7. ENERGY AND SOCIAL ISSUES
7.2. Brazilian social profile on energy use
7.2.1. Social indicators
Between the first half of the 20th century and the beginning of the 21st century, Brazil underwent a transformation from a rural country relying largely on fuelwood for energy use to a mostly urban and industrialized country using modern commercial forms of energy such as electricity, fossil fuels and modern biomass (see Chapter 2 for more details). Still, it has not been economical to extend the power grid to many of Brazil’s rural and isolated areas, and currently 12 million people (7% of the country’s total population of 172 million in 2001) still have no access to electricity [7.2]. Moreover, even among those with access, a large share of low income families cannot pay for even their most basic needs. Even when household electricity use is less than 100 kW·h/month, some families have serious difficulties paying their electricity bills. The situation is similar for liquefied petroleum gas (LPG) for cooking, as its price is highly dependent
1 This section benefited substantially from Ref. [7.1].
on the international price of oil and the exchange rate between Brazilian reals and US dollars.
Moreover, energy affordability concerns are not restricted to the poor. The growing use of expensive natural gas imported from Bolivia for power generation, for example, may affect middle income families as well.
Nonetheless, a persistent theme throughout this chapter is the issue of equity across different groups of the Brazilian population. Unfortunately, a recent study by the Brazilian Institute of Geography and Statistics (IBGE) shows that the income gap between the most and the least affluent segments of the population is immense and growing, with the total earnings of the richest 5% currently equalling those of the poorest 80% [7.3]. It should be noted that the increase in inequality is a new trend that started in 2000 after a seven year trend of decreasing inequality.2 The challenge for any sustainable development strategy will be to spur income creation for the poorest segments of the population, without jeopardizing the savings and investment capacity of the wealthier segments [7.5].
In addressing this challenge, two particular features of Brazil should be kept in mind. One is the unusual pattern in the intensity of household energy use. A recent study by Cohen et al. [7.6] evaluates empirically the relationship between household
expenditure and total (direct plus indirect) energy requirements of Brazilian households at different income levels in 11 capital cities using a generalized input–output model to calculate the energy embodied in purchased goods and services. The study concludes that, on average, the total energy intensity of household expenditure increases with income level, although with a considerable spread in energy intensities within income groups as well as disparities between regions of the country. This suggests an expenditure elasticity3 for Brazil that is slightly greater than 1.0, in contrast to results for other countries that show expenditure elasticities less than 1.0 [7.7]. One contributing factor may be the pattern of fuel consumption for private automobiles across income groups, as its share of total household energy use increases with household income. In any event, to the extent that income growth for the poor and energy intensity reductions are both considered as part of sustainable development, the Brazilian pattern will require careful analysis.
Second are the consequences of Brazil’s income being historically so heavily skewed towards a small fraction of the population. Tables 7.1 and 7.2 show the disparities in income and urbanization across the different regions of Brazil. There is currently a rough positive correlation between TABLE 7.1. DEMOGRAPHIC AND INCOME INDICATORS BY REGION, 1999 [7.3]
Brazil North Northeast Southeast South Midwest
Population (106) 171 13 48 73 25 12
GDP per capita (US $ PPP-2000 ) 6719 3808 3009 8835 7748 6107
TABLE 7.2. URBAN POPULATION BY REGION, 1950–2000 (%) [7.8]
Region 1950 1960 1970 1980 1991 2000
North 29.6 35.5 45.1 51.6 59.0 69.8
Northeast 26.4 34.2 41.8 50.5 60.7 69.0
Southeast 47.5 57.4 72.7 82.8 88.0 90.5
South 29.5 37.6 44.3 62.4 74.1 80.9
Midwest 25.9 37.2 48.1 67.8 81.3 86.7
Brazil 36.2 45.1 55.9 67.6 75.6 81.2
2 See Table 7.3. This new trend can be explained by the effect of the economic crisis of 1997–1999, which reduced employment and the purchasing power of the poor [7.4].
