Hydropower Royalty in Brazil - Delivering local development

摘要

The hydropower generation has developed an important role in Brazilian energy sector, corresponding to 70% of the Brazilian electric matrix. Although the hydropower plants are very important for the Brazilian electric sector, plants construction always brought a lot of questionings from society, mainly from people affected by the reservoir. Due the affected community pressure, the Brazilian government established in 1988 a financial compensation to be paid for the hydropower plants regarding the use of the hydropower potential – The Hydropower Royalty. Thus, hydropower royalty was created to compensate states and cities that were flooded by hydropower plant reservoirs in order to reimburse for the negative externalities. The aspects related to the negative externalities from the hydropower plant implementation and operation, mostly those regarding the social and environmental changes, are very significant and mainly the municipalities where the plants are going to be constructed pay this cost. For that reason, the hydropower royalty aims to appropriate an amount of money for the affected municipalities in order to minimize the negative impacts. In other words, the revenue proceeding from the hydropower royalty should minimize the social costs related to the negative externalities.