Power Plants and Deforestation: Recent Evidence from the Amazon

This paper evaluates the effects of the recent construction of hydroelectric power plants (HPPs) on deforestation patterns on the perimeter around the construction site. The study is a comprehensive collection of case studies... [ view full abstract ]

This paper evaluates the effects of the recent construction of hydroelectric power plants (HPPs) on deforestation patterns on the perimeter around the construction site. The study is a comprehensive collection of case studies of all new HPPs built in the Brazilian Amazon between 2003 and 2011. We use synthetic control method and satellite data at the 30 meters resolution. We find while the construction of some HPPs increased deforestation, others helped to avoid it. This could be attributed to increased monitoring and law enforcement brought by the HPP to the region. In general, we can attribute 14% of the observed deforestation in the areas around the HPPs to the construction itself.