Paraguay: Leveraging Paraguay’s Hydropower for Sustainable Economic Development

While internationally Paraguay is known for being the largest hydropower exporter in the world, the domestic economy suffers from regular outages and high system losses. The country is largely dependent on agricultural production, which has led to volatile economic performances in the past resulting from climatic circumstances and commodity price fluctuations. To address these two key policy challenges, the Government of Paraguay has approached the Earth Institute to: 1) explore the potential of a climate risk management system and sustainable agriculture activities to mitigate environmental vulnerability and 2) develop a high-level strategic plan to use Paraguay’s vast hydropower resources for sustainable economic development and the diversification of its economy.

Together with the Center on Globalization and Sustainable Development, CCSI has drafted a report on “Leveraging Paraguay’s Hydropower for Sustainable Economic Development.” The report (traducción inofficial en español):

  • outlines the current challenges faced by the electricity sector and recommends how these could be addressed
  • provides suggestions for how Paraguay could use its excess electricity to diversify its economy and reduce its fossil fuel dependency, and
  • analyzes past revenue streams from electricity exports, suggests ways to maximising future export revenues and provides management system tools that could be considered to allocate these revenues efficiently in the future.
As a follow up to this work, CCSI and SDSN, in collaboration with partners in Paraguay, are developing the decarbonization pathway for Paraguay. The work  has two components:

Component I – Planning for the decarbonization of Paraguay’s economy by 2050, grounded in an analysis of current and projected energy needs by 2050 and recommendations for policy actions.

Component II – Evaluating transition alternatives in the context of regional integration through power interconnectors, and fostering a regional conversation about the opportunity.

The work will be delivered by September 2021.