2014 Reports

Mines: The Local Welfare Effects of Mineral Mining in Developing Countries

von der Goltz, Jan; Barnwal, Prabhat

Do residents of mining communities face health-wealth trade-offs? We conduct the first extensive investigation assessing this question using micro-data from communities near about 800 mineral mines in 44 developing countries. Mining communities enjoy a substantial medium term rise in asset wealth (0.3σ), but experience a nine percentage point increase in anemia among adult women, and a five percentage point increase in the prevalence of stunting in young children. Both of these health impacts have previously been linked to metal toxicity - and in particular, exposure to high levels of environmental lead. Benefits and costs are strongly concentrated in the immediate vicinity (5km) of the nearest mine. We find no systematic evidence of general ill health, and we observe health impacts only near mines of a type where lead pollution is to be expected. Identification is based on a mine-level and mother-level panel, and in the cross-section, on group effects. A novel instrumental variable serves as a cross-sectional robustness check. To make plausible that the observed health impacts are due to pollution, we develop difference-in-difference tests based on the known association of certain mine types with lead pollution, and based on the pathophysiology of lead toxicity. Our results represent the first comprehensive assessment of the local welfare impacts of mining in developing countries, and add to the evidence suggesting that communities near industrial centers in developing countries face information or cost constraints that limit their choice sets.