Economic, sectoral and regional impacts of financing for the recovery of degraded pastures in Brazil : an ABC Plan program

Abstract

This paper estimates the regional economic impacts of a Brazilian public policy aimed at mitigating greenhouse gas emissions in agriculture. More specifically, it examines the Degraded Pasture Recovery Program (RPD) of the ABC Plan during the period from 2015 to 2018 and the projected period (2019 to 2025). A computable general equilibrium (EGC) model is constructed and regionalized especially for this simulation, to differentiate geographical spaces according to their geomorphological, climatic and pedological characteristics. The results indicate that the impacts vary across regions and sectors. Furthermore, the higher the share of ABC Plan financing relative to the production value in the livestock sectors, the greater the accumulated decrease in the region’s Gross Domestic Product (GDP). The policy is essential for the economic growth of regions that do not necessarily have large livestock production but in which the proportion of production financed by the program is high. In addition, the impact on production goes beyond the livestock sectors and may affect a range of sectors that are important to the economy, both agriculturally and industrially.