Industrial Environmental Impacts of FTAA in Brazil

Abstract

Industrial Environmental Impacts of FTAA in Brazil This study is an attempt to estimate the industrial environmental impacts due to FTAA in Brazil. Based on these CGE model results from Tourinho and Kume (2002), we estimate the resulting changes of pollution emission and water and energy use levels in the Brazilian industrial sector due to FTAA. Our results are very interesting since economy-aggregate direct environmental impacts of FTAA on the Brazilian economy are expected to be, in general, very minor and in the direction of a lower air pollution intensity (particulates and SO2) and energy uses. However, it is expected an increasing intensity in water pollution and uses and CO2 emissions. These changes will occur in few sectors where already exist dynamic technological and environmental policies and motivation to meet export market stricter environmental rules. Then we analyze the determinants of adoption of control practices, estimated in Seroa da Motta (2001) and Ferraz and Seroa da Motta (2002), indicating that, apart from sanctions and public pressure, the industrial sector is motivated to enhance environmental due to restrictions for expanding export market. Based on all these evidences, regulators may follow strategies that would further enhance the current performance together with economic efficiency and competitiveness.