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Analysis

Conservation Strategy Fund helps local conservationists use economic tools to find smart, efficient solutions to the most urgent environmental problems. Since its creation in 1998, CSF has conducted dozens of analysis projects in forests, rivers and coastal environments. Most of our work has focused in the tropics, where extraordinarily high levels of biological diversity are found. To maximize the reach and quality of our work, we involve leading experts and conservation organizations in all of our projects.

Contributing to the decision-making process about hydropower plants in the Brazilian Amazon region: Study of the financial feasibility and potential impacts of the Castanheira Dam

Conservação Estratégica (CSF-Brazil), in partnership with Instituto Centro de Vida (ICV), International Rivers and Operação Amazônia Nativa (OPAN), is carrying out a detailed study on the construction of the proposed hydropower plant Castanheira in the Arinos river, in the state of Mato Grosso, Brazil. This study has three goals: (1) evaluate the financial feasibility of the project; (2) contribute to the analysis of socio-environmental impacts associated with the construction of hydroelectric dams in the Amazon region; and (3) assist the decision makers about this kind of infrastructure work through a cost-benefit analysis of the dam.

The Arinos River is located in the Upper Tapajós River Basin, in the municipality of Juara, and is known for its richness and biodiversity of fish, being an important source of income and leisure for the local community. According to the Ten-Year Energy Plan 2024, elaborated by the Brazilian Federal Energy Planning Company, the construction of the Castanheira hydroelectric dam in this region is necessary, contributing to meet the future demand for electricity in Brazil. However, given the likely negative socio-environmental impacts and the high initial cost relatively to the quantity of electricity to be produced, environmentalists are questioning whether it’s worth constructing Castanheira dam in the first place.

Within this context, CSF-Brazil, in partnership with ICV, International Rivers, and OPAN, is conducting a study on the construction of the proposed Castanheira Dam. This study is divided in three stages. In the first stage, we evaluate the financial feasibility of the hydropower plant and its contribution to the Brazilian energy matrix. We do not include the socio-environmental externalities associated with the construction of the hydroelectric plant – which is the focus of the second stage. In this following stage, we evaluate the economic impacts, considering some of the socio-environmental externalities resulting from the construction of the hydroelectric plant. Out of all the potential impacts, we analyse the three following ones: (I) greenhouse gas emissions; (ii) the opportunity cost of the flooded area; and (iii) the potential impact on fishing activities. Although we do not quantify, we discuss the potential impacts of the construction of this hydropower plant on the indigenous population and on the development of the host cities (Juara and Novo Horizonte do Norte). The data coming from these two steps will be combined and, in the third stage, a cost-benefit analysis of the construction of the proposed Castanheira dam will be conducted.

The results found in this study will be presented to the local community and federal institutions such as the Energy Research Company and the Ministry of Mines and Energy. Through a technical and transparent study, we hope to contribute to the local and national debate on the construction of hydroelectric plants in the Brazilian Amazon region.

Currently, the Castanheira dam is in the process to obtain its Preliminary Permit (click here for more information).

Photo credit: Michel de Andrade.
Photo description: The picture above is of the region of the Upper Tapajós River Basin, in the Sub-basin of the Juruena River, in Mato Grosso which is a place of great beauty.