Colombia is particular for the analysis of electricity generation: more than 65% of the electricity generated comes from hydroelectric plants. However, this high potential is affected by deforestation; this has generated a detrimental effect for the water resource. The objective of this research is to estimate the effect of deforestation on the generation of hydroelectric energy using fixed and non-parametric effects models with a data panel of 60 hydropower plants in Colombian territory, between 2000 and 2015. It is found that deforestation decreases the income of some hydroelectric plants, which represents a loss of 2.5% of the installed capacity corresponding to 132 GW or 15,000 millions COP equivalent to 1 millon COP per hectare deforested.
