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Economics, Politics, and Hydroelectric Power: The Paraná River Basin

Published online by Cambridge University Press:  24 October 2022

J. Eliseo Da Rosa
J. Eliseo Da Rosa*
Affiliation:
Indiana State University, Evansville
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The construction of binational hydroelectric plants on the Paraná River at Itaipú by Brazil and Paraguay and at Yacyretá and Corpus by Argentina and Paraguay reflects unprecedented cooperation and integration among these three nations, with far-reaching consequences for the future economic, social, and political development of all the Paraná River hinterland. The Paraná River Basin, or River Plate Basin, is among the five largest water systems in the world, second in size only to the Amazon Basin in the Western Hemisphere. With a length of 2,796 miles, it includes three main rivers, the Paraná, Paraguay, and Uruguay, and their tributaries. It covers an area of 1,980,000 square miles and contains a population estimated in 1980 at more than eighty million people. Brazil takes the largest share of the Basin at 45.9 percent; Argentina has 28.19 percent, and Paraguay has 13.1 percent, with the remainder held by Bolivia and Uruguay. Brazil's share of the basin comprises some of the relatively more progressive and industrialized southwestern, southeastern, and southern states of Mato Grosso, Goiás, São Paulo, Paraná, Santa Catarina, and Rio Grande do Sul. In Argentina, the provinces adjacent to the Paraná River contain 60 percent of the country's population and support 85 percent of its economic activity. Until the completion of a paved road and the international bridge over the Paraná River in the 1960s that permitted direct access to the Atlantic coast of Brazil, Paraguay's communication with world markets depended exclusively on the Paraguay and Paraná rivers.

Type
Research Article
Information
Latin American Research Review , Volume 18 , Issue 3 , 1983 , pp. 77 - 107
Copyright
Copyright © 1983 by the University of Texas Press

References

Notes

1. The quantity of electric power generated per year is given in kilowatts per hour (kwh), and the hourly capacity (also called plant potential) is given in kilowatts (kw). The following multiples and symbols are also used: Kilowatt = kw = 1,000 watts; Megawatt = Mw = 1,000 kw; Gigawatt = Gw =1,000,000 kw.

2. Itaipú Treaty, Annexes, and Letters of Agreement, in República del Paraguay, Honorable Cámara de Senadores, Diario de Sesiones, Sesión Extraordinaria del 29 de Mayo, 1973 (Asunción, 1973), pp. 198-213.

3. Yacyretá Treaty, Annexes, and Letters of Agreement, in ítalo A. Luder, La Argentina y sus claves geopolíticas (Buenos Aires, 1974), pp. 151-84.

4. Osny Duarte Pereira, Itaipu Prós e Contras (Rio de Janeiro, 1974), pp. 63-65.

5. For a theoretical discussion of the problem, see J. Hirshleifer, J. C. de Haven, and J. W. Milliman, Water Supply (Chicago, 1960), pp. 59-73.

6. The Law of the Sea on the subject of ownership of sea water as a “common inheritance of mankind” presents some of the same problems encountered in the shared ownership of water in international rivers.

7. Duarte Pereira, Itaipu Prós e Contras, pp. 51-62.

8. Efraím Cardozo, Los derechos del Paraguay sobre los Saltos del Guaira (Asunción, 1965), pp. 173-82, 215-21.

9. In Efraín Enríquez Gamón, Itaipú: aguas que valen oro (Buenos Aires, 1975), pp. 35-36.

10. Isaac Francisco Rojas, Intereses argentinos en la Cuenca del Plata (Buenos Aires, 1975), pp. 253-58.

11. Luis María Árgaña, majority leader in the Paraguayan House said: “Today, with the dam, one third of the territory [in dispute] will be flooded; when the locks are built, another third will be flooded; and in this way the whole problem will eventually disappear.” Cámara de Diputados, Diario de Sesiones (11 July 1972), p. 270.

12. ABC Color (Asunción), 15 August 1980, p. 9.

13. World Bank, Paraguay: Regional Development in Eastern Paraguay (Washington, 1978), p. 29.

14. In accordance with Article 15 Paragraph 4 of the Itaipú Treaty, the value of the royalties, compensation, and payments to the partners will be adjusted for variations in the gold parity of the U.S. dollar. Paragraph 5 contemplates the case of termination of the fixed parity of the U.S. dollar to gold and leaves open the possibility of a new system of parity that could be used to maintain constant the value of those payments.

15. Luder, La Argentina, p. 98.

16. Because the money value of the compensation agreed upon in the treaties remains constant for the duration of the partnership, the exporting partner cannot benefit from higher costs of production and low output from a given plant. It is evident, however, that Paraguay will benefit from using for domestic consumption the power generated at Itaipú and from selling its share of Yacyretá to Argentina.

17. Luder, La Argentina, p. 99.

18. According to ANDE's President Debernardi, the deadline for the disclosure of the use

timetable required in the treaty will become effective only in 1983 because the treaty speaks of “two years before the beginning of commercial operation of the first generator.” ABC Color, 3 August 1980, p. 10.

