The impacts of the Brazilian NDC and their contribution to the Paris agreement on climate change

Abstract

AbstractThis paper measures the economic impacts of Brazil's climate mitigation strategies contained in its Nationally Determined Contribution (NDC). To do so, we employ the computable general equilibrium MIT Economic Projection and Policy Analysis model and simulate alternative carbon pricing scenarios (sectoral versus economy-wide carbon markets), set to achieve the country's overall emissions targets announced under the Paris Agreement. The results show relatively cheap emissions reductions from land-use changes and agriculture in the short run: the cost of the Brazilian NDC is predicted to be only 0.7 per cent of GDP in 2030. Further efforts to reduce carbon emissions beyond 2030 would require policy changes, since all the potential emissions reductions from deforestation would be finished and the capacity to expand renewable energy sources would be constrained. In this case, an economy-wide carbon pricing system would help substantially to avoid higher compliance costs.