Economic Impacts of the Mariana Mining Disaster

This working paper examines the economic impacts of the Mariana mining tailings dam collapse in Brazil, which resulted in significant environmental and economic damage. It utilizes comprehensive microdata, including firm-to-firm financial transactions and individual-level credit card consumption, to investigate the negative externalities caused by water pollution. The findings indicate that agricultural supply chains were disrupted, leading to a decline in consumption and a destruction of wealth, which adversely affected the GDP of the municipalities along the Doce River. Specifically, the analysis reveals a cumulative loss of 14% in the value-added of agriculture in the 37 affected municipalities, with the most impacted areas experiencing an 18% decline. Additionally, the services sector saw a 6% decrease in value-added, contributing to an overall local GDP decline of 7%. The study highlights the dependence of agriculture on clean water and the broader implications of water contamination on economic activity and public policy. It also discusses the significant income loss for agricultural producers and the decline in consumer spending in the affected regions.