Renewable energy power plants and economic development in Brazil’s northeast region

Abstract

Brazil’s northeast is now the region with the largest installed capacity of renewable energy, predominantly wind and solar power. The purpose of this research is to show the relationship between the installation of renewable energy power plants and the economic development in the northeast of Brazil. The methodology used is the generalized spatial two-stage least-squares regression with a spatial lag of the dependent (GDP per capita and salary growth) and independent variables (presence of solar or wind power plant). The results indicate that the presence of renewable energy power plants is beneficial only in terms of GDP per capita growth and not in terms of salary increases. Moreover, the municipalities that benefit the most in terms of GDP per capita growth are the neighboring ones, meaning that the spillover effect is greater than the direct effect. Consequently, renewable power should be adjusted to economic and social situations to avoid local tensions with traditional resource users and inhabitants.