IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/6y7vk.html
   My bibliography  Save this paper

The Environmental Costs of Political Interference: Evidence from Power Plants in the Amazon

Author

Listed:
  • Costa, Francisco J M

    (FGV EPGE Brazilian School of Economics and Finance)

  • Szerman, Dimitri
  • Assunção, Juliano

Abstract

This paper estimates the impacts of ten recently built hydroelectric power plants in the Brazilian Amazon on deforestation. Using the inventory of all sites with hydropower potential yet undeveloped, we apply the synthetic control method to estimate the causal impact of each power plant on forest loss. Overall, the construction of the ten plants contributed to 21 percent of the observed forest loss within a 50-kilometer radius of the construction site. Notably, this impact is solely attributed to four plants. In at least three of these plants, construction licenses were granted despite technical recommendations against them. In contrast, the remaining plants, which received technical clearance from the environmental agency, have negligible effects. These findings highlight the effectiveness of robust environmental regulations and underscore their vulnerability to high-level political interference.

Suggested Citation

  • Costa, Francisco J M & Szerman, Dimitri & Assunção, Juliano, 2024. "The Environmental Costs of Political Interference: Evidence from Power Plants in the Amazon," SocArXiv 6y7vk, Center for Open Science.
    • Handle: RePEc:osf:socarx:6y7vk
    DOI: 10.31219/osf.io/6y7vk
    as

