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      • HARVEST
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      WARM GLOBE, “WARMER” POLICIES: AN EMPIRICAL TEST OF THE GREEN PARADOX HYPOTHESIS

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      SARPONG-THESIS-2020.pdf (1.083Mb)
      Date
      2020-10-20
      Author
      Sarpong, Thomas T.
      ORCID
      0000-0003-1197-9245
      Type
      Thesis
      Degree Level
      Masters
      Metadata
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      Abstract
      We study the effect of an ethanol expansion on carbon emissions using Brazilian energy data from 1981 to 2018. We find that greater ethanol production provides a perverse incentive for Brazilian oil producers to increase their rate of oil extraction. We report that following a cubic meter rise in the one period lagged change in Brazil’s ethanol production, change in oil extraction increases between 0.53 m3 to 0.64 m3 in the current period, a weak green paradox. These estimates translate into short-run and long-run elasticities of 1.5 and 4.9 respectively, implying that a one percent rise in the change in ethanol production now would increase change in oil production by 1.5 percent in the short-run and 4.9 percent in the long-run. Also, net CO2 emission in Brazil is positive if the reduction in CO2 emission as a result of substituting ethanol for oil on a one-for-one basis is less than 73 percent in the short run and 244 percent in the long run, thus, evidence for a strong green paradox. The results indicate that Brazil’s well-intended ethanol policy may have resulted in detrimental outcomes that go against the objectives of the policy. We recommend that, at the very least, Brazil and other policymakers should critically evaluate a single policy such as an ethanol subsidy used in isolation to ascertain whether or not their implementations have the potential of increasing fossil fuel extraction and ultimately increasing CO2 emissions now or in the future.
      Degree
      Master of Science (M.Sc.)
      Department
      Agricultural and Resource Economics
      Program
      Agricultural Economics
      Supervisor
      Skolrud, Tristan
      Committee
      Lloyd-Smith, Patrick; Mann, Jannelle; Gray, Richard; Rude, James
      Copyright Date
      September 2020
      URI
      http://hdl.handle.net/10388/13102
      Subject
      emissions
      global warming
      climate change
      green paradox
      ethanol
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