Socioeconomic Impacts and Land Use Change of Integrating Biofuel Production with Livestock Farming in Brazil: A Computable General Equilibrium (CGE) Approach

Sugarcane bioenergy is a reality in Brazil, comprising the production of ethanol and bioelectricity. Sugarcane bioenergy can reduce greenhouse gas (GHG) emissions as compared to fossil fuels. However, there are concerns about the possible implications caused by the expansion of sugarcane production, the displacement of mainly pastureland, but also other croplands, and the potential for indirect land use changes. A promising strategy to enlarge sugarcane bioenergy in Brazil without compromising the cattle industry is to integrate both activities, converting extensive livestock production systems into more intensive ones. The objective of this study is to model and evaluate the socioeconomic impacts and land use change considering the expansion of ethanol production in two scenarios. The first scenario, referred to Business as Usual (BAU), comprises of sugarcane bioenergy and extensive livestock production, without any integration between the two. The second scenario, Integrated Sugarcane-Bioenergy and Livestock (ISBL) in Brazilian agriculture, considers the integration between these activities. To achieve this goal, a computable general equilibrium (CGE) model for the Brazilian economy was implemented. The Brazilian input-output matrix (main data for the model) was estimated for 2021. The closure and the shocks were set to 2031, with an estimated increase of 75% in ethanol production. Additionally, a technological efficiency gain of 5% was considered for the livestock sector within the ISBL system. Our modeling results show that the ISBL scenario is economically more efficient, as a higher gross domestic product and output level were obtained. The aggregate employment level of the economy also increased. Even considering that the integration of sugarcane bioenergy and livestock production took place only in these activities, positive socioeconomic impacts were noticed across other sectors of the economy.