3 The expenditure elasticity measures the variation of energy requirements as expenditures vary. An expen-diture elasticity greater than 1.0 means a general tendency for a continuous increase of the energy requirement with rising expenditure.
urbanization and income, with the Southeast region being both the richest and the most urbanized and the Northeast region being the poorest and the most rural. Until the first half of the 20th century, Brazil was mainly a rural country. But the steady trend for at least half a century, as shown in Table 7.2 (and Fig. 2.11 in Chapter 2), has been one of increasing urbanization in all regions of the country. Now more than 80% of the population lives in urban areas, the majority concentrated in State capitals along the coast. The poorer North and Northeast regions are less urbanized, with some 30% of their populations living in rural areas. The more recent settlement of the Midwest region has given it the highest urban growth rate of all regions.
Figure 7.1 shows the evolution of the Brazilian Human Development Index (HDI) between 1975 and 2002. The HDI is the average of a life expectancy index, an education index combining literacy and school enrolment data, and an income index based on the logarithm of gross domestic product (GDP) per capita in terms of purchasing power parity (PPP) [7.10]. Despite the continuous improvement shown in Fig. 7.1, from 0.644 in 1975 to 0.775 in 2002, Brazil only ranked 72nd in 2002 among the 177 countries for which the index has been calculated. Even with recent improvements, health and education levels were the most important factors limiting Brazil’s ranking.
Comparing HDI values across regions, disparities again arise. While the Southeast region’s HDI rose from 0.765 to 0.822 between 1975 and 2000, the Northeast region’s improvement was only from 0.636 to 0.705, the lowest of all regions and bringing it, in 2000, to the level that the country, on average, had reached in the 1980s.
Brazil’s Gini index of income inequality, as shown in Table 7.3, is one of the highest (i.e. most unequal) in the world.4 For the 1992–1999 period
examined here, there were only three countries in the world more unequal than Brazil: Central African Republic (0.61), Swaziland (0.61) and Sierra Leone (0.63)5 [7.11]. Table 7.3 shows a significant increase in inequality from 1992 to 1993 at a time when inflation rates were very high, especially in the second half of 1993 (30% per month), and before the introduction, in 1994, of the Government’s so-called ‘Real Plan’ stabilization plan [7.1]. Here it is important to stress that only the formal economy is included in the analysis; the inclusion of the informal economy would make the final income distribution more equitable; that is, it would decrease the Gini index (for details, see Ref. [7.12]).
The percentage of Brazilians categorized as
‘poor’ decreased from an average of 43% in the 1980s to 37% in the 1990s [7.13]. Consistent with the pattern shown in Tables 7.1 and 7.2, the percentage of people categorized as poor in urban areas is below the national average, dropping from 34% to 31% in the same period. The Northeast — the most rural region — has the highest proportion of poor people, more than 50%. In addition, in 1987, 1990, 1993 and 1996, the richest 20% of the population absorbed 81% of the total income of the economi-cally active population of the Northeast region, with this proportion dropping to 68% in the Southeast region over these same years.
Table 7.4 shows disparities across regions for various household amenities, ranging from basic services such as water and sewage up to less essential items like Internet connections. The avail-ability of many of the features in the table depends on the availability of electricity and regional infra-structure, as well as on income levels in individual households.
1975 1980 1985 1990 1995 2000 2002
HDI
FIG. 7.1. Evolution of the Human Development Index for Brazil [7.9].
4 The Gini index measures the extent to which the distribution of income (or consumption) among individ-uals or households within a country deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. A value of zero represents perfect equality; a value of one, perfect inequality.
5 The figures for the less unequal countries ranged from 0.23 (Austria) to 0.24 (Denmark) to 0.25 (Belgium, Sweden, Norway and Finland), for instance.
