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Combustible renewables and waste consumption, agriculture, CO2 emissions and economic growth in Brazil

Abstract This paper studies the dynamic relationships between per-capita combustible renewables and waste (CRW) consumption, agricultural value added (AVA), carbon dioxide (CO2) emissions, and real gross domestic product (GDP) for the case of Brazil, spanning the period 1980–2013. There is long-run cointegration between the considered variables. Short-run empirical findings reveal that there is a unidirectional causality running from agriculture to CO2 emissions and to GDP. However, there is long-run bidirectional causality between all considered variables. The long-run estimates show that both CRW consumption and AVA contribute to increase economic growth and to decrease CO2 emissions. Agricultural production and CRW consumption appear to play substitutable roles in the Brazilian economy as increasing CRW consumption reduces AVA in the long run, and vice versa. In addition, economic growth increases agricultural production and CRW production. Brazil is advised to continue encouraging agriculture and biofuels productions. The present substitutability between agriculture and biofuels productions could be reduced or even stopped by encouraging second-generation biofuels and discouraging first-generation biofuels. This may be done by policies of subsidization or of taxation, encouraging R&D and giving advantageous credits.