As we reported earlier, Brazil is set to build the 3rd largest dam in the world in the Amazon basin.  The Belo Monte dam would produce 11 gigawatts of electricity and would rank it behind the Three Gorges Dam in China and the Brazilian-Paraguayan Itaipu Dam.  The electricity from the dam’s turbines would go to the country’s grid with 70% going to public consumption and 30% dedicated to the mining and minerals upgrade industries in order to meet the country’s every growing demand for power.

The dam will be built by the Norte Energia consortium on the Lower Xingu River in northern Brazil, a tributary of the Amazon River.    However, opponents say it would have negative environmental and social impacts while at the same time reducing the flow of the river by up to 80% along a 100 kilometres (62 mi) stretch known as the “Big Bend” (Volta Grande).

Both natives and environmental groups have actively opposed the building of the dam and continue to oppose it even though the Brazilian government gave its approval in June.

The Environmental News Network highlights the important economic questions that the dam poses.  For anyone with a background in welfare economics the questions are basic but rest at the heart of how we should make trans-formative economic decisions as we attempt to maximize social welfare when there will be winners and losers.  In this case a choice between obtaining vast amounts of renewable energy vs. potential distruction of the environment and the displacement of thousands of native peoples.

What’s more valuable: Generating an estimated annual average 4,500 megawatts (MW) of renewable hydroelectricity from a mega-dam project or conserving a 1,500-square kilometer area of threatened tropical rainforest ecosystem that has supported tremendous biodiversity and thousands of people for millennia?

…”Are there alternatives to achieving the same or similar ends that would not result in environmental destruction and the loss of traditional ways of life on such a massive scale? Who benefits and who pays?,” and “What are the true, total costs?”

…Belo Monte is viewed as ”�the thin edge of a wedge,’ that will see the Amazon’s rivers largely drained and the tropical rain forest ecosystem severely degraded, resulting in staggering losses of freshwater fish, amphibians and terrestrial wildlife, as well the traditional ways of life of thousands living in the region.

When the Brazilian government made its decision in June we presume it did a careful weighing of these costs and benefits and concluded that the gains to the winners (consumers and industry) outweighed the loses to the losers (the natives and the environment).  What we don’t know yet is the extent to which the losers might be compensated by the winners for their loses.

See also Concerns about methane plague Brazil’s Belo Monte dam.  This Deustche Welle article says that hydropower projects in the tropics can be just as bad as fossil fuels on the climate because of the amount of methane they produce.  Methane is also a greenhouse gas.  The article mentions that there are more than 200 other dam projects planned in Brazil.  Brazil gets two-thirds of its electricity from hydropower.


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