Drought Hurts Brazil’s Economy, Helps Commodities



São Paulo, Brazil was once nicknamed Cidade da Garoa, or the city of drizzle.

But that name hasn’t fit in years. The city of 20 million people is now the epicenter of Brazil’s worst drought since the 1930s.

The drought is a threat not only to the many agriculture commodities grown in the country, but also to Brazil’s economy.

A Drought for the Ages

The drought situation in Brazil is perilous.

São Paulo, the world’s 12th biggest city and Brazil’s economic center, gets its water from two reservoir networks – the Cantareira and the Alto Tiete. The reservoirs are nearly depleted at 6% and 15% capacity, respectively. And that’s after the “peak” of this year’s rainy season.

And while the country did get some rain recently, it is unlikely to put much of a dent into the reservoir capacity deficit.

The country’s southeastern states of Rio de Janiero, Minas Gerais, and Espírito Santo, have been affected too. Already, 71% of São Paulo’s residents and 36% of all Brazilians have faced problems with the water supply this year.

And it’s going to get worse…

Just a few short months ago, the central Brazilian government said water rationing wasn’t necessary.

But now, it says that it’s likely that the country’s three largest metropolitan areas – São Paulo, Rio de Janeiro, and Belo Horizonte, which includes more than 40 million people – will face some rationing.

Those cities are joining 93 other cities in Brazil that have already instituted some water rationing.

Water utility Sabesp (SBS) predicts it may have to implement a drastic rationing plan, with five days every week of NO water access in the affected regions of the country!

But wait, it gets worse…

Lifeblood of the Country Scare

You see, Brazil gets about 70% of its electricity from hydroelectric dams. And as the water runs lower, less power will be generated.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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