Local socioeconomic impacts of Brazilian Hydroelectric Power Plants

Abstract

This paper estimates the short- and medium-run effects of the construction of large hydroelectric power plants (HPPs) on the economic development of Brazilian municipalities. We use the synthetic control method to perform one case study for each of the 82 municipalities affected by a HPP between 2002 and 2011. Two main findings emerge. First, the median impact of the construction of HPPs on the local economy is modest and follows an inverted U-shape over a five-year horizon. Second, the estimated effects display a lot of dispersion. These results do not provide support for the view that large construction works can unequivocally spur local development.