INSIGHTS RECENT HYDROPOWER PLANTS IN BRAZIL LEAD TO VARYING LOCAL ECONOMIC EFFECTS

This policy brief summarizes a study by the Climate Policy Initiative (CPI) and PUC-Rio on the economic impacts of hydropower plants (HPP) in Brazil. Analyzing 82 municipalities between 2002 and 2011, the research finds that while dam construction often provides short-term boosts to employment and revenue, these effects typically dissipate after five or six years and rarely transform the underlying structure of local economies.

• The economic effects of hydropower plant construction on local municipalities are generally short-lived, with growth occurring in the first two to three years and typically dissipating after five or six years, coinciding with the end of construction.
• HPP construction significantly boosts formal employment in the short term, with an average increase of 10% to 37% in the first year, though this levels off to between 8% and 14% after five years.
• There is extreme variation in employment outcomes across municipalities; approximately 25% saw formal employment increase by at least 38%, while another 25% saw employment decrease by 15%.
• The construction of hydropower plants does not lead to a structural transformation of local economies, as the share of formal employment across sectors—including agriculture, manufacturing, retail, services, and construction—remains unchanged.
• Total municipal revenue typically increases during the first and second years following the start of construction, eventually stabilizing at an increase of approximately 4%.
• The increase in total municipal revenue is primarily driven by royalties and intergovernmental revenues rather than tax collection; while tax revenue may spike by 35% two years after a plant arrives, this effect drops to 2.5% in the medium term.

APA

o, J. A., Szerman, D., & Costa, F. (2017). INSIGHTS RECENT HYDROPOWER PLANTS IN BRAZIL LEAD TO VARYING LOCAL ECONOMIC EFFECTS. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/11/Insight_Recent_Hydropower_Plants_In_Brazil_Lead_To_Varying_Local_Economics_Effects.pdf

Chicago

o, Juliano Assun, Dimitri Szerman, and Francisco Costa. INSIGHTS RECENT HYDROPOWER PLANTS IN BRAZIL LEAD TO VARYING LOCAL ECONOMIC EFFECTS. Climate Policy Initiative, 2017. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/11/Insight_Recent_Hydropower_Plants_In_Brazil_Lead_To_Varying_Local_Economics_Effects.pdf.

Wikipedia

{{cite report |last1=o |first1=Juliano Assun |last2=Szerman |first2=Dimitri |last3=Costa |first3=Francisco |title=INSIGHTS RECENT HYDROPOWER PLANTS IN BRAZIL LEAD TO VARYING LOCAL ECONOMIC EFFECTS |publisher=Climate Policy Initiative |date=November 2017 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2017/11/Insight_Recent_Hydropower_Plants_In_Brazil_Lead_To_Varying_Local_Economics_Effects.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{o2017insights, author = {o, Juliano Assun and Szerman, Dimitri and Costa, Francisco}, title = {{INSIGHTS RECENT HYDROPOWER PLANTS IN BRAZIL LEAD TO VARYING LOCAL ECONOMIC EFFECTS}}, institution = {Climate Policy Initiative}, year = {2017}, month = nov, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2017/11/Insight_Recent_Hydropower_Plants_In_Brazil_Lead_To_Varying_Local_Economics_Effects.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }