Brazil is anticipated to increase by approximately 51%; the Belo Monte complex is expected to provide over 40% of this additional supply of electricity. Project engineers assume that rainfall patterns will be stable into the future. However, this might not be the case. Belo Monte's energy generation may be lower than expected if deforestation proceeds unabated (Stickler et al, 2013). Stickler and colleagues have attempted to model the impact of deforestation on the energy supply of Belo Monte; see Stickler et al (2013). According to these authors, if deforestation proceeds within both the Xingu and Amazon basins and climate feedbacks are taken into consideration, power generation potential would decline by almost 70% below maximum installed capacity and is likely to fall short of expected capacity by an average of 62% in all but 4 months. Similar analyses could be expanded to other river basins in the Amazon and the effect of deforestation on power generation of planned hydroelectric could be measured and monetized using the energy market prices (Mohd Shahwahid et al., 1997; Arias et al. 2011; Guo et al. 2000).

Nevertheless, one of the limiting factors of climate modeling using AGCMs is the coarse spatial resolution of the input data and of the model itself. Hence, changes in hydrology of small watersheds can be quite different from the overall result for the entire basin, but cannot be represented accurately by the model. Therefore, there is a need to refine the current hydrological models to incorporate both finer geomorphological features and regional rain patterns.

# **2.6.3  Watershed Protection**

Irrigation is rare within the Amazon biome, but increasingly important on the forest fringe. Much of the intensive agriculture in the Amazon basin occurs in the floodplain ( _varzea_ ), during the dry season. With climate change, such activity has become increasingly vulnerable to drought, flash flooding, and associated risks. The costs of e.g. crop and property insurance, measurable flooding or drought losses or changes in productivity might be ways of getting at these effects. Their magnitudes would depend on settlement patterns in the floodplain which are also changing with the realignment of transport corridors to the _terra firme_ .

The Amazon forest keeps the regional climate humid and rainy by cycling atmospheric water in the form of aerial rivers to the southeast and center of the South American continent (Fearnside, 2003). Hence, the growing importance of irrigation in cerrado areas on the Amazon forest fringe would be affected by loss of localized water availability, or affected by the concentration of rainfall in a lesser part of the growing season. There is also a reasonable body of knowledge on the effects of erosion and sedimentation on economic infrastructure such as navigation, irrigation and hydroelectric generation. Yet most or all of these impacts are likely to be localized rather than generalizable to the region as a whole. There are more pervasive effects of climate change on drought-related losses in agricultural productivity that could be treated as avoided losses. The World Bank’s Erick Fernandes (pers. comm.) reports significant declines in output due to the 2010 drought.

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