The local socio-economic impacts of large hydropower plant development in a developing country

Abstract

Despite extensive discussion in the literature about the socio-economic impacts of hydropower development on surrounding communities, there is (1) a lack of quantitative studies that look at impacts over extended periods of time and (2) a lack of studies including multiple projects in the context of a developing country. Here, we use econometric methods to evaluate the relationship between county-level socio-economic indicators and hydropower development for 56 Brazilian hydropower plants built between 1991 and 2010. We find that counties that built hydropower plants had greater GDP and tax revenues during their first few years of development than a control group that consisted of counties with hydropower projects planned but not yet built. However, those positive economic effects were short lived (<15years). We also find that social indicators (e.g. average income, life expectancy, educational level, access to piped water and public electricity, teenage pregnancy levels, and HIV cases) in counties that built hydropower did not statistically differ from those in the control counties. The results suggest that, for Brazil, justifications for hydropower projects based on local long-term economic and social development should be questioned, and that more effective mechanisms for turning local short-term economic growth into long-term development are needed.