19. In accordance with Annex C of the Itaipú Treaty, Brazil has guaranteed all credit operations undertaken so far by Itaipú. Paraguay has refused up to now to finance any of the loans necessary to complete the construction of Itaipú. Interview with ANDE President Debernardi, ABC Color, 5 February 1981.

20. Duarte Pereira, Itaipu, p. 231.

21. Statement of Admiral Isaac Rojas made in Buenos Aires and transcribed in ABC Color, 30 July 1979, p. 10. See also editorial in ABC criticizing Rojas's position against Paraguay, 13 July 1979, p. 12.

22. Protocol signed by Paraguay and Argentina in Asunción on 30 August 1979 to change Annex C of the Yacyretá Treaty to include a formula for estimating the compensation for flooded land to be received by the partners. In ABC Color, 31 August 1979, pp. 9-10.

23. The formula to be used to compute the aggregate compensation for the flooded territory is T = E × CE × .089, where T is total compensation to be paid for flooded territory; E is power produced per year; CE is cost per unit of output expressed in U.S. $/kwh; and .089 is a coefficient purporting to measure the percentage contribution (opportunity cost) of the flooded land needed to produce electric power. CE = (G + R) ÷ EM, where G is annual direct expenses; R is annual amortization costs for 60 years and 8 percent interest; and EM is electric power produced per year. Once the total value of this compensation is determined, each country receives a share proportional to the amount of land flooded in its territory.

24. ABC Color, 25 August 1979, p. 16.

25. In Itaipu, Duarte Pereira discusses the several recommendations adopted by UN conferences and other international meetings concerning the use of the water in rivers of shared sovereignty.

26. It is assumed in this discussion that the level of water above sea level is constant between two given locations, which is the same as saying that the water flows with no slope. This simplification does not affect the nature of the problem of interdependency.

27. La Prensa (Buenos Aires), 30 October 1979, pp. 1 and 4.

28. The level of the water between Itaipú and Corpus of 105 meters above sea level that was agreed upon by the three countries constitutes a compromise between the initial Argentine demand of 130 meters and the level of 100 meters first agreed upon by Brazil and Paraguay at the time they subscribed to the Itaipú Treaty. With the 105-meter level, Corpus becomes economically feasible, Paraguay and Brazil do not suffer a significant loss in potential at Itaipú, and Paraguay protects the productivity of its currently operating or future plants. Argentina's concession in reducing its initial demand, although criticized by extreme nationalistic groups, was estimated to have brought the efficiency of the use of the hydroelectric resource of the Paraná River up to more than 90 percent of its full capacity.

29. Enríquez Gamón, Itaipú, reproduces editorials from all the Paraguayan dailies expressing opinions on the Itaipú Treaty before, during, and after the approval of the treaty by Paraguay's legislature, pp. 448-680.

30. World Bank, Paraguay. Two other studies discuss some aspects of the problem of Paraguay's energy policy for the future, but are not available to the public. They are: Paraguay: estrategias para desarrollo: consideraciones preliminares (Asunción, 1974), prepared for ANDE by an international consultant group; and Análisis de las posibilidades de establecer industrias de alto consumo energético en el Paraguay, prepared by Industri Konsultant A.S. and Kvarner Engineering A.S. (Asunción, 1978).

31. Ricardo Canese, Qué hacer con la energía de Itaipú: estudio preliminar, anexos, published in ABC Color, 18 March 1980, p. 8, and in a Unión Industrial press release published in ABC Color, 11 May 1980, p. 10.

32. Memo of ANDE President Debernardi to the minister of Public Works and Communications of 16 January 1980, published in La Tribuna (Asunción), 20 February 1980, pp. 12-15.

33. World Bank, Paraguay: Economic Memorandum (Washington, 1979), pp. 1-2; and ABC Color, 11 May 1980, p. 10.

34. Canese, Qué hacer, serialized in ABC Color between 18 and 29 March 1980.

35. The methodology used by Canese to estimate the price that Paraguay should receive as compensation for the energy sold to Brazil is identical to that used in this study to determine the economic rent earned by that part of the water contributed by Paraguay. Annex 5, in ABC Color, 23 March 1980, pp. 8-9.

36. O Estado de São Paulo, 4 November 1982; Hoy (Asunción), 6-7 November 1982; and ABC Color, 5 November 1982.

37. Canese in ABC Color, 28, 29, 31 December 1981 and 2, 3 January 1982.

38. New York Times, 8 November 1982, p. 22.

39. Hoy, 6 November 1982, p. 10; ABC Color, 6 November 1982, p. 9.

40. ABC Color, 6 November 1982, p. 9.

41. Responses to a questionnaire by ABC Color presented to political leaders of Argentina, ABC Color 9, 11, 12, 14, 15, 28 September and 8, 10, 13 October 1982.