Estimation of socioeconomic impacts of wind power projects in Brazil's Northeast region using Interregional Input-Output Analysis

Abstract

Brazil's Northeast is the country's least developed region and accounts for half of its potential for wind power generation. Recent wind energy projects have directed substantial investment flows to this region and are expected to propel regional socioeconomic development. This paper estimates interregional socioeconomic impacts of onshore wind power deployment in Brazil's Northeast region by applying a new Interregional Input-Output model with endogenized households. By assessing the direct, indirect and induced effects on economic sectors and households, cross-sectoral insights for regional development policies are identified. The set of projects considered consists of 2911 MW procured through auctions, which will become operational by 2023. Results show significant indirect and induced multiplier effects. Results indicate that 10 jobs/MW are created directly, while the total effect is 31.9 jobs/MW, meaning indirect and induced effects can be more than three times higher than direct impacts. More than 50% of the benefits occur in just a few key sectors. In the Northeast, the highest potential benefit on value added is revealed in the sectors: wholesale and retail trade; R&D and other business activities; financial intermediation; and real estate activities. These sectors reflect the potential for induced economic co-benefits mainly. However, the Rest of Brazil captures a significant part of total benefits, especially high-income jobs and high value-added activities. Therefore, we recommend that regional development policies focus on key sectors identified here and human development to provide O&M personnel and long-lasting benefits. Lastly, we discuss justice and equality issues related to our results.