Carbon Prices and Forest Preservation Over Space and Time in the Brazilian Amazon

48 Pages Posted: 19 Apr 2023 Last revised: 24 Feb 2024

See all articles by Juliano J. Assunção

Juliano J. Assunção

Climate Policy Initiative; Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics

Lars Peter Hansen

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Todd Munson

Argonne National Laboratory

José A. Scheinkman

Columbia University; Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 10, 2023

Abstract

Reforestation in the Brazilian Amazon absorbs carbon, and deforestation for cattle-ranching produces carbon emissions. The social productivities vary across locations for the alternative activities. 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 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.

Suggested Citation

Assunção, Juliano J. and Hansen, Lars Peter and Munson, Todd and Scheinkman, José, Carbon Prices and Forest Preservation Over Space and Time in the Brazilian Amazon (April 10, 2023). Available at SSRN: https://ssrn.com/abstract=4414217 or http://dx.doi.org/10.2139/ssrn.4414217

Juliano J. Assunção (Contact Author)

Climate Policy Initiative ( email )

United States

Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics ( email )

Rua Marques de Sao Vicente, 225/206F
Rio de Janeiro, RJ 22453
Brazil

Lars Peter Hansen

University of Chicago - Department of Economics ( email )

1101 E 58th ST
Chicago, IL 60637
United States
773-702-8170 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Todd Munson

Argonne National Laboratory

José Scheinkman

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Princeton University - Department of Economics ( email )

26 Prospect Avenue
Princeton, NJ 08544
United States
609-258-4020 (Phone)
609-258-6419 (Fax)

HOME PAGE: http://www.princeton.edu/~joses

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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