Working Paper: “Carbon Prices, Forest Conservation and Reforestation in the Brazilian Amazon”
Abstract:
Deforestation for cattle ranching in the Brazilian Amazon emits carbon, and reforestation absorbs carbon. The social productivities for these alternative activities vary across locations. We analyze a spatial/dynamic model of efficient land allocation to establish a benchmark for policies. We treat cattle prices as stochastic and location-specific productivities as uncertain when assessing the consequences of imposing alternative prices of carbon emissions. Modest carbon price increases would incentivize Brazil to choose policies that capture a significant amount of greenhouse gases in the next 30 years. Our analysis pinpoints tropical forest management as an important contributor to climate change mitigation.
Acknowledgments:
We circulated an earlier version of this paper with the title ”Carbon prices and forest preservation over space and time in the Brazilian Amazon”. We thank Andy Atkeson, Pengyu Chen, Bin Cheng, Zhaoyang Xu, Jessie Liao, Leonardo Gomes, Patricio Hernandez, João Pedro Vieira, Daniel (Samuel) Zhao for their expert research assistance and to Joanna Harris and Diana Petrova for their helpful comments and to Carmen Quinn for editorial assistance. Assunção’s research was supported by the Climate Policy Initiative-Brazil; Hansen’s research was supported in part by the Griffin Applied Economics Incubator Project on Policy-making in an Uncertain World and by an EPIC/Argonne National Labo-ratory collaboration award; and Scheinkman’s research was supported by the Columbia Climate School and by Princeton University. For an online support notebook, see the link: https://lphansen.github.io/Amazon/intro.html
This research was also supported in part by the Research Computing Center at the University of Chicago for providing computational resources.