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Abstract
This paper assesses the impacts of the increase in the ethanol demand in
Brazil and in the United States on the agricultural production and land use. A global
economic model representing agricultural and energy markets, trade among countries,
ethanol supply and the demand in Brazil and in the US and changes in the land use is
used. We simulate increases in the ethanol demand in Brazil and in the US to reflect the
US policy and forecasts about the Brazilian demand for the upcoming decade. Results
suggest a specialization in sugarcane and ethanol production in Brazil and decreases in
other agricultural commodities. The area cultivated with sugarcane would move up from
5 million to 15 to 20 million hectares in 2020, replacing areas of pasture, other crops and
forest. The Cerrado region in Brazil would lose 2.5 million hectares to agriculture, while tropical forests would only be considerably affected if the US trade barriers on ethanol
imports were reduced.