Paraná Basin already feels effects of drought on agribusiness and energy generation – 06/06/2021 – Market

Standing on the reddish earth that was once the lake of the Água Vermelha hydroelectric plant, on the border between São Paulo and Minas Gerais, retired José Carlos Jesus, 57, gives the dimension of the crisis: “Here where we are, it doesn’t even work when the reservoir is full”.

About a hundred meters separate him from his ranch, where he now lives “hidden from the pandemic”. The simple house was built on the edge of the dam, but the lake now starts farther down, which forced him to stretch a 250 meter hose to collect water.

With only 7.7% of its energy storage capacity, the Água Vermelha plant’s reservoir is a portrait of the water crisis that is frightening the country and has been leading the government to announce emergency measures to try to avoid energy rationing.

In one of its branches, the Pádua Diniz stream, in Indiaporã (SP), the water descended so much that it left the old dirt road showing more than 40 years ago, when the reservoir was created. There is only a small pond, formed by the few summer rains, under the bridge of the new road.

“I’ve come here by boat and, just under the bridge, we caught more than 100 croakers”, recalls public official Aparecida Batista dos Reis, 53, as she tried to fish in what was left of the creek on Wednesday afternoon (2).

The situation is even more worrying due to the maintenance of low levels even after the end of the so-called rainy season, when the reservoirs should be full of water to guarantee the crossing of the driest winter.

And it brings back the ghost of 2015, when the drought was so severe that traffic on the Tietê-Paraná waterway had to be interrupted due to a lack of draft for the passage of trains carrying grain from the Midwest to São Paulo.

“Not even in 2015 was the river like this”, complains businessman Jonzelito Luiz Pereira, 59, who owns a farm and an inn next to the dam, in Iturama (MG). “The wells [de água subterrânea] are already drying. It was supposed to start drying in October.”

Água Vermelha is the last of the 12 hydroelectric power plants on the Grande River, which originates in the Serra da Canastra, in Minas Gerais, and forms the Paraná River after joining the Paranaíba River, on the border between São Paulo and Mato Grosso do Sul.

Together, the three rivers are responsible for two-thirds of the energy storage capacity of the Southeast/Midwest energy subsystem, considered the main water reservoir in the Brazilian electricity sector as it concentrates dams at important power plants.

Thus, the region is in the focus of the government’s effort to try to avoid rationing. Last week, the ANA (National Water and Sanitation Agency) declared a water emergency in the basin, opening the door to more drastic measures, such as limiting water uptake in rivers.

The abundance of water makes the region an important agribusiness hub, with cattle and sugar cane farms extending as far as the eye can see, and a strong fish production, considered the second largest tilapia breeding in Brazil.

The drought is already causing damage to the local activity, with the delay in harvesting sugarcane and the worsening of pasture conditions. Producers fear that the dispute with the electricity sector will make business unfeasible, which should intensify conflicts over the use of water in the coming months.

“If I have to stop irrigating, I lose all production,” says Edvaldo Costa Mello, owner of Fazenda Costa Mello, a citrus producer that has a lemon planting area just below the Água Vermelha dam.

His property is on the banks of the Rio Grande, but already in the reservoir of the Ilha Solteira hydroelectric plant, on the Paraná river. It is the largest hydroelectric plant in the water tank, with a capacity to produce 3,444 MW, and its lake extends to the two rivers that form the Paraná.

The reservoir is used by the Tietê-Paraná waterway. Therefore, there is a continuous effort to maintain a volume of water sufficient to allow the passage of convoys, which depend on a minimum elevation of 325 meters above sea level, a volume observed today.

Even so, the gigantic 1,200 square kilometer lake (almost the size of the city of São Paulo) is now at less than half its storage capacity. It is already possible to find large dry areas in some of its branches, such as the Cigano stream, in Três Fronteiras (SP).

The president of the Paranaíba Hydrographic Basin Committee, Breno Esteves Lasmar, defends that the importance of the region for the economy and the possibility of stopping the waterway should be considered in the management of the reservoirs. “[A redução do nível] it will have a very big impact on the entire national economy.”

The local impact on job and income generation can also be considerable, says Fernando Carmo, agricultural assistant at the Sustainable Rural Development Coordination of the São Paulo Secretariat of Agriculture.

