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Ethanol Expansion and Indirect Land Use Change in Brazil

Joaquim Bento Ferreira-Filho and Mark Horridge ()
Authors registered in the RePEc Author Service: Joaquim Bento de Souza Ferreira Filho ()

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: In this paper we analyze the Indirect Land Use Change (ILUC) effects of ethanol production expansion in Brazil through the use of an inter-regional, bottom-up, dynamic general equilibrium model calibrated with the 2005 Brazilian I-O table. A new methodology to deal with ILUC effects is developed, using a transition matrix of land uses calibrated with Agricultural Censuses data. Agriculture and land use are modeled separately in each of 15 Brazilian regions with different agricultural mix. This regional detail captures a good deal of the differences in soil, climate and history that cause particular land to be used for particular purposes. Brazilian land area data distinguish three broad types of agricultural land use, Crop, Pasture, and Plantation Forestry. Between one year and the next the model allows land to move between those categories, or for Unused land to convert to one of these three, driven initially by the transition matrix, changing land supply for agriculture between years. The transition matrix shows Markov probabilities that a particular hectare of land used in one year for some use would be in an other use next period. These probabilities are modified endogenously in the model according to the average unit rentals of each land type in each region. A simulation with ethanol expansion scenario is performed for year 2020, in which land supply is allowed to increase only in states located in the agricultural frontier. Results show that the ILUC effects of ethanol expansion are of the order of 0.14 hectare of new land coming from previously unused land for each new hectare of sugar cane. This value is higher than values found in the Brazilian literature. ILUC effects for pastures are around 0.47. Finally, regional differences in sugarcane productivity are found to be important elements in ILUC effects of sugar cane expansion.

Keywords: CGE; ethanol; biofuels; land use; Brazil (search for similar items in EconPapers)
JEL-codes: C68 D58 E47 Q15 Q16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-ene and nep-env
Date: 2011-06
References: View references in EconPapers View complete reference list from CitEc
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Published in Land Use Policy, Volume 36, January 2014.

Downloads: (external link)
http://www.copsmodels.com/ftp/workpapr/g-218.pdf Initial version, 2011-06 (application/pdf)
http://www.copsmodels.com/elecpapr/g-218.htm Local abstract: may link to additional material. (text/html)

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Persistent link: https://EconPapers.repec.org/RePEc:cop:wpaper:g-218

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