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dc.titleThe Value of Clean Water: Evidence from an Environmental Disaster
dc.contributor.authorGonzalez, Rodrigo Barbone
dc.contributor.authorHaas Ornelas, José Renato
dc.contributor.authorSilva, Thiago Christiano
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageBrazil
dc.date.available2023-12-01T00:12:00
dc.date.issue2023-12-01T00:12:00
dc.description.abstractClean water has a largely unknown economic value, particularly to small communities whose agricultural activities take place on river shores. In November 2015, the rupture of a mining tailings dam in the municipality of Mariana led to a record disposal of toxic residuals in southeast Brazil. A mud avalanche ran out for 600 km (373 miles) until it reached the Atlantic Ocean, leaving behind extreme ecological and economic damage in the Doce River basin. This is the largest environmental disaster in Brazil to date. We quantify the negative externalities using rich, identified, and comprehensive data from firm-to-firm electronic payments and individual-level consumer credit usage. We find that agricultural producers in affected municipalities received cumulatively 41% to 60% fewer inflows (income) from customer firms outside the affected zone three years after the disaster. Effects are driven by municipalities where the river shore is larger relative to the farming area. In these municipalities, individuals also faced an 8% fall in their credit card and consumer finance expenditures. This result is stronger for non-formal and high-risk workers. Thus, water contamination led to (first) production and (later) consumption decline with real effects on municipality-level agriculture and services output, causing a 7% decline in local GDP.
dc.format.extent40
dc.identifier.doihttp://dx.doi.org/10.18235/0005312
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/The-Value-of-Clean-Water-Evidence-from-an-Environmental-Disaster.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectMunicipal Government
dc.subjectWater Supply
dc.subjectEnvironmental Impact
dc.subjectConsumer Credit
dc.subjectPayment System
dc.subjectDisaster
dc.subjectWater and Sanitation
dc.subjectGross Domestic Product
dc.subjectSmall Business
dc.subjectAgriculture, Food Security and Rural Development
dc.subjectEconomy
dc.subjectService Provider
dc.subject.jelcodeC63 - Computational Techniques • Simulation Modeling
dc.subject.jelcodeG01 - Financial Crises
dc.subject.jelcodeG20 - Financial Institutions and Services: General
dc.subject.jelcodeG21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages
dc.subject.jelcodeG28 - Government Policy and Regulation
dc.subject.jelcodeO16 - Financial Markets • Saving and Capital Investment • Corporate Finance and Governance
dc.subject.jelcodeO40 - Economic Growth and Aggregate Productivity: General
dc.subject.keywordswater;Environmental disaster;Agriculture;Consumer credit;Payment system
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01509
idb.operationRG-K1098
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