Blue water turns black: economic impact of oil spill on Brazilian Northeast

Luiz Carlos Ribeiro, Kênia de Souza (), Edson Domingues and Aline Magalhães
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Luiz Carlos Ribeiro: Federal University of Sergipe
Aline Magalhães: Cedeplar-UFMG

No 619, Textos para Discussão Cedeplar-UFMG from Cedeplar, Universidade Federal de Minas Gerais

Abstract: The international literature is in consensus about the negative impacts that oil spills have on the economy and environment. Since late August 2019, crude oil stains have appeared on the beaches of the Brazilian Northeast. Five months on, this could be considered the most severe environmental disaster of this type, with a scope of more than 3,000 km; 1,013 locations across 130 municipalities were directly affected by the accident. However, the economic impacts are still unknown. Here, we show that the coastal areas of Piauí, Rio Grande do Norte and Ceará were the worst affected in terms of gross domestic product and employment, assuming tourism and fishing to be directly affected economic activities. Simultaneously, we found that interior counterparts of the country were marginally affected, because they accommodated part of the affected areas’ demand loss. Our results can help plan better measures to mitigate the negative impacts of this kind of disaster and identify the most vulnerable areas for government and private assistance. We anticipate our article will provide the first economic estimations of the recent oil spill in Brazil. Furthermore, our economic simulation model can be adapted to assess oil spill economic impacts in any country in the world.

Keywords: oil spill; environmental disaster, Brazilian Northeast, Computable general equilibrium (search for similar items in EconPapers)
JEL-codes: C68 Q25 Q51 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020-02
New Economics Papers: this item is included in nep-env
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