This article estimates the impacts of ten recently constructed hydroelectric plants in the Brazilian Amazon on deforestation. Using an inventory of all undeveloped sites with hydroelectric potential, the synthetic control method was applied to estimate the causal impact of each plant on forest loss. Overall, the construction of the ten plants contributed to 13% of the observed forest loss within a 50-kilometer radius of the construction sites.

Notably, this impact is attributed exclusively to four plants. In at least three of these cases, construction licenses were granted despite technical recommendations against them. In contrast, the remaining plants, which received technical approval from the environmental agency, showed insignificant effects. These findings highlight the effectiveness of robust environmental regulations and underscore their vulnerability to high-level political interference.

Researcher: Francisco Costa
Brazilian School of Economics and Finance (FGV EPGE)

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