This article investigates the effects of ten recently built hydroelectric plants in the Brazilian Amazon on deforestation. Using the synthetic control method and an inventory of undeveloped hydroelectric potential sites, the study estimates the causal impact of each plant on forest loss. The results indicate that these constructions contributed to 13% of the forest loss observed within a 50 km radius, with this effect concentrated in only four plants. In three of them, licenses were granted despite technical recommendations against construction. In contrast, the plants authorized with technical support from the environmental agency showed negligible impacts. The study highlights the importance of strong environmental regulations and warns of their vulnerability to high-level political interference.

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

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