Pollution generation in the Carajas region of Brazil: An extended input -output approach

The economic development of any region involves some consequences to the environment. The choice of a socially optimal development plan must consider a measure of the strategy's environmental impact. This dissertation tackles this problem by examining environmental impacts of new production activities. The study uses the experience of the Carajás region in the north of Brazil. This region, which prior to the 1960's was an isolated outpost of the Amazon area, was integrated to the rest of the country with a non-sophisticated but strategic road system and eventually became the second largest iron ore mining area in the world. Finally, in the 1980's, the area was linked, by way of a railroad, to the nearest seaport along the Atlantic Ocean. The consequence of such changes was a burst of economic growth along the railroad Corridor and neighboring areas. In this work, a Social Accounting Matrix (SAM) is used to construct a 2-region (Corridor and surrounding area), fixed price, Computable General Equilibrium (CGE) Model to examine the relationship between production and pollution by measuring the different pollution effects of alternative growth strategies. SAMs are a very useful tool to examine the environmental impacts of development by linking production activities to measurable indices of natural resource degradation. The simulation results suggest that the strategies leading to faster economic growth in the short run are also those that lead to faster rates of environmental degradation. The simulations also show that the strategies that leads to faster rates of short run growth do so at the price of a rate of environmental depletion that is unsustainable from a long run perspective. These results, therefore, support the concern expressed by environmental economists and policy makers regarding the possible trade-offs between economic growth and environmental preservation. This stresses the need for a careful analysis of the environmental impacts of alternative growth strategies. ^