Economic effects of projected decrease in Brazilian agricultural productivity under climate change
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Economic effects of projected decrease in Brazilian agricultural productivity under climate change Marcos Spı´nola Nazareth
. Angelo Costa Gurgel
. Deˆnis Antoˆnio da Cunha
Springer Nature B.V. 2020
Abstract This paper aims to analyze the economywide and regional effects of climate change-induced productivity decrease in Brazil. Our methodological framework was based on the General Equilibrium Analysis of the Brazilian Economy Project—PAEGDyn, a dynamic CGE model. The results show that the projected falls in agricultural productivity impose reductions in the performance of Brazilian GDP over time. Even with the use by other sectors of the economy of the factors unemployed in agriculture, there is no intersectoral compensation in economic production over time able to bring it back to the reference trajectory. In addition, the impact will be greater in warmer and poor regions, which depend on agriculture and present greater income inequality, accentuated by the free mobility of production factors within the national border. Therefore, the main implication of this study is the need to allocate M. S. Nazareth (&) D. A. da Cunha Universidade Federal de Vic¸osa – UFV, Vic¸osa, MG, Brazil e-mail: [email protected] D. A. da Cunha e-mail: [email protected] M. S. Nazareth Centro Universita´rio de Vic¸osa - Univic¸osa, Vic¸osa, MG, Brazil A. C. Gurgel Sao Paulo School of Economics, Fundac¸a˜o Getu´lio Vargas - FGV, Sa˜o Paulo, SP, Brazil e-mail: [email protected]
scarce resources for adaptation and mitigation policies primarily for these regions, including broadly stimulating economic development with more income distribution. This will allow these regions to protect themselves by making investments in new technologies and modern infrastructure for the agricultural sector. Keywords Agricultural productivity Climate change Dynamics CGE models Paegdyn GTAP
Introduction The growing demand for goods and services due to the economic growth of the last decades around the globe has caused a significant increase in deforestation, depletion of fossil fuels, emission of pollutants and greenhouse gases (GHG), among other consequences for the stock of the planets natural resources that overload the biospheres resilience capacity (Riplle et al. 2017; IPCC 2014). This situation has resulted in the process called global environmental change, whose main manifestation is climate change. In addition, it is widely known that, because agriculture is highly dependent on environmental conditions, mainly temperature, precipitation and soil quality, has become the economic sector most vulnerable to projected climate change for the coming decades (Tol 2018). Therefore, foreseeing these impacts, as well as how they will unfold for the rest
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of the long-term economy, is essential for the development of effective environmental and economic policies to minimize the negative effects. The agronomic and economic literature on the effects of climate change in world
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