Development that Works
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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • More power to Dams?



    Large infrastructure projects have a bad rap. Many deservedly so.

    But new evidence is emerging that large scale dam projects in China are Pareto improving, and large scale infrastructure investments in Brazil had large positive effects on development.

    dam brazil


    Dam projects have been controversial for the benefits on power generation, flood control and irrigation, and damages from environmental and social impacts of inundation and hydrological change. The benefits and damages are distributed geographically unevenly among different regions, depending on the location along a river. Are the negative impact caused by dam projects mitigated by the market and governmental mechanisms? Are the dam projects Pareto improving?

    The answer is yes for China where more than half of the Dams in the world are located.

    So if in China, Dams made some counties better off without making any other worse off, in Brazil the huge infrastructure push in dams resulted in large development gains for the country as a whole (ungated)

    Traditional cost-benefit analyses of the impact of electricity provision vary widely, but the internal economic rate of return tends to be around 5–15 percent, with a few estimates around 100 percent. Our calculations suggest that the rate of return on electricity investments in Brazil was much higher—18.4 percent above the 10–12 percent return guaranteed to electricity companies through the electricity tariffs.

    That is 18.4%.

    Big can be pretty too.

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