Marcelo Sant’Anna, FGV – EPGE

Coautores: Rafael Araujo and Francisco Costa

Abstract: 

This paper estimates the Brazilian Amazon’s carbon-efficient forestation — i.e. when farmers internalize the social cost of carbon. We propose a dynamic discrete choice land use model and estimate it using a panel of land use and carbon stock of 5.7 billion pixels between 2008 and 2017. Business-as-usual implies an inefficient release of 44 billion tons of CO2 in the long run resulting from the deforestation of an area twice the size of France. We show that targeted mitigation efforts in areas with the largest potential for emission reductions can mitigate up to 13 billion tons of CO2 at a cost under $10/ton. However, the abatement cost curve is convex, making preserving the whole forest an expensive task.