KYOTO PROTOCOL AND THE ECONOMIC WELFARE IN BRAZIL - A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS

Abstract

The main goal of this paper is to evaluate the welfare economic and environmental impacts of the CO2 emissions reductions that are fixed in Kyoto Protocol can bring to Brazil. Scenarios are drawn for the simulation of the CO2 emissions reductions among the Kyoto Protocol subscribers. Besides that, they allow the possibility of execution of one of the Kyoto Protocol flexibility mechanisms – the emissions trade. The tool used is a modified version of GTAP (Global Trade Analysis Project) – the GTAP-E (energy). The results confirm the hypothesis that, although the environmental policy of emissions reductions contributes to the decreasing of CO2 in the atmosphere, it affects negatively the economic welfare of the signatory countries. When it comes to Brazil, the simulations show that the best option would be to participate directly in the emissions trade set in Kyoto Protocol.