential (GTP) and Global Warming Potential (GWP) for the meat and dairy industries
The GWP is the standard indicator defined in the Paris Agreement, the present study considers the GTP in order to disclose the trade-offs between the economic and environmental impacts for the meat and dairy industry

Summary

Introduction

Brazil has experienced substantial economic growth in agriculture and food processing, maintaining a leading position in international trade. This study is focused on two issues related to Brazil and climate change It emphasizes the potential penalization of the meat and dairy industry in accounting for GHG measures, mainly due to the positive correlation between methane emissions from extensive livestock production and the standardized use of GWP indicators. It compares the different atmospheric trends effects over time for GWP and GTP. Empirical evidence suggests the potential benefits of imposing a tax on the externalities of the meat production chain, which could point to essential directions for Brazilian environmental policy [12,26,29,35,39]

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Methods

Results

Conclusion