Brazil has faced economic difficulties since being awarded the 2016 Olympics in 2009. While GDP growth was around 4-6% then, it has since slowed to an average of 1.2% due to issues like corruption and the effects of the global financial crisis. This has impacted Brazil's ability to invest in infrastructure and environmental protection for the Olympics. Significant work remains to be done to clean pollution from Guanabara Bay as originally promised. Some experts argue that hosting mega-events like the Olympics often costs countries far more than the economic benefits gained due to factors like unused infrastructure and revenues going mostly to organizing bodies like the IOC rather than the host nation.

1. Brazil
in Crisis
Brazil, international sporting
events, and emerging
economies

2. Overview
Background on Brazil
Environment and Economics in
Brazil
Olympic Economics
Other Countries post-Olympics

3. Brazil

4. Overview: Brazil and the World Cup &
Olympics
When the International
Olympic Committee
awarded Rio de Janerio
the 2016 Olympics, the
Brazilian economy was
booming at 4-6% GDP
growth per year.

5. BUT…
From 2011-2014,
Brazil has had one of
the weakest
recoveries to the 2009
financial crisis, having
an average GDP
growth rate of
1.2%/year.

6. Changes in Brazilian Economy and Society
• Low GDP growth rates
• Corruption
• Rise of Brazilian Middle Class
• Wealth
• Decreased inequality, reduced poverty rate
• Power and Influence
• Concern for their rights
• As Marcia Regina, 55, a teacher from Rio's working-class north side told the Guardian, "I
can't stand being in a country where I have to pay such high taxes to get nothing
whatsoever in return," she said. "In our health system, we are treated like wild animals.
In terms of public safety, we are just treated as statistics. Don't even talk to me about
education. They think we are all stupid.“ (CNBC, August 17, 2015)

7. Brazilian Economic Effects on Environment
Guanabara Bay in Rio
de Janerio, where the
Olympic Sailing Trials
and Competitions will
take place in 2016.

8. Brazil: Economics = Environment
• Current Challenges for Brazil’s environment:
• Detrimental Droughts
• Deforestation (especially in the Amazon)
• Water Shortages
• “Half of the Brazilian population does not have sewage collection, said Édíson Carlos, president
of Trata Brasil, a nonprofit organization of sanitation companies that listed sanitation problems
in the bay in a 2014 report.” (Washington Post, May 15, 2015)
• Water Pollution
• Ineffective Sewage control in major cities like Rio and San Paulo
• Causal Relationships:
• 75% of Brazil’s energy comes from hydroelectricity
• Scientific studies have linked deforestation in the Amazon to massive droughts in
Southern Brazil

9. Guanabara Bay
• Brazil is significantly behind schedule in cleaning up the overly
polluted Guanabara Bay for the Olympics.
• In its hosting application, Brazil promised to have 80% of the bay cleaned in time for the
games; however, a year away, only one of eight water treatment plants have been built.
• Causes:
• Ineffective sewer treatment
• Lack of industry control on oil production
• In its hosting application, Brazil promised to have 80% of the bay cleaned in
time for the games; however, a year away, only one of eight water treatment
plants have been built.
• http://www.bbc.com/news/world-latin-america-33838578

11. Brazilian Gov’t Responses
• “Officials have admitted that a target to treat 80 percent of the sewage
flowing into Guanabara Bay by 2016 will not be met, and garbage-picking
“eco-boats” have been suspended pending new bids for the contract.”
(Washington Post, May 15, 2015)
• Using “eco-barriers” and chemical agents to clean up and decrease the
toxicity of Guanabara Bay.
• Brazilian TV reported that 8,200 liters of sewage reaches the bay per second
and 100 tons of garbage a day. Rio’s state-controlled water and sanitation
company, CEDAE, said it had more than tripled the amount of treated
sewage reaching the bay. In the next three years, that number will reach
16,000 liters a second. From 2009 to 2016, the company will have spent
$668 million on sewage treatment in the bay.

12. Discussion ?s
• How to companies and federal governments evaluate the negative
externalities of pollution at the expense of “higher” economic
output/productivity?

13. RIO OLYMPICS 2016

14. Cost/Benefit Analysis
• Lessons from the 2014 World Cup
• Brazil spent more than $11 billion on hosting the 2014 FIFA World Cup
• However, the revenues were not nearly as big as hoped; according to the
Borgen Project, “The World Cup did little to boost the economy and the
jump in tourism the government was anticipating was not as significant
as expected.”
• Brazil needed to build 12 new stadiums and completely re-do their
transportation infrastructure
• But the World Cup only brings in around $3.5 billion in revenue, most of
which goes to FIFA.

15. What you need to host the Olympics
• IOC has been putting more emphasis recently on new
infrastructure
• Challenges: Trying to find low-cost, high-quality construction
• Infrastructure Demands
• 12 new sporting event stadiums/areas
• Olympic Village
• New Train/Highway construction to connect Olympic areas
• Airport reconstruction for the 3 airports in the Rio area

16. Is it worth it to host the Olympics?
• Articles to look at:
• “Does Hosting the Olympics actually pay off?” New York Times Magazine,
August 5, 2014.
• “Just Say No.” The Economist, February 28, 2015.
• Lessons from other countries
• Spending and Revenue: While the London Olympics in 2012 cost $10.4
billion, London only received $5.2 billion in revenue.
• Unused infrastructure and economic losses
• Montreal in 1974 (loss of CAN$990 million), Sydney in 2000 (loss of US$2.1
billion), Athens in 2004 (US$14-15 billion)

18. Challenge: Revenues
One of the biggest complaints about
hosting the Olympics and World Cup
is that the majority of revenues
generated from the events goes to
the IOC/FIFA. In the case of the 2012
London Olympics, the IOC pocketed
almost 70% of broadcast revenues.

19. Recommendations for future
Olympics/World Cups
Prof. Andrew Zimbalist of Smith College, in his new book Circus
Maximus: The Economic Gamble Behind Hosting the Olympics and the
World Cup, provides some recommendations for future Olympic and
World Cup events:
1. IOC and FIFA should abandon their preference for new
construction; put emphasis on usage of existing facilities
2. Limit the number of cities bidding
3. Adjust splitting of TV revenues to favor host nations
4. Increase transparency among national committees and the IOC

20. Discussion Questions:
• Is it worth it to host the Olympics? What is Brazil gaining and
losing?
• Should the Brazilian government be prioritizing their resources in
different ways?
• Based on what we’ve heard today, do you think Brazil will be able
to successfully host the Olympics come Summer of 2016?
• What do you believe are the major obstacles Brazil must overcome
before the Olympics?