Smog, not lights. Tracking Bolivia’s 2024–2026 recession from space

Werner Hernani () and Ahmed Eid ()
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Werner Hernani: Investigador asociado de INESAD
Ahmed Eid: Investigador invitado de INESAD

No 06/2026, Development Research Working Paper Series from Institute for Advanced Development Studies

Abstract: Nighttime lights are the standard satellite proxy for economic activity, but they fail to detect recessions. On a 2020–2024 panel of nine Bolivian departments, VIIRS lights match the sign of PIB growth 78 percent of the time during expansions but only 39 percent during contractions -worse than coin-flip. The reason is structural: lit infrastructure is a stock that does not contract when activity falls, while fossil-fuel combustion is a flow that does. Tropospheric NO2, a neardirect measure of combustion retrieved daily by ESA’s Sentinel-5P satellite, maintains 72 percent sign concordance during contractions. We exploit this asymmetry to build a monthly recession indicator from TROPOMI NO2 over eleven Bolivian metropolitan areas, July 2018 through April 2026. The indicator peaked in June 2023; INE quarterly PIB first registered negative year-on-year growth five quarters later, in 2024Q4. Through November 2025 the satellite and INE agree to within one log point. A pre-break SARIMA trained through November 2025 projects a 2026 PIB contraction of approximately 2 percent, consistent with the IMF (-3.3 percent), World Bank (-3.2), and IIF (-4) forecasts, though the confidence interval is wide. The centered-12-month March 2026 endpoint becomes fully observable from actual data in October 2026, and we commit to a revisit at that date. The indicator is reproducible from free Copernicus data with a two-month publication lag.

Keywords: land tenure; credit constraints; insurance; adverse selection; land reform; Bolivia. (search for similar items in EconPapers)
JEL-codes: D86 G21 G22 O12 O16 Q15 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:adv:wpaper:202606

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