CONDITIONS OF CARBON DIOXIDE (CO₂) IN BRAZIL: EMPIRICAL EVIDENCE OF A CURVE IN THE "N" FORMAT

ABSTRACT

This article aims to empirically determine the main determinants of CO₂ emissions in Brazil throughout the period 1971-2011. Moreover, we seek empirical evidences to support the hypothesis of the Environmental Kuznets Curve (EKC) for Brazil. The variables used to explain CO₂ emissions were per capita income, per capita energy consumption, population density, and the degree of openness of the economy. We also added an exogenous dummy to the model to capture the effects of the Kyoto Protocol on Brazilian emissions. The methodology used to achieve our main goal was the autoregressive vectors model with error correction (VEC models). The results produced by the VEC model for the long term pointed to the statistical significance of all explanatory variables in the model. In addition, no evidence was found of a EKC to Brazil. Instead, we found evidence of a curve in the "N" format, showing that CO₂ emissions first decrease, but then rise again from a certain level of per capita income. The maximum point of the curve occurs when per capita income reaches US$ 2,729.27, and the minimum point when per capita income is US$ 9,122.54.

KEYWORDS:
Environmental Kuznets Curve; Brazilian emissions of CO₂; time series econometrics