The Impacts of Climate Change in the Brazilian Economy (Impactos Econômicos das Mudanças Climáticas no Brasil)

Abstract

The climate transition projected by the Intergovernmental Panel on Climate Change – IPCC – will affect the world’s natural resources, economy, and societies to an extent which is not yet known. The study The Economics of Climate Change in Brazil (EMCB) is a pioneering initiative aimed at analyzing and quantifying the impact of climate change on the country’s development agenda. Without a greater evidence base of these trends, decision makers do not have the instruments needed to identify the more serious and urgent risks and to evaluate and implement prevention and adjustment measures which are more efficient in terms of cost and benefits.For the first time in the country, a large interdisciplinary team, comprised primarily of scientists of the country’s main research centers, gathered to make projections regarding various sectors. The starting point were computational models that provided projections on future national climate trends, such as temperatures, precipitation levels and hydrologic flows. These projections were used in models for certain sectors of the economy, and translated into economic terms the expected impacts in each sector, according to two future climate trends projected by the IPCC – scenarios A2 and B2.These IPCC climate trends are based on hypotheses regarding the future behavior of the global economy. This study attempted, to the extent possible, to simulate the future behavior of the Brazilian economy in a manner which was compatible with the hypotheses set forth by the IPCC for the global economy. The scenarios projected for the Brazilian economy were A2-BR, which was simulated with and without climate change according to IPCC’s A2 climate scenario, and B2-BR, which was simulated with and without climate change according to IPCC’s B2 scenario. Both generated future trends for the Brazilian economy, based on IPCC’s economic assumptions for climate scenario A2 and climate scenario B21.Although the climate problems associated with global warming are long-term, the year of 2050 was established as the horizon for the simulations, thus excluding the more severe effects on productivity and Gross Domestic Product (GDP) which will become more severe after the second half of the 21st century. This was necessary since the uncertainties involved – especially macroeconomic – are still too large, and because the database was unable to support long-term projections. Some sector analyses, however, go beyond 2050 In spite of this time restriction, this study concentrated on the average behavior of the variables, given the difficulty to adequately address the uncertainties in the models’ extreme climate change situations.One of the main conclusions is that the worst effects of climate change shall take place in the North and Northeastern regions, the country’s poorest, and that, as a result, the cost of inaction today shall be the worsening of regional and income inequalities.