    Download full text from publisher

    File URL: https://osf.io/download/65e5eb3f85203701f7880153/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/6y7vk?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Cisneros, Elías & Kis-Katos, Krisztina & Nuryartono, Nunung, 2021. "Palm oil and the politics of deforestation in Indonesia," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    2. Bruno Ferman & Cristine Pinto, 2019. "Inference in Differences-in-Differences with Few Treated Groups and Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 452-467, July.
    3. Jennifer Alix-García & Daniel L. Millimet, 2023. "Remotely Incorrect? Accounting for Nonclassical Measurement Error in Satellite Data on Deforestation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(5), pages 1335-1367.
    4. Francisco Costa & François Gerard, 2021. "Hysteresis and the Welfare Effect of Corrective Policies: Theory and Evidence from an Energy-Saving Program," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1705-1743.
    5. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    6. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    7. Mauricio E. Arias & Fabio Farinosi & Eunjee Lee & Angela Livino & John Briscoe & Paul R. Moorcroft, 2020. "Impacts of climate change and deforestation on hydropower planning in the Brazilian Amazon," Nature Sustainability, Nature, vol. 3(6), pages 430-436, June.
    8. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    9. Bård Harstad, 2023. "The Conservation Multiplier," Journal of Political Economy, University of Chicago Press, vol. 131(7), pages 1731-1771.
    10. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    11. Pfaff, Alexander S. P., 1999. "What Drives Deforestation in the Brazilian Amazon?: Evidence from Satellite and Socioeconomic Data," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 26-43, January.
    12. Seema Jayachandran, 2022. "How Economic Development Influences the Environment," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 229-252, August.
    13. Pailler, Sharon, 2018. "Re-election incentives and deforestation cycles in the Brazilian Amazon," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 345-365.
    14. de Faria, Felipe A.M. & Davis, Alex & Severnini, Edson & Jaramillo, Paulina, 2017. "The local socio-economic impacts of large hydropower plant development in a developing country," Energy Economics, Elsevier, vol. 67(C), pages 533-544.
    15. Bård Harstad & Torben K. Mideksa, 2017. "Conservation Contracts and Political Regimes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1708-1734.
    16. Alexander Pfaff & Juan Robalino & Robert Walker & Steven Aldrich & Marcellus Caldas & Eustaquio Reis & Stephen Perz & Claudio Bohrer & Eugenio Arima & William Laurance & Kathryn Kirby, 2007. "Road Investments, Spatial Spillovers, And Deforestation In The Brazilian Amazon," Journal of Regional Science, Wiley Blackwell, vol. 47(1), pages 109-123, February.
    17. Philip M. Fearnside & Salvador Pueyo, 2012. "Greenhouse-gas emissions from tropical dams," Nature Climate Change, Nature, vol. 2(6), pages 382-384, June.
    18. Bragança, Arthur & Dahis, Ricardo, 2022. "Cutting special interests by the roots: Evidence from the Brazilian Amazon," Journal of Public Economics, Elsevier, vol. 215(C).
    19. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    20. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    21. Erin O Sills & Diego Herrera & A Justin Kirkpatrick & Amintas Brandão Jr. & Rebecca Dickson & Simon Hall & Subhrendu Pattanayak & David Shoch & Mariana Vedoveto & Luisa Young & Alexander Pfaff, 2015. "Estimating the Impacts of Local Policy Innovation: The Synthetic Control Method Applied to Tropical Deforestation," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-15, July.
    22. World Bank, 2008. "Environmental Licensing for Hydroelectric Projects in Brazil : A Contribution to the Debate," World Bank Publications - Reports 7854, The World Bank Group.
    23. Stavins, Robert N & Jaffe, Adam B, 1990. "Unintended Impacts of Public Investments on Private Decisions: The Depletion of Forested Wetlands," American Economic Review, American Economic Association, vol. 80(3), pages 337-352, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Costa, Francisco J M & Szerman, Dimitri & Assunção, Juliano, 2018. "Local Economic Impacts of Hydroelectric Power Plants: Evidence from Brazil," SocArXiv kzhs6, Center for Open Science.
    2. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    3. Heger, Martin Philipp & Neumayer, Eric, 2019. "The impact of the Indian Ocean tsunami on Aceh’s long-term economic growth," Journal of Development Economics, Elsevier, vol. 141(C).
    4. Carvalho, Carlos & Masini, Ricardo & Medeiros, Marcelo C., 2018. "ArCo: An artificial counterfactual approach for high-dimensional panel time-series data," Journal of Econometrics, Elsevier, vol. 207(2), pages 352-380.
    5. Bueno, Matheus & Valente, Marica, 2019. "The effects of pricing waste generation: A synthetic control approach," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 274-285.
    6. Cappelli, Federica & Caravaggio, Nicola & Vaquero-Piñeiro, Cristina, 2022. "Buen Vivir and forest conservation in Bolivia: False promises or effective change?," Forest Policy and Economics, Elsevier, vol. 137(C).
    7. Gonzalez, Felipe & Prem, Mounu, 2020. "Police Repression and Protest Behavior: Evidence from Student Protests in Chile," SocArXiv 3xk5r, Center for Open Science.
    8. Pushpendra, Rana & Sills, Erin, 2017. "Does certification change the trajectory of tree cover in working forests in the tropics? An application of the synthetic control method of impact evaluation," CEnREP Working Papers 264782, North Carolina State University, Department of Agricultural and Resource Economics.
    9. Ando, Michihito, 2013. "Estimating the effects of nuclear power facilities on local income levels: A quasi-experimental approach," Working Paper Series 2013:3, Uppsala University, Department of Economics.
    10. Bauer, Thomas K. & Braun, Sebastian T. & Kvasnicka, Michael, 2017. "Nuclear power plant closures and local housing values: Evidence from Fukushima and the German housing market," Journal of Urban Economics, Elsevier, vol. 99(C), pages 94-106.
    11. Evans Korang Adjei & Rikard Eriksson & Johan Lundberg, 2023. "The effects of a large industrial investment on employment in a remote and sparsely populated area using a synthetic control approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(7), pages 1553-1576, September.
    12. Bragança, Arthur & Dahis, Ricardo, 2022. "Cutting special interests by the roots: Evidence from the Brazilian Amazon," Journal of Public Economics, Elsevier, vol. 215(C).
    13. Robalino, Juan A. & Pfaff, Alexander, 2012. "Contagious development: Neighbor interactions in deforestation," Journal of Development Economics, Elsevier, vol. 97(2), pages 427-436.
    14. Bauer, Thomas K. & Braun, Sebastian T. & Kvasnicka, Michael, 2017. "Nuclear power plant closures and local housing values: Evidence from Fukushima and the German housing market," Open Access Publications from Kiel Institute for the World Economy 306480, Kiel Institute for the World Economy (IfW Kiel).
    15. Ando, Michihito, 2015. "Dreams of urbanization: Quantitative case studies on the local impacts of nuclear power facilities using the synthetic control method," Journal of Urban Economics, Elsevier, vol. 85(C), pages 68-85.
    16. Ferman, Bruno & Pinto, Cristine, 2016. "Revisiting the Synthetic Control Estimator," MPRA Paper 73982, University Library of Munich, Germany.
    17. Michael Pollmann, 2020. "Causal Inference for Spatial Treatments," Papers 2011.00373, arXiv.org, revised Jan 2023.
    18. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    19. César Martinelli & Marco Vega, 2019. "The Economic Legacy of General Velasco: Long-Term Consequences of Interventionism," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 42(84), pages 102-133.
    20. Pekka Malo & Juha Eskelinen & Xun Zhou & Timo Kuosmanen, 2024. "Computing Synthetic Controls Using Bilevel Optimization," Computational Economics, Springer;Society for Computational Economics, vol. 64(2), pages 1113-1136, August.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:socarx:6y7vk. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://arabixiv.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.