Nova School of Business and Economics and NOVAFRICA
University of Alicante, IZA and NOVAFRICA
Working Paper No 2201
The livelihoods of 130 to 270 million people depend on artisanal and small-scale mining (ASM), a labor-intensive method of mineral extraction. Based on geological mapping and gold price variations in a yearly panel of 10,628 fine-grained cells, we provide the first estimation of the environmental and wealth impacts of the main form of ASM, gold ASM, throughout the African continent. We first demonstrate that artisanal mining leads to tropical deforestation and vegetation degradation. We find that the historical increase in the gold price accounts for 20 percent of the total deforestation in the gold-prone tropical regions in Africa. Second, we contrast these negative environmental impacts with the positive economic effects of ASM, which increases night-time light emissions and households wealth. Last, we show how droughts magnify the effects of ASM, suggesting that mining may be a way for households to diversify their livelihoods when agricultural incomes fall short. These results are policy relevant: a one standard deviation increase in artisanal gold mining revenues increases wealth by 2% of a standard deviation, an effect larger than the effect of drought alone on wealth.
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