Development Effects of Electrification: Evidence from the Geologic Placement of Hydropower Plants in Brazil

47 Pages Posted: 16 Jun 2011

See all articles by Tania Barham

Tania Barham

University of Colorado at Boulder

Molly Lipscomb

Batten School of Public Policy

Ahmed Mushfiq Mobarak

Yale School of Management; Yale University - Cowles Foundation

Date Written: June 2011

Abstract

We estimate the development effects of electrification across Brazil over the period 196'22'003 Brazil relies almost exclusively on hydropower, which requires intercepting water at high velocity. We build an engineering model which takes as inputs only geography (river gradient, water flow and Amazon) and simulates a time series of hypothetical electricity grids for Brazil that show how the grid would have evolved had infrastructure investments been made based solely on geologic cost considerations, ignoring all demand-side concerns. Using the model as an instrument, we document large positive effects of electrification on development that are underestimated when one fails to account for the political allocation of infrastructure projects or its targeting to under-developed areas. Broad-based improvement in labor productivity across sectors and areas rather than general equilibrium re-sorting (in-migration to electrified counties) appears to be the likely mechanism by which these development gains are realized.

Suggested Citation

Barham, Tania and Lipscomb, Molly and Mobarak, Ahmed Mushfiq, Development Effects of Electrification: Evidence from the Geologic Placement of Hydropower Plants in Brazil (June 2011). CEPR Discussion Paper No. DP8427. Available at SSRN: https://ssrn.com/abstract=1865577

Tania Barham (Contact Author)

University of Colorado at Boulder ( email )

1070 Edinboro Drive
Boulder, CO 80309
United States

Molly Lipscomb

Batten School of Public Policy ( email )

235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-4893
United States

Ahmed Mushfiq Mobarak

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-5787 (Phone)

HOME PAGE: http://mba.yale.edu/faculty/profiles/mobarak.shtml

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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