São Paulo drought raises fears of Brazil energy crisis

A powerful demonstration of the water-energy nexus in action:

Brazil's continuing drought has led not only to distinct possibility of extremewater rationing where nearly 40% of Sao Paulo is expected to be supplied with water for just 2 days a week but also has raised the spectre of energy rationing due to lack of water to generate hydropower. Brazil has consequentlybeen using more expensive and dirtier sources of energy to ensure the economy stays afloat.

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'Brazil is under the threat of a severe energy crisis this year as a prolonged drought has depleted key reservoirs that supply water for hydroelectric power generation. Energy rationing is possible if water reservoirs fall below 10 percent of capacity, Brazil's Energy Minister Eduardo Braga said on Thursday. Reservoirs in Brazil's southwest and northwest regions now stand at around 17 percent of capacity. "There is widespread concern about the water and energy sectors, particularly after the energy minister said ... there may be energy rationing," said Luiz Roberto Monteiro, a trader with Renascenca brokerage in Brazil. "That would hurt the whole economy."'

Source:http://www.reuters.com/article/2015/01/23/markets-emerging-idUSL1N0V219420150123

'Business is worried. Santiago Chamorro, president ofGeneral Motors do Brasil, said that the carmaker had studied bringing water in by truck for its plants in São Paulo.

"We are preparing for the worst and hoping for the best," Mr Chamorro said.

The public, meanwhile, is stocking up on water. Leroy Merlin, a home-improvement store, said that demand for new water tanks for residential use rose 352 per cent last year.

Some fear that the crisis could degenerate into street warfare in São Paulo once the scarcity starts to bite later this year.'

Source: http://www.ft.com/cms/s/0/a140a1e6-b14e-11e4-a830-00144feab7de.html#ixzz3RoxQACZl