TABLE 7.3. MAJOR SOCIAL INDICATORS [7.3, 7.9]
Year Poverty linea Gini indexb Income share of
the richest 10% (%)
Income share of the poorest 20% (%)
1992 40.8 0.571 45.81 2.32
1993 41.7 0.600 48.58 2.24
1995c 33.9 0.585 47.92 2.29
1996 33.5 0.580 47.59 2.15
1997 33.9 0.580 47.70 2.20
1998 32.8 0.575 47.92 2.25
1999 34.1 0.567 47.45 2.34
a Defined as the percentage of people earning less than US $2.00 per day at exchange rate values. There are no data for 2000, except for the Gini index, which was 0.608. In 2001, the poverty line figure was 33.6%.
b The degree of income concentration, considering the income distribution for all workers more than 10 years old; it varies between zero (perfect equality) and one (maximum inequality).
c No data available for 1994.
TABLE 7.4. SELECTED FEATURES OF HOUSEHOLDS IN BRAZIL, TOTAL AND BY REGION FOR 2001 (%) [7.14]
Brazil (total)
North
(urban) Northeast Southeast South Midwest
Water system
Grid 81.1 63.7 69.2 90.5 81.7 75.5
Other 18.9 36.4 30.7 9.5 18.3 24.5
Sewage
Public sewer 45.4 5.8 22.0 73.5 22.9 30.8
Septic tank 21.3 47.0 21.0 11.1 46.9 12.9
Other 25.6 40.6 35.2 13.7 27.3 52.2
None 7.6 6.6 21.8 1.8 2.9 4.1
Other features
Garbage collection 83.2 85.3 66.3 92.3 84.5 84.4
Electric lighting 96.0 98.4 89.4 99.1 97.9 96.3
Telephone 58.9 53.4 35.9 70.6 64.9 59.9
Stove 97.6 96.9 93.9 99.3 98.7 98.3
Water filter 52.7 33.0 52.1 65.3 19.2 63.2
Refrigerator 85.1 83.0 64.9 94.0 92.9 87.0
Freezer 18.8 16.4 7.1 19.8 35.1 19.3
Washing machine 33.7 26.0 9.3 44.0 48.8 28.1
Radio 88.0 75.5 81.0 92.3 93.4 83.8
Television 89.0 88.2 78.4 94.4 92.3 88.5
Personal computer 12.6 6.7 5.2 17.3 13.9 10.6
Internet access 8.6 4.1 3.5 12.0 8.8 7.3
Note: Some values in the first column (Brazil total) do not match the total figures for Brazil (e.g. for electricity access) owing to the exclusion, in this table, of the rural areas in the North region, for which data are scarce.
The contrast between urban and rural areas is striking. Even with progressive improvements in water and sewage indicators in the 1990s, in rural areas the share of households with some kind of water grid system (25%) and sewage system (66%) is still much lower than in urban areas (92% and 97%, respectively).
The eradication of poverty in Brazil is an important goal. Still, before this aim is met, more convenient and economically accessible energy services could certainly improve the quality of life and provide better social opportunities for a large part of the population. Pursuing this objective, it is important to reduce the economic burden of energy in the budgets of low income households and to increase access to energy to include all Brazilian households.
7.2.2. Energy use in the residential sector
From 1980 to 2000, the percentage of households supplied with electricity increased from 44% to 93% (see Table 7.5 and Fig. 2.12). At the same time, the percentage of rural households with access to electricity jumped from 22% to 69%.
Regional disparities are again evident, with 39% of rural households in the Northeast region still lacking access to electricity, compared with only 12% of rural households in the Southeast region.
In the same period, the residential sector’s share of total energy use dropped from 35% to 17%. This drop was mainly the result of an increase in the industrial sector’s use, but also resulted from more efficient appliances and shifts in the mix of primary energy sources (see Chapter 2 for details).
In Brazil, the household energy fuel mix has changed significantly since 1970. Electricity, LPG
and, later, natural gas experienced high growth rates from 1970 to 2000, replacing the previously dominant fuelwood consumption (see Chapter 2 for details). However, fossil and biomass fuels still supply 36% of the energy demand in the residential sector, primarily for cooking and heating water.