The state government estimates that fish farming around the Ilha Solteira lake generates around 5,000 direct and indirect jobs. The waterway would be responsible for another 3,000 jobs, which were suspended during the 2015 stoppage.

The water crisis picks up local producers already facing increased costs due to the escalation in international prices for commodities, since feeds are based on soy and corn. Pereira, from Iturama, decided to sell half of the 120 head of cattle he had to save on feed.

“There is a complicating factor in the maintenance of pastures for cattle”, says the president of the Union of Rural Producers of Aparecida do Taboado (MS), Eduardo Sanchez. “The plant suffers from water stress, it has to do more costly work, to treat the lame cattle.”

In fish farming, which closed 40% of units in the 2015 crisis, the high costs may make investments to adapt to lower levels of the lake unfeasible, says Carmo. “The cost of feed is extremely high, and many people can stop producing because they cannot invest to move the tanks.”

“If it goes down more, it’s going to be a problem”, confirms Akemi More, from Piscicultura More, a small family business that produces in water mirrors provided by União on the Paranaíba river. “The river is already like it was in the dry season”, reinforces his brother and partner Sandro More. With the crisis, last week they sold 15 of the 93 tanks they had.

Local producers trust the maintenance of the minimum quota to guarantee traffic on the waterway, but last week the ONS (National Operator of the Electric System) released a report considering the flexibility to 319 meters in June to reinforce the recovery of the reservoirs.

The operator wants to reduce the mandatory flows at the hydroelectric power plants on the upper parts of the Grande and Paranaíba rivers to hold water in the headwater reservoirs. The energy generated by the minimum flows can now be replaced by wind power plants in the Northeast, which is in the middle of the windy season.

In 2014, the reduction in the quota of the Ilha Solteira reservoir turned into a legal war, which culminated in the suspension of power generation at the hydroelectric plant after an injunction granted to fish farmers associations in the region.

Today, producers trust that the sector’s proximity to the federal government can help to avoid greater impacts, says Assis Henrique, managing director of Global Peixes, which produces tilapia and has a breeding unit in tanks in different parts of the lake.

Specialists in the electricity sector say they understand the concern with the local economy, but claim that the billionaire costs of the energy crisis, which make the bills of all Brazilians more expensive, are relevant in the debate on water management.

The expectation is that Brazilians spend 2021 paying an extra fee to pay for the thermal plants, which will also pressure distributors’ tariff readjustments over the next few years. Power rationing is currently considered unlikely.

There is a consensus among experts that the crisis is structural and needs long-term solutions. “These are issues such as change in land use, climate change, aspects of economic development that lead to the suppression of vegetation”, says Lasmar. “Where there is no forest, there is no water.”

According to Cemaden (National Center for Monitoring and Alerting of Natural Disasters), the Paraná River basin has been facing below average rainfall for 22 years and the situation worsened from February 2019, when it received the worst volumes since the beginning of 1980s.

“In terms of flow, it can be concluded that the upper portion of the Paraná River basin faces a situation that can be classified as severe and exceptional since 2014” he says.

Roberto Kishinami, senior coordinator of the Clima e Sociedade Institute, argues that agribusiness in the region should seek more efficient irrigation technologies, such as the drip used in the Midwest. “On here [em São Paulo] it uses a lot of center pivot, which is like spraying water from a hose.”

In Brazil, on average, 50% of the water collected in Brazilian rivers is used for irrigation, says ANA. An increase in the water collection tariff, which is regulated by the states, could lead to a search for greater efficiency, considers Kishinami.

The former president of ONS Luiz Eduardo Barata recalls that, with each water crisis, authorities talk about the recovery of water sources and riparian forests, the forests on the banks of rivers, but the proposals rarely go ahead.

He advocates changes in the electricity sector model to allow the hiring of more renewable energies, such as solar and wind, to ensure the recovery of reservoirs to their maximum levels, which has not happened for a long time — the last time they surpassed 80 % capacity was in April 2011.

“Today, we are filling the tank halfway and running until it falls into the reserve”, he compares. “But it would be better to go with a full tank and fill up when it’s half full. The cost is the same and the risk is lower.”

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