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Economic and regional impacts of investments in electricity generation in Brazil

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  • Diniz, Tiago
  • Ferreira-Filho, Joaquim Bento
  • Horridge, Mark

Abstract

To accomplish climate agreements, Brazil intends to raise the share of renewables, other than hydropower, in electricity supply. According to the Brazilian Decennial Energy Plan (PDE 2026), the country will expand its installed capacity mostly by investments in gas, wind and solar sources. However, areas suitable for those projects are regionally concentrated and, in some cases, in the poorest regions such as the Northeast. Hence, the expansion of power supply also entails economic and regional issues. We explore this topic analyzing the economic and regional impacts of the investments in electricity generation, under various policy scenarios provided by the PDE 2026. For that, we apply a regional recursive-dynamic CGE model for Brazil, TERM-BR10, specially enhanced to deal with electricity features. Our results show that a supply plan with more insertion of solar source could increase the national GDP by 0.45% and by 2.3% in specific regions. They also show that a scenario without new hydro dams does not imply in economic loss, in terms of national GDP or employment. We also came to the conclusion that policy guidelines have welfare and distributive benefits, with greater impact to poorest regions and low income households.

Suggested Citation

  • Diniz, Tiago & Ferreira-Filho, Joaquim Bento & Horridge, Mark, 2018. "Economic and regional impacts of investments in electricity generation in Brazil," Conference papers 332933, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332933
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