Wood used to be supplied from the Atlantic Forest, heterogeneous tropical forests along the entire Brazilian coast. Although imported coal and oil products have been in the mix since the beginning of the 20th century, fuelwood remained the main energy carrier in the country until the end of the 1960s. At that point, oil products came to the fore, following growing industrialization and strong urban population growth.
Residential fuelwood consumption currently is concentrated in lower income households in all regions of Brazil, as depicted in Fig. 7.2. In the Northeast region, more than 70% of the residential
49.0
73.5
38.7
47.5 48.4 51.4
20.9
15.0
15.5
18.7 19.6 17.9
18.8 8.1
20.9
19.1 17.1 16.8
8.7
16.4
10.5 10.6 9.8
2.8 8.5 4.3 4.3 4.1
0.7 2.6
0 10 20 30 40 50 60 70 80 90 100
North Northeast South Southeast Midwest Average
%
<2 m.w. 2–3 m.w. 3–5 m.w. 5–10 m.w. >10 m.w.
FIG. 7.2. Share of fuelwood consumption by income group and region, 2000 [7.1, 7.9, 7.11].
Note: m.w. = minimum wage. In 2000, the minimum wage in Brazil was 160.77 Brazilian reals, or US $181.12 at PPP-2000.
TABLE 7.5. POPULATION WITH NO ACCESS TO ELECTRICITY, 2003 [7.15]
Region
Total Urban Rural
103 % 103 % 103 %
North 2 811 20.4 246 2.5 2 565 62.5
Northeast 6 679 13.4 811 1.9 5 868 39.3
Southeast 1 394 1.4 587 0.3 807 11.9
South 657 2.1 173 0.6 484 8.2
Midwest 483 4.3 116 0.8 367 27.6
Brazil 12 023 6.5 1 932 0.9 10 091 31.0
Note: Data from Ref. [7.15] recalculated for December 2002.
fuelwood consumed is used by families with monthly incomes less than twice the minimum wage, compared with 50% for Brazil as a whole.6 These figures indicate that wood fuelled ovens are mainly restricted to rural areas and the peripheries of cities, where these families usually live [7.1].
From 1990 to 2000, total electricity use in Brazil increased by 58%. As a result of energy rationing during the electricity shortage in 2001, average residential use dropped from 173 kW·h/
month in 2001 to 134 kW·h/month in 2002.
Figure 7.3 shows household electricity use by income group and major end use in 2000. Clearly, the higher income groups consume a lot more electricity in all major end uses than the lower income groups. The difference in electricity use between the highest and lowest income groups is greatest for air conditioning (10 times) and for lighting (9 times).
7.2.3. Data suitability for the EISD set of indicators
The data cited in this chapter so far present a picture of Brazil that includes most of the features incorporated in the social indicators within the EISD ‘equity’ theme. To fully quantify the EISD indicators for Brazil and, in particular, to quantify trends over a number of years, more complete data would be needed. Section 7.2.2 refers to the
percentage of households without electricity (6.5%
in 2000), which is the essential component of the first EISD indicator, concerning accessibility (share of households without electricity or commercial energy (SOC1)). Section 7.2.2 also presents some statistics on household electricity use by income group and on the household fuel mix and how it has changed over time. These are almost exactly the two components of the third EISD indicator (household energy use and fuel mix by income group (SOC3)), but the data are not sufficiently comprehensive to calculate indicator values. Section 7.2.1 includes statistics on inequity in household income, which is one component of the second EISD indicator (share of household income spent on fuel and electricity (SOC2)). Later in this chapter, Tables 7.6 and 7.7 and Figure 7.4 present data related to another component of this indicator, namely, household expenditures on electricity and LPG by income level.
Other statistics in Section 7.2 illustrate features of Brazil’s situation that go beyond energy, such as the share of the population below the poverty line, the Gini index, and the shares of households with sanitation and drinking water.
Additional statistics are also presented, such as the HDI and urbanization patterns, which enhance the overall picture of Brazil’s current situation.
7.3. SOCIAL FEATURES OF